N.L.R.B. v. Peninsula General Hosp. Medical Center, s. 94-1202

CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)
Citation36 F.3d 1262
Docket Number94-1232,Nos. 94-1202,s. 94-1202
Parties147 L.R.R.M. (BNA) 2513, 63 USLW 2268, 129 Lab.Cas. P 11,208 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. PENINSULA GENERAL HOSPITAL MEDICAL CENTER, Respondent. PENINSULA REGIONAL MEDICAL CENTER, formerly known as Peninsula General Hospital Medical Center, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
Decision Date18 October 1994

ARGUED: David S. Habenstreit, N.L.R.B., Washington, DC, for petitioner. Gary L. Simpler, Arthur Mortimer Brewer, Shawe & Rosenthal, Baltimore, MD, for respondent. ON BRIEF: Frederick L. Feinstein, Gen. Counsel, Linda Sher, Acting Associate Gen. Counsel, Aileen A. Armstrong, Deputy Associate Gen. Counsel, Linda Dreeben, Supervisory Attorney, N.L.R.B., Washington, DC, for petitioner. Frances Taylor, Shawe & Rosenthal, Baltimore, MD, for respondent.

Before WILKINS and WILLIAMS, Circuit Judges, and SHEDD, United States District Judge for the District of South Carolina, sitting by designation.

Petition for review granted and enforcement denied by published opinion. Judge SHEDD wrote the opinion, in which Judge WILKINS and Judge WILLIAMS joined.


SHEDD, District Judge:

The National Labor Relations Board ("Board") has applied for enforcement, and Peninsula Regional Medical Center ("Peninsula") has petitioned for review, of an order reported at 312 N.L.R.B. No. 97 (1993), in which the Board found that an employee organization known as the Nursing Services Organization ("NSO"), which Peninsula formed, is a "labor organization" within the meaning of Sec. 2(5) of the National Labor Relations Act ("the Act"), 29 U.S.C. Sec. 152(5); and that Peninsula dominated the NSO in violation of Secs. 8(a)(1) and 8(a)(2) of the Act, 29 U.S.C. Secs. 158(a)(1) and (a)(2). The Board ordered Peninsula inter alia to cease and desist from "[d]ominating, assisting, or contributing financial or other support to the NSO or any other labor organization" and to "withdraw all financial or other support from and completely disestablish the NSO." Peninsula's only contention in support of its petition for review is that the Board erred in determining that the NSO is a "labor organization" within the meaning of Sec. 2(5). Because we agree with Peninsula, we grant the petition for review, set aside the Board's order, and deny enforcement.


The central purpose of the Act is "to protect and facilitate employees' opportunity to organize unions to represent them in collective bargaining negotiations." American Hosp. Ass'n v. NLRB, 499 U.S. 606, 609, 111 S.Ct. 1539, 1541-42, 113 L.Ed.2d 675 (1991). The heart of the Act is Sec. 7, which "grants employees the right to organize and form labor unions for the purpose of collective bargaining and other concerted activities." Ultrasystems Western Constructors, Inc. v. NLRB, 18 F.3d 251, 255 (4th Cir.1994). Section 7 provides in pertinent part that:

Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection....

29 U.S.C. Sec. 157. Section 8 "identifies as unfair labor practices specific actions which interfere with the rights granted by [Sec.] 7." Ultrasystems Western Constructors, 18 F.3d at 255.

Relevant for our purposes here, Sec. 8(a)(2) provides that it is an unfair labor practice for an employer "to dominate or interfere with the formation or administration of any labor organization." 1 This section reflects congressional recognition that "the maintenance of a 'company union,' dominated by the employer, may be a ready and effective means of obstructing self-organization of employees and their choice of their own representatives for the purpose of collective bargaining." NLRB v. Pennsylvania Greyhound Lines, 303 U.S. 261, 266, 58 S.Ct. 571, 574, 82 L.Ed. 831 (1938). This Court has similarly noted the problem associated with company unions:

[T]he purpose of the Act is to prohibit anything which will enable the employer to exert influence on the representatives of the employees in the collective bargaining which it is the purpose of the Act to promote. When the employer himself assists in setting up the bargaining agency, provides the machinery by which the bargaining representatives are chosen, allows the elections to be conducted on his premises and at his expense and pays the representatives for the time devoted to bargaining, he is manifestly taking too great a part in a matter with which he is supposed to have nothing whatever to do. Collective bargaining becomes a delusion and a snare if the employer, either directly or indirectly, is allowed to sit on both sides of the bargaining table; and, with the great advantage that he holds as the master of pay and promotions, he will be on both sides of the table if he is allowed to take any part whatever in the choice of bargaining representatives by the employees.

