Reno Hilton Resorts v. Nat'l Labor Bd.

• Decision Date: 03 December 1999
• Docket Number: No. 98-1484,98-1484
• Citation: 196 F.3d 1275
• Parties: (D.C. Cir. 1999) Reno Hilton Resorts, Petitioner v. National Labor Relations Board, Respondent International Union, United Plant Guard Workers of America, Intervenor
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1275

196 F.3d 1275 (D.C. Cir. 1999)

Reno Hilton Resorts, Petitioner v. National Labor Relations Board, Respondent

International Union, United Plant Guard Workers of America, Intervenor

No. 98-1484

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 7, 1999

Decided December 3, 1999

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board

Joseph E. Herman argued the cause and filed the briefs for petitioner.

Steven B. Goldstein, Attorney, National Labor Relations Board, argued the cause for respondent. With him on the brief were Linda Sher, Associate General Counsel, John D. Burgoyne, Acting Deputy Associate General Counsel, and David Habenstreit, Supervisory Attorney.

Scott A. Brooks argued the cause and filed the brief for intervenor.

Before: Ginsburg, Rogers and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge:

Reno Hilton Resorts ("Reno Hilton") appeals the decision and order of the National Labor Relations Board ("Board") that it had violated 8(a)(1) and (3) of the National Labor Relations Act ("Act"), 29 U.S.C. 158(a)(1) and (3), by contracting out the work of its recently unionized security service. See Reno Hilton Resorts, 326 NLRB No. 154, 1998 WL 723981, at *1 (Sept. 30, 1998). Reno Hilton contends that the Board misstated and misapplied the appropriate legal standard for determining whether an employer's discharge of an employee constitutes an unfair labor practice, and lacked substantial evidence to support its finding of discriminatory intent. Finding these contentions unpersuasive, we deny the petition for review and grant the Board's cross-application for enforcement of the order.

I.

When Reno Hilton began operating what was formerly a Bally's hotel-restaurant-casino complex in 1992, it inherited Bally's security staff, the members of which were not represented by any labor organization. Shortly thereafter, while implementing a cost-savings plan, Reno Hilton considered and rejected various proposals to contract out a number of security positions, despite a projected annual savings ranging from $24,000 to $96,000.

In June 1993, International Union, United Plant Guard Workers of America ("Union") began a campaign to organize Reno Hilton's security employees. After losing an election by a vote of 51 to 34, the Union filed unfair labor practice charges with the Board. While those charges were pending,¹ the Union started another campaign in 1995 to organize Reno Hilton's security employees, and an election was scheduled for September 1995. Reno Hilton retained a labor consulting firm, The Burk Group, to assist it in its opposition to the union campaign, as it had done in the first campaign. Shortly before the election, Gary Parillo, an "anti-union" security employee, was called into the office of Reno Hilton's director of security, Dave Bennett, to meet with a Burk Group official. A color-coded chart in the office listed various security department employees and their position on the Union's organizing efforts. The Burk Group official asked Parillo to help determine which security employees were proor anti-union, advising Parillo that if the Union came in, the hotel would contract out the security jobs and showing Parillo figures purporting to represent the associated cost savings.

The Union won the election by a vote of 44 to 33 and was certified by the Board on October 12, 1995, as the exclusive collective-bargaining representative of the full-time and regular part-time security employees at the Reno Hilton. Shortly before and after the election, Reno Hilton's management indicated to rank-and-file employees that the presence of the Union would mean that "things would get really rough."Within two weeks of the Union's certification, the Hilton Hotel's Vice President, Jim Anderson, met with Bennett regarding contracting out Reno Hilton's security work. According to Lee Boekhout, a Reno Hilton security employee, Bennett's impression after that meeting was that Reno Hilton "may have lost the battle," but it had "won the war," and that "they [i.e., the unit security employees] were gone." Bennett reassured Boekhout, however, that his job was protected because, Bennett claimed, he was able to save the jobs of the ten or eleven employees who supported Reno Hilton's position in the election campaign.

