Hosp. Menonita de Guayama, Inc. v. Nat'l Labor Relations Bd.

94 F.4th 1

HOSPITAL MENONITA DE GUAYAMA, INC., Petitioner v. NATIONAL LABOR RELATIONS BOARD, Respondent

No. 22-1163

Consolidated with 22-1180

United States Court of Appeals, District of Columbia Circuit

Argued September 21, 2023

Decided February 27, 2024

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

Patrick M. Muldowney argued the cause for petitioner. With him on the briefs were Ángel Muñoz Noya and Gerardo De Jesús.

Heather Beard, Senior Attorney, National Labor Relations Board, argued the cause for respondent. With her on the brief were Jennifer Abruzzo, General Counsel, Peter Sung Ohr, Deputy General Counsel, Ruth E. Burdick, Deputy Associate General Counsel, David Habenstreit, Assistant General Counsel, and Elizabeth Heaney, Supervisory Attorney.

Before: Henderson and Katsas, Circuit Judges, and Edwards, Senior Circuit Judge.

Concurring opinion filed by Circuit Judge Katsas.

Edwards, Senior Circuit Judge:

This case emanates from actions taken by Hospital Menonita de Guayama, Inc. ("Petitioner") after it acquired Hospital San Lucas Guayama ("Hospital San Lucas") and became a successor employer with an obligation to recognize and bargain with the Unidad Laboral de Enfermeras (OS) y Empleados de la Salud ("the Union"). When Petitioner acquired Hospital San Lucas, the Union represented five distinct bargaining units of employees. Over the course of five months after the acquisition, Petitioner first failed and refused to bargain in good faith with the Union. It then serially withdrew recognition from the Union as the employees' collective bargaining agent in each of the five units.

The Union filed unfair labor practice charges with the National Labor Relations Board ("Board" or "NLRB") and the Board's General Counsel then filed a complaint against Petitioner. The complaint alleged that Petitioner had violated Sections 8(a)(5) and (1) of the National Labor Relations Act ("NLRA" or "Act"), 29 U.S.C. § 158(a)(1), (5). A hearing was held before an Administrative Law Judge ("ALJ"), who determined that Petitioner had violated the NLRA by withdrawing recognition from the Union, failing and refusing to bargain in good faith with the Union, unilaterally changing the terms and conditions of employment, and withholding information relevant to the Union's bargaining duties. See Hosp. Menonita de Guayama, Inc., No. 12-CA-214830, 2019 WL 2354716 (N.L.R.B. Div. Judges May 30, 2019) ("ALJ Decision"). In reaching his decision, the ALJ relied on the Board's "successor bar" rule, which holds that an incumbent union enjoys an irrebuttable presumption of majority status for a reasonable period of time following the successor employer's voluntary recognition of the union. Id.

The Board largely adopted the findings and conclusions of the ALJ, with one member dissenting. Hosp. Menonita de Guayama, Inc., 371 N.L.R.B. No. 108, at 1 (June 28, 2022). The Board denied Petitioner's request to overrule the successor bar rule and afford incumbent unions in successorship situations only a rebuttable presumption of majority support. Id. at 3-4. The Board carefully explained its adherence to the successor bar rule, noting that its decade-old decision implementing the rule was soundly reasoned and vindicated by subsequent legal and economic developments. Id. at 5-6. The Board also noted that each of the arguments raised by the dissent had been carefully considered and rejected by the Board in a prior decision. Id.

In its petition for review, Petitioner asks this court to overturn the successor bar rule. We decline the invitation and deny the petition for review. On the facts presented, the Board's application of the successor bar rule was consistent with established Board precedent, permissible, and reasonable. The ALJ's factual findings, which the Board adopted, are supported by substantial evidence. The Board's conclusion that Petitioner refused to bargain in good faith with the Union and engaged in multiple unfair labor practices follows directly from established Board precedent. Indeed, based on the record in this case, there can be no doubt whatever that Petitioner was guilty of the unfair labor practices as charged. The only issue we consider is whether the Board erred in applying established precedent and enforcing the successor bar rule to preclude Petitioner's challenges to the Union's majority support. After carefully reviewing the record before us, we find that the Board more than adequately justified its application of the successor bar and the factual findings before us fall comfortably within the rule's ken. We find no merit in Petitioner's arguments to the contrary.

