Troutbrook Co. v. Nat'l Labor Relations Bd.

107 F.4th 994

TROUTBROOK COMPANY LLC, d/b/a Brooklyn 181 Hospitality LLC, Petitioner v. NATIONAL LABOR RELATIONS BOARD, Respondent

No. 23-1025

Consolidated with 23-1030

United States Court of Appeals, District of Columbia Circuit

Argued November 2, 2023

Decided July 12, 2024

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

Thomas G. Eron argued the cause for petitioner. With him on the briefs was Raymond J. Pascucci.

David A. Seid, Senior Attorney, National Labor Relations Board, argued the cause for respondent. With him on the brief were Jennifer A. Abruzzo, General Counsel, Ruth E. Burdick, Deputy Associate General Counsel, David S. Habenstreit, Assistant General Counsel, and Milakshmi V. Rajapakse, Supervisory Attorney.

Before: Rao and Garcia, Circuit Judges, and Rogers, Senior Circuit Judge.

Dissenting opinion filed by Circuit Judge Rao.

Garcia, Circuit Judge:

The National Labor Relations Act specifies the topics over which an employer must bargain in good faith with an employee representative. The National Labor Relations Board held that Troutbrook Company, LLC violated the Act by resolutely refusing to discuss certain of those mandatory subjects—including wages, health benefits, and retirement benefits—throughout months of negotiations over an initial collective bargaining agreement for one of its hotels. Troutbrook now petitions for review of the Board's decision. Because substantial evidence supports the Board's determination, we deny Troutbrook's petition and grant the Board's cross-application for enforcement of its order.

I

A

Troutbrook owns and operates a sixty-room hotel in Brooklyn, New York. On September 24, 2018, after the hotel's employees voted for union representation, the Board certified New York Hotel and Motel Trades Council, AFL-CIO ("the Union") as their exclusive collective-bargaining representative. Troutbrook challenged the certification and refused to bargain with the Union. On June 3, 2019, the Board found the company's refusal unlawful and ordered it to recognize and bargain with the Union. See Troutbrook Co. d/b/a Brooklyn 181 Hosp., LLC & N.Y. Hotel & Motel Trades Council, AFL-CIO, 367 N.L.R.B. No. 139 (June 3, 2019). On February 28, 2020, we denied Troutbrook's petition for review and granted the Board's cross-application for enforcement. Troutbrook Co. v. NLRB, 801 F. App'x 781 (D.C. Cir. 2020).

A few months later, Troutbrook and the Union began negotiating an initial collective-bargaining agreement. The parties met six times by teleconference: three times in mid-2020 and, after a hiatus due to the COVID-19 pandemic, three times in early 2021. The Union's primary spokesperson during negotiations was Assistant General Counsel Gideon Martin. Martin was assisted by Union General Counsel and Executive Vice President Rich Maroko. Attorney Raymond Pascucci served as the primary spokesperson for Troutbrook.

On May 18, 2020, before the parties' first bargaining session, Martin sent Pascucci the Union's proposal, which comprised its Industry-Wide Agreement with the Hotel Association of New York City, Inc. ("IWA") and a Memorandum of Understanding modifying the IWA's terms for Troutbrook's hotel. During the session, Maroko presented the proposal's terms, covering both economic subjects (e.g., wages, severance pay, and sick leave) and non-economic subjects (e.g., union recognition, non-discrimination requirements, and agreement duration). The Union voiced its preference that Troutbrook sign onto the IWA and offered to answer any questions. Pascucci said that he needed time to review the proposal with the company.

On June 4, 2020, the parties met for a second session. At the start of the call, Pascucci proposed ground rules to guide the parties' negotiations, including that the "[p]arties would focus on non[-]economic issues before moving onto economic issues." J.A. 96; see J.A. 300. Maroko countered that the Union preferred to discuss all issues without limiting the topics.

The parties then turned to the Union's proposal. Pascucci stated that Troutbrook was "not willing to accept the IWA, whatsoever." J.A. 96. He explained that the pandemic had significantly altered the hotel industry's labor market and room rates and that the company sought a standalone agreement tailored to its hotel. Maroko asked whether Troutbrook took issue with specific provisions of the IWA, and Pascucci clarified that the entire agreement was "way too convoluted and unnecessarily complex and burdensome." J.A. 97. Maroko said he understood if Troutbrook wanted to discuss particular subjects of concern, but he objected to the company's wholesale rejection of the IWA as a starting point for negotiations. Pascucci asked if Maroko viewed the IWA as a "one size fits all" document, and Maroko initially said yes. J.A. 97. But he then made clear that "[i]f [Troutbrook] raise[s] issues that are legitimate, [the Union will] be flexible on them." J.A. 98. After Maroko requested a counterproposal, Pascucci stated that the company's response would address "just some of the articles" in the IWA rather than the whole agreement. Id. Maroko replied that good-faith bargaining required a complete counterproposal. Pascucci disagreed, claiming that the parties could make more progress by considering a few issues at a time.