American Enka Corp. v. NLRB, 119 F.2d 60, 62-63 (4th Cir.1941); see also NLRB v. Norfolk Southern Bus Corp., 159 F.2d 516, 518 (4th Cir.1946), cert. denied, 330 U.S. 844, 67 S.Ct. 1085, 91 L.Ed. 1290 (1947) ("Promotion and sponsorship by the employer ... of an organization for collective bargaining is ... condemned" by the Act).

Although Sec. 8(a)(2) "has effectively achieved its goal of eliminating traditional company unions[,] ... the concern over company unions is not a moot point." Robert B. Moberly, The Worker Participation Conundrum: Does Prohibiting Employer-Assisted Labor Organizations Prevent Labor-Management Cooperation?, 69 Wash.L.Rev. 331, 345 (1994). This is so because of the "broad scale implementation of employee participation programs throughout American industry." Dennis M. Devaney, Much Ado About Section 8(a)(2): The NLRB And Workplace Cooperation After Electromation And du Pont, 23 Stetson L.Rev. 39, 50 (1993). These programs, "[w]hile usually less overt, ... foster the same concerns of employer domination or interference that section 8(a)(2) was intended to counter." Moberly, supra, at 345. Nevertheless, perhaps due in part to the fact that employee participation programs have become a "vital part of American industry today," id. at 359; even the Board has recognized that there is "some room" for lawful cooperation between employers and employees through the use of such programs. See E.I. du Pont de Nemours & Co., 311 N.L.R.B. 893 (at 893) (1993). In this respect, we find particular force in the words of Judge John Minor Wisdom:

No one can question the rightness of a policy intended to preserve the integrity of collective bargaining by labor representatives free of interference from management. Everyone would agree that in carrying out this policy the Board and the courts should regard employer-employee committees with suspicion and scrutinize them carefully in order to prevent an employer's using a committee as a company-dominated labor organization or as a device for frustrating rights guaranteed labor under Section 7 of the Act. But this policy becomes too much of a good thing when it is pushed so far as to leave no place for a bona fide, socially desirable employee committee or joint employer-employee committee that is something less than a labor organization and something more than a Great Books Study Group.

NLRB v. Walton Mfg. Co., 289 F.2d 177, 182 (5th Cir.1961) (Wisdom, J. dissenting).


We now turn to the facts of this case. Peninsula, a Maryland corporation located in Salisbury, Maryland, operates as a hospital and provides medical and professional care services to the general public. Peninsula employs approximately 1,800 employees, including approximately 400 registered nurses and 100 licensed practical nurses.

The NSO has existed since at least 1968. Since its founding, the NSO has served as a forum for nurses to discuss, consider, and evaluate professional nurse practice issues and for continuing nursing education. At all times, NSO meetings have been held in Peninsula facilities, and nurses have received their regular pay or continuing education credits for attending NSO meetings. While membership in the NSO originally was limited only to registered and licensed practical nurses employed in Peninsula's nursing department, membership was opened up in 1988 to include nurses who were classified as employees of other departments.

The NSO's by-laws date back to 1976. According to the 1976 by-laws, the original purpose of the NSO was:

[T]o provide an opportunity for free communication and share in the planning and evaluation of nursing services. The [NSO] contributes to and works within the framework of the philosophy and objectives of the Nursing Services Department.

(J.A. 638). The most recent by-laws appearing in the record are dated April 1991. These by-laws set forth the "philosophy" of the NSO as being substantially similar to the above-stated purpose of the 1976 by-laws, with the addition of the following sentence: "The focus of this organization is to act as a Liaison between nurses, all departments, Nursing Management, and Administration." (J.A. 612).

Until 1988, the NSO was funded exclusively by voluntary annual membership dues of one dollar. Members who paid these dues received flowers in the event of their marriage, the birth of a child, or the death of a family member. When it became apparent that the voluntary dues were insufficient to cover the NSO's expenses, Peninsula began budgeting $500 annually for the NSO.

At all times relevant to this case, Karen Poisker has been Peninsula's Vice-President of Nursing. 2 Ms. Poisker was first employed by Peninsula as a registered nurse and rose through the nursing ranks to the position of Vice-President of Nursing. Throughout her employment with Peninsula, Ms. Poisker has been a member of the NSO. Upon...

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