Tri-State Health Service, Inc. v. N.L.R.B.

• Decision Date: 21 June 2004
• Docket Number: No. 03-60498.,03-60498.
• Parties: TRI-STATE HEALTH SERVICE, INC., Doing Business as Eden Gardens Nursing Home, Petitioner-Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent-Cross-Petitioner.
• Court: U.S. Court of Appeals — Fifth Circuit

374 F.3d 347

TRI-STATE HEALTH SERVICE, INC., Doing Business as Eden Gardens Nursing Home, Petitioner-Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent-Cross-Petitioner.

No. 03-60498.

United States Court of Appeals, Fifth Circuit.

June 21, 2004.

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S. Price Barker (argued), Rebecca Lear Castillo, Cook, Yancey, King & Galloway, Shreveport, LA, for Tri-State Health Service, Inc.

Aileen A. Armstrong, Deputy Associate General Counsel (argued), Howard E. Perlstein, Richard A. Cohen, N.L.R.B., Washington, DC, Rodney D. Johnson, N.L.R.B., New Orleans, LA, for N.L.R.B.

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

Before GARWOOD, HIGGINBOTHAM and SMITH, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

Tri-State Health Service, Inc. ("Tri-State"), seeks review of a decision of the National Labor Relations Board ("NLRB" or "Board") finding that Tri-State lacked a good faith doubt in the continued majority status of a union with which it refused to bargain. The Board pursues a cross-petition for enforcement. Agreeing with Tri-State that the decision violates Allentown Mack Sales & Serv. Inc. v. NLRB, 522 U.S. 359, 118 S.Ct. 818, 139 L.Ed.2d 797 (1998), we grant the petition for review and deny the cross-petition for enforcement.

I.

We consider whether Tri-State committed an unfair labor practice in violation of § 8(a)(1) and (5) of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 158(a)(1), (5), when it refused to bargain with the incumbent Service Employees International Union.¹ Tri-State is the owner and currently the operator, of Eden Gardens Nursing Home. Though Tri-State has owned the facility since it opened in 1975, it has periodically leased it to other management firms. It was during one such period in 1996, with the nursing home under the management of Woodard Health Services, Inc. ("Woodard"), that the union was certified as the bargaining representative for the home's unskilled labor.² By the time a collective bargaining agreement ("CBA") was successfully negotiated in October 1997, Woodard had subleased operations to Camelot Healthcare, L.L.C. ("Camelot").³

Camelot's tenure in charge of the nursing home was rocky, marked by an inability to pay contractual wages, the union's successful pursuit of an unfair labor practice charge, and, eventually, an inability to pay rent. During this same period, some union members began to grow dissatisfied with the union's representation.⁴

Circumstantial evidence of that development came in several different forms. For example, between early 1998 and the fall of 1999, the number of employees authorizing automatic deductions of their union dues (known as dues checkoffs) fell from eleven to zero. None of the nursing home's employees served as a union steward, and the sole example of union activity consisted of the posting of a flyer announcing the grievance being pursued against Camelot.

Anecdotal evidence paints a similar picture. Wanda Smith, a supervisor at the nursing home, overheard three nurse's aides complaining that their union dues had not earned them meaningful benefits.⁵ An assistant administrator, Suzanne Price, similarly claims to have been approached by four employees and told that they wished to cancel their dues checkoffs because they no longer wanted to be represented by the union.⁶

The present dispute arises from actions Tri-State failed to take on its resumption of control of the nursing home in March 2000, when Woodard's lease expired. Tri-State chose not to inform the union of the change in management or to respond to the union's invitations to negotiate a new CBA.

Tri-State later justified its refusal to bargain on the ground that it possessed a genuine doubt as to whether the union continued to command the support of a majority of the bargaining unit. The union responded by filing a grievance with the Board. Following a hearing before an administrative law judge ("ALJ"), it was determined that Tri-State was a successor to Camelot within the meaning of NLRB v. Burns Int'l Sec. Serv., Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972), and that Tri-State lacked sufficient justification for refusing to bargain.

Accordingly, Tri-State was found to be in violation of NLRA § 8(a)(1) and (5). In his ruling, the ALJ assigned probative weight only to Smith's claim that she had heard three employees complain about the union. The ALJ dismissed, for want of credibility, Price's similar claim and found irrelevant the evidence of declining dues checkoffs and low union activity. The ALJ also rejected the notion that Tri-State could rely on the union's margin of victory during the certification elections as an indicator of the union's low level of support. The Board affirmed, taking only minor exceptions to the ALJ's reasoning.