I. BACKGROUND

A. Legal and Statutory Background

Section 7 of the NLRA grants employees "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," as well as "the right to refrain from any or all of such activities." 29 U.S.C. § 157. Section 8(a)(1) makes it an unfair labor practice for an employer "to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed" by the NLRA. 29 U.S.C. § 158(a)(1). Similarly, Section 8(a)(5) labels as an unfair labor practice an employer's "refus[al] to bargain collectively with the representatives of [one's] employees." Id. § 158(a)(5). When an employer violates Section 8(a)(5), it concurrently violates Section 8(a)(1). Enter. Leasing Co. of Fla. v. NLRB, 831 F.3d 534, 546 (D.C. Cir. 2016).

The NLRB is tasked with enforcing the NLRA. And the Supreme Court "has emphasized often that the NLRB has the primary responsibility for developing and applying national labor policy." NLRB v. Curtin Matheson Sci., Inc., 494 U.S. 775, 786, 110 S.Ct. 1542, 108 L.Ed.2d 801 (1990). Accordingly, the Court has directed lower federal courts reviewing a Board decision to "uphold a Board rule as long as it is rational and consistent with the [NLRA], even if we would have formulated a different rule had we sat on the Board." Id. at 787, 110 S.Ct. 1542 (citations omitted).

As part of its authority to interpret and enforce the NLRA, the Board has adopted a "successor bar" rule. The Board first used the term "successor bar" in St. Elizabeth Manor, Inc., 329 N.L.R.B. 341 (1999), which held that, "once a successor's obligation to recognize an incumbent union has attached (where the successor has not adopted the predecessor's contract), the union is entitled to a reasonable period of bargaining without challenge to its majority status through a decertification effort, an employer petition, or a rival petition." Id. at 344 (footnote omitted). In reaching its conclusion, the Board reasoned as follows:

In both initial recognition and successorship situations, the employer has incurred a recognitional obligation by a voluntary act, either by extending recognition to a union after ascertaining demonstrated majority support or by hiring a sufficient number of a predecessor's employees to constitute a majority and thereby incurring a bargaining obligation . . . . In both situations, because the employer and the union are embarking on a new relationship, all the issues are likely to be open. Thus, bargaining in both situations is likely to present a greater challenge than bargaining between partners in an established relationship who are negotiating a new contract after having lived under an earlier contract or contracts so that only selected issues are likely to be on the table.

Moreover, as in the case of voluntary recognition following an initial campaign, parties in a successorship relationship are in a stressful transitional period. Although in many cases the employees may have had adequate time to determine whether the incumbent union was effective in representing them in negotiations with the predecessor employer, they have not had the opportunity to learn if the incumbent will be effective with the successor. The employees may fear that the successor employer will not want the union or would give them a better deal without it. This is particularly true if the employer has exercised its prerogative to set initial terms and conditions of employment that differ from those that employees have enjoyed pursuant to the union's collective-bargaining relationship with the predecessor. With mergers and acquisitions commonplace, and with publicized downsizings, restructurings, and facility closings accompanying them, employees' concern over the security of their continued employment and working conditions is understandably increased in the course of any change in ownership. Thus, although at the time of transition there may be no indication that the employees had become dissatisfied with their union, anxiety about their status under the successor may lead to employee disaffection before the union has had the opportunity to demonstrate its continued effectiveness.

Furthermore, the successor may be reluctant to commit itself wholeheartedly to bargain for a collective-bargaining agreement with the incumbent union when at any time following the recognition, the union's majority status may be attacked. A reasonable period free of outside distractions will permit the parties to attempt to bring their new relationship to fruition, i.e., to engage in the process of collective bargaining.

Id. at 342-43 (footnote omitted).

The Board's decision in St. Elizabeth did not write on a blank slate. In 1975, the Board had held that, absent a successor employer's adoption of an existing collective bargaining agreement, an incumbent union was entitled only to a rebuttable presumption of majority support following a successor's voluntary recognition of the union. See Southern Mouldings, Inc., 219 NLRB 119, 119 (1975). Six years later, the Board modified its position and made the presumption irrebuttable without expressly overruling - or...