Between June 4 and June 18, 2020, Pascucci and Martin exchanged emails. Pascucci presented in writing Troutbrook's proposed ground rules from the second session, including the proposal to defer discussion of economic subjects. Martin rejected that ground rule, though he agreed to some others. In his words, the Union "d[id] not want to constrain the parties' capability to freely explore and discuss any items, such as specific proposals, terms, or conditions, during bargaining sessions." J.A. 107.

Pascucci countered with a modification: "The parties agree to focus primarily on non-economic subjects before turning to economic subjects, but it is understood that this general framework does not preclude either party from raising and freely discussing any item at any point during the bargaining process." J.A. 105. Martin again rejected the rule as unnecessarily restrictive and asked whether Troutbrook was "refusing to have meaningful discussion on economics until all non-economic subjects are addressed." J.A. 103. Pascucci replied that Troutbrook was prepared to move forward without a formal, agreed-upon rule, but that "[i]n responding to the Union's proposals, the [company] will focus on non-economic subjects first." J.A. 101.

On June 25, 2020, the parties conferred for a third time. After an update on the hotel's operations, Pascucci briefly introduced six "non-economic counterproposals" addressing recognition of the Union, non-discrimination, a prohibition on strikes and lockouts, a probationary period for new employees, hours of work, and the effective dates of any agreement. J.A. 112-13, 120-21. Martin suggested it was "worth walking through" the counterproposals. J.A. 112. Because the effective-dates counterproposal was a placeholder, he asked if Troutbrook knew how long it wanted any agreement to be valid. J.A. 113. The company had not yet considered the issue, Pascucci responded, but it would "be part of [the] wages and benefits" discussion. J.A. 113. Pascucci's reference to those mandatory economic subjects prompted Martin to inquire when the Union could expect to receive Troutbrook's counterproposals on wages, health benefits, and retirement. Id. Pascucci reiterated that the company's "plan" was to "[w]ork[ ] on non-economics first." Id. Martin repeated the Union's preference for a complete counterproposal, noting that "it's difficult to evaluate a response when it doesn't respond to every term and condition." Id.

Martin then turned to Troutbrook's non-economic counterproposals. He asked how the Union should interpret Troutbrook's silence on terms that were included in the Union's original proposal but not addressed in Troutbrook's counters. "We're not agreeing to whatever else is in your versions of these topics," Pascucci responded. J.A. 114. When asked how many sets of counterproposals Troutbrook intended to make, Pascucci replied that the "intention is we work on these topics, then we reach a tentative agreement and then move on to the next set of proposals." Id. Martin requested that Troutbrook at the very least offer counterproposals on wages, health benefits, and retirement, but Pascucci pivoted back to the company's non-economic counterproposals. Despite the parties' disagreement over bargaining procedure, for the rest of the third session, the parties discussed the details of Troutbrook's non-economic counterproposals but did not come to any concrete agreements.

After a seven-month hiatus due to the COVID-19 pandemic, on February 2, 2021, the parties met for the fourth time. Martin noted that the Union was "still waiting on a complete proposal including economics, health, [and] wages" and that "[i]t's hard to analyze a proposal without that." J.A. 123. Pascucci replied: "[T]he way I do it is first work through non[-]economics, get through a half dozen and resolve and then move on to next sets, and then eventually work through economics." Id. In response to Pascucci's concerns about the IWA, Martin stated that "we can bargain flexib[ly]. We should change the IWA for your operational needs." J.A. 124. Martin further offered to "bargain over [language] and talk about it so [Troutbrook] do[es]n't think it's more convoluted than it is" or to "bargain over things to make them less expensive." Id. Pascucci emphasized that Troutbrook already gave counters on multiple non-economic subjects. But Martin underscored how difficult it would be to come to an agreement through piecemeal bargaining. For example, he explained that "it's a lot easier to go to the crew on hours of work if I also know how much they are getting paid." J.A. 125. Pascucci found that...