Quality Health Services of P.R v. NLRB , 873 F.3d 375 ( 2017 )

United States Court of Appeals
For the First Circuit
Nos. 16-1556
16-1845
QUALITY HEALTH SERVICES OF P.R., INC.
d/b/a HOSPITAL SAN CRISTÓBAL,
Petitioner, Cross-Respondent,
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent, Cross-Petitioner.
PETITIONS FOR REVIEW OF A DECISION AND ORDER
OF THE NATIONAL LABOR RELATIONS BOARD
Before
Torruella, Thompson, and Kayatta,
Circuit Judges.
José L. Nieto-Mingo, with whom Nieto Law Offices, José R.
González-Nogueras, Lloyd Isgut-Rivera, and Jiménez, Graffam &
Lausell were on brief, for petitioner/cross-respondent.
Barbara A. Sheehy, Attorney, National Labor Relations Board,
with whom Elizabeth Heaney, Supervisory Attorney, Richard F.
Griffin, Jr., General Counsel, Jennifer Abruzzo, Deputy General
Counsel, John H. Ferguson, Associate General Counsel, and Linda
Dreeben, Deputy Associate General Counsel, were on brief, for
respondent/cross-petitioner.
October 16, 2017
TORRUELLA, Circuit Judge. Quality Health Services of
Puerto Rico, Inc., d/b/a Hospital San Cristóbal (the "Hospital"),
petitions for review of an order of the National Labor Relations
Board ("NLRB" or the "Board") declaring that the Hospital had
committed several unfair labor practices, in violation of section
8 of the National Labor Relations Act ("NLRA" or the "Act"),
29 U.S.C. § 158. The Board cross-applies for enforcement of that
order. After careful consideration, we deny the Hospital's
petition for review and grant the Board's cross-petition for
enforcement.
I. Background
A. The Hospital Considers Cost-Cutting Measures
During the relevant time period, Unidad Laboral de
Enfermeras(os) y Empleados de la Salud (the "Union") was the
exclusive collective-bargaining representative for most of the
Hospital's approximately three-hundred employees, including the
Hospital's respiratory therapy technicians. By 2009, the Hospital
was experiencing a decrease in its number of patients, which led
it to consider and implement cost-cutting measures. Between 2009
and 2010, the Hospital, without notifying or bargaining with the
Union, implemented a number of changes to cut operating costs.
These changes ultimately led to two Board decisions finding that
the Hospital had engaged in unfair labor practices. See Hosp. San
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Cristóbal, 358 N.L.R.B. 547 (2012); Hosp. San Cristóbal, 356
N.L.R.B. 699 (2011). The collective bargaining agreement ("CBA")
between the Hospital and the Union (together, the "Parties")
expired on February 28, 2010, during which time the Parties were
amid negotiating a successor CBA. In January 2011, continuing its
cost-cutting plan, the Hospital considered subcontracting the
services of its employees in the Respiratory Therapy Department
("Department"). On March 15, 2011, Hospital Executive Director
Pedro Benetti notified the Union by letter that the Hospital
intended to subcontract the Department, and offered the Union an
opportunity to "negotiate the impact of [the] decision." Between
March 24, 2011, and April 12, 2011, the Hospital and the Union met
on several occasions to engage in bargaining around that issue.1
B. The Parties Bargain
On March 28, 2011, while negotiations were ongoing, the
Hospital subcontracted with the private company Respiratory
Therapy Management ("RTM") to provide non-unit respiratory therapy
technicians on an as-needed basis to cover absences by the
hospital's unit employees. Under the expired CBA, the Hospital
was permitted to hire "temporary employees" for emergencies,
1 The Parties dispute whether the subject of these discussions
was just the effects of the Hospital's decision to subcontract the
Department, or both the effects and the decision itself.
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"absence due to illness, vacation or any other similar motive."
Nonetheless, according to the Hospital's Human Resources Director,
Candie Rodríguez ("Rodríguez"), RTM's as-needed employees did not
count as temporary employees. On March 30, 2011, Union
representatives Ariel Echevarría ("Echevarría") and Evelyn Santa
met with Rodríguez to discuss a grievance. After the meeting,
Rodríguez circulated a memorandum directing employees to stop
discussing the possible subcontracting of other departments. By
early April 2011, the number of full-time union respiratory therapy
technicians had dropped from eleven to eight, after three
technicians resigned.