During contract negotiation sessions from November 1995 to early August 1996, Anderson continually proposed to the Union that Reno Hilton would have the right to contract out its security work. The Union presented counter proposals to the subcontracting plans, which Reno Hilton rejected. According to the Union President, Anderson assured the Union negotiators that Reno Hilton had no present intention to contract out its security work. Be that as it may, in February 1996, Bennett sent a memorandum to Reno Hilton's president advising that his investigation with two potential subcontractors of the costs of bringing in an outside security service indicated that Reno Hilton could save a considerable amount of money. In April 1996, several high-ranking Hilton Corporation and Reno Hilton officials discussed the economics of contracting out the security work. During this time the administrative assistant to Reno Hilton's director of security, and its director of human resources spoke to Boekh out about changing the job titles of anti-Union employees to protect their jobs from the imminent elimination in the wake of contracting out.

Then, in June 1996, Reno Hilton presented the Union with a proposed wage freeze and an unrestricted right to contract out. When the Union rejected the proposal, Reno Hilton responded with a proposal for a three-year contract with a wage ceiling of $10.43 and a one-year bar on contracting out security work. The Union rejected this proposal as well as a third proposal for no wage adjustment and unrestricted rights to contract out. The security employees went on strike. The strike lasted from the end of July 1996 until mid-August 1996, at which point Reno Hilton and the Union entered into a collective bargaining agreement. The agreement froze wages, prohibited discrimination against employees on the basis of union or non-union status, and provided that Reno Hilton had the right to "[c]ontract or subcontract any work."

In October 1996, Reno Hilton conducted a financial impact analysis of contracting out that estimated savings of over $1.5 million over three years. On November 1, 1996, hotel officials met with a potential subcontractor, American Protective Services, to discuss cost and quality issues. The same day, Anderson wrote to the Union President requesting a meeting to discuss the results of the hotel's inquiry into contracting out. Prior to the meeting, Anderson informed the Union that contracting out security work at the available base wage rate of $7.50 per hour would save Reno Hilton $4.23 per hour per employee. Also, prior to the meeting, hotel officials made the decision to contract out its security work in January 1997, unless the Union would agree to a wage cut equal to the projected cost savings of contracting out.² Reno Hilton's financial statement purported to show a decline of $10,587,156 in net revenues in 1996 from the prior year.

Before the contracting out decision was implemented in January 1997, Reno Hilton made two offers to the Union to avoid subcontracting. At the meeting with the Union President in late November 1996, Anderson stated first, that Reno Hilton would save over $500,000 annually by contracting out the security work of rank-and-file employees; second that the Union counter-proposals projecting over $400,000 annual savings were unacceptable; and third, that if the Union wanted to avoid contracting out, it would have to agree to a base wage rate for Reno Hilton's security staff of $7.75 per hour, which included the $0.25 per hour profit margin it would have to pay the subcontractor. In response to the Union's protest that the proposed wage decrease was an attempt to drive it out, inasmuch as Reno Hilton had not tried to lower wages in this manner during the contract negotiations, Anderson claimed that the cost saving benefits of contracting out had only recently become apparent. The Union rejected this avoidance offer.

Another avoidance offer was made the following month. In early December 1996, Reno Hilton informed the Union that the hotel would contract out its security work in January 1997. On December 20, 1996, the Union filed unfair labor practice charges on the ground that the company contracted out its security work in retaliation for the employees' union activity while protecting the jobs of "loyal" employees. At an eleventh hour meeting before Reno Hilton contracted out, Anderson reiterated the $7.75 offer, informing the Union that no amount of cost savings proposed by the Union would substitute for accepting that wage rate. Reno Hilton also proposed to make severance pay contingent upon the employees' agreeing not to sue Reno Hilton. The Union rejected the offer.

In response to the Union's December 1996 charges, the ALJ ruled that Reno Hilton had violated 8(a)(3) and (1) of the Act by contracting out its security employees' work and dismissing all of its security employees, and recommended immediate and full reinstatement of the employees with back pay and benefits. The Board affirmed substantially all of the ALJ's rulings, findings, and conclusions, and expanded the remedies to include a broader cease-and-desist order,³ rescission of the subcontract with American Protective Services, and restoration of the status quo ante by ordering Hilton to re-establish an in-house security force. Reno Hilton petitioned the court for review under 29 U.S.C. 160(f), and the Board cross-petitioned for enforcement of its order under 160(e).

II....