II.

A.

We must uphold the Board's finding that Tri-State violated its duty to bargain if that decision is supported by substantial evidence on the record as a whole. Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 42, 107 S.Ct. 2225, 96 L.Ed.2d 22 (1987); 29 U.S.C. § 160(e). If a reasonable jury could have reached the Board's conclusion, it must be upheld. Allentown Mack Sales & Serv., Inc. v. NLRB, 522 U.S. 359, 366-67, 118 S.Ct. 818, 139 L.Ed.2d 797 (1998). Nevertheless, the Board "is not free to prescribe what inferences from the evidence it will accept and reject, but must draw all those inferences that the evidence fairly demands." Id. at 378, 118 S.Ct. 818.

B.

An employer is required to bargain with the representative of its employees, and its failure to do so constitutes an unfair labor practice. See NLRA § 8(a)(5), 29 U.S.C. § 158(a)(5). That requirement, however, attaches only for so long as the union retains the support of a majority of employees in the bargaining unit.

To that end, there is a conclusive presumption that the union retains majority support for one year after its election as the representative of a bargaining unit. Auciello Iron Works v. NLRB, 517 U.S. 781, 786, 116 S.Ct. 1754, 135 L.Ed.2d 64 (1996). The union also is entitled to a conclusive presumption of majority status during the pendency of a collective-bargaining agreement, up to a maximum of three years. Id.

Thereafter, the union is entitled to only a rebuttable presumption of majority status. NLRB v. Curtin Matheson Scientific, Inc., 494 U.S. 775, 778, 110 S.Ct. 1542, 108 L.Ed.2d 801 (1990). An employer may overcome this latter presumption and refuse to bargain if it shows either that the union did not enjoy majority support within the relevant bargaining unit, or that the employer had a "`good-faith' doubt, founded on a sufficient objective basis, of the union's majority support." Id.; see also Raven Serv. Corp., 315 F.3d at 506.⁷

To claim validly that it possesses a good faith doubt regarding the union's majority status, an employer need not prove that it has a sincere belief that the union in fact lacks majority support. Allentown Mack, 522 U.S. at 367, 118 S.Ct. 818. Rather, it must only substantiate uncertainty on that score. Id. It is therefore unreasonable for the Board to disregard evidence that would tend to support the inference that workers do not support the union, even if the same evidence is capable of supporting other, more neutral inferences. Id. at 369.⁸

III.

Tri-State argues that its good faith doubt about the union's majority status is supported by five pieces of evidence. Of these, the ALJ and the Board credited only one and found it insufficient, standing alone, to excuse Tri-State's refusal to bargain with the union.

The Board erred in refusing to credit two further items of evidence. Once these additional data points are factored into the analysis, it is apparent that the Board's finding of an unfair labor practice is not supported by substantial evidence.

A.

The Board accepted the ALJ's determination that Smith's testimony supports Tri-State's claimed good faith doubt, and we agree. We also concur with the Board that this evidence is insufficient, by itself, to create a genuine good faith doubt about the union's majority status. Although Smith's testimony supports an inference that three employees shifted their support away from the union, that inference is countered by the fact that the union had been certified by a much larger margin. As a result, the substance of Smith's testimony would not cause a reasonable employer to question whether the union had lost its majority support.

B.

The Board rejected Tri-State's contention that it could look to the decline in union dues checkoffs as a barometer of the union's support. The Board explained:

Employee cancellations of dues-checkoff authorizations may be attributable to many factors other than opposition to a union.... [E]mployees may prefer to pay their dues only at convenient times or in person, or may even be "free riders" who desire and accept union representation without joining the union and paying dues.

(Internal quotations omitted.)

This is precisely the sort of reasoning rejected in Allentown Mack, 522 U.S. at 369, 118 S.Ct. 818. There, the Court discussed the significance of an employee's statement that could have been interpreted as reflecting only a desire for better union representation, but also could have been interpreted as reflecting a desire to abandon the union. Id. The Board purported to resolve the ambiguity, concluding (as it did here with the dues checkoffs) that the evidence was most reasonably interpreted in a manner that did not cast doubt on the union's majority status. Id. Accordingly, the Board determined that the evidence was not probative of the employer's uncertainty.

The Court reversed, reasoning that the existence of two possible interpretations of the evidence meant only that it could not establish the fact of a decline in majority status. Nevertheless, "[t]he statement would...