On April 12, 2011, the Parties engaged in a bargaining
session during which the Hospital acknowledged, on advice of
counsel, that it should negotiate with the Union both the decision
to subcontract the Department and the decision's effects. The
Hospital then offered the Union an opportunity to present
alternatives to subcontracting, and postponed the proposed
subcontracting on approximately six different occasions.2
2 The Hospital asserts that the Union "engaged in dilatory tactics
to avoid bargaining and unduly delay any decision the Hospital had
to take." The Union disputes this and asserts, instead, that the
Hospital did not provide it with the necessary financial
information and projected savings from subcontracting that would
have allowed the Union to present alternatives until July 5, 2011.
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C. The Parties Discuss a Food Stipend-Cutting Alternative
On May 27, 2011, Echevarría and Rodríguez met informally
to discuss possible alternatives to subcontracting, including
reducing the Hospital's payment in monthly food stipends to unit
employees. On June 17, the Hospital proposed reducing that
monthly stipend from $55 to $15 per employee, which would have
resulted in monthly savings of $7,400 per month, or eliminating
the food stipend completely, which would have saved $10,175 per
month. In comparison, if the Hospital completely subcontracted
the work then performed by the Department's unit employees, the
projected monthly savings would have been $7,243. Rodríguez noted
that if the Union agreed to any one of the proposals, the eight
regular employees would retain their positions, but the Hospital
would still continue to use RTM employees as needed, and would not
assign unit employees to permanent shifts.
The Parties held bargaining sessions on June 28 and
July 5 to discuss adjusted savings projections in light of the
Department's reduction to eight employees. These new projections
showed monthly savings of $4,998 ($59,976 annually) if the work
was subcontracted.
D. The Parties Do Not Agree and The Hospital Implements the
Subcontracting Plan
At the next bargaining meeting on July 8, 2011, the Union
presented a proposal addressing the proposed alternative involving
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reducing food stipends. The Union proposed reducing the stipend
to $30, which brought the Parties within $373 of each other in
terms of monthly cost savings for the Hospital. Union's proposal
also included other conditions.3 Later that day, the Hospital
rejected the proposal because the Union's conditions -- including
filling vacancies with regular employees, granting the permanent
shift of 7:00 AM to 3:00 PM to the two most senior unit employees,
and limiting the food stipend reduction to one year -- would not
result in the savings the Hospital desired. After this meeting,
the Hospital determined that the Parties had reached an impasse,
and thus implemented its decision to subcontract the Department.
Later that same day, at approximately 2:30 PM, Rodríguez
began notifying the Department's eight unit employees of their
termination. Additionally, the Hospital called in the
Department's off-duty employees, and terminated them upon arrival.
The Hospital provided each terminated employee with a termination
letter, stating that the employee was immediately relieved from
3 The Union proposed the following conditions: (1) future
vacancies in the Department should be filled with regular
employees; (2) the food stipend reduction should be limited to a
duration of one year; (3) the Parties should meet every trimester
to evaluate whether the Hospital was reaching its projected
savings; (4) the two senior unit employees in the Department should
be granted permanent shifts from 7:00 AM to 3:00 PM; and (5) if
the Hospital reached its projected savings, the food stipends would
return to the original fifty-five dollar amount.
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occupational duties, but would receive payment through July 13,
2011. RTM staff covered the terminated employees' shifts.
E. The Parties Continue Negotiations But Fail to Reach an
Agreement
Still later on July 8, 2011, Union President Ana Meléndez
told Rodríguez that the Union was available to continue
negotiations until a "satisfactory agreement" could be reached.
The Parties met later that night, but could not agree on a stipend
amount or whether the two most senior unit employees could be
granted permanent shift assignments. The Hospital required that
the monthly food stipend be reduced to $25 per employee, which
would have resulted in savings exceeding those of subcontracting.
The Union stated it would agree to reduce the food stipend to $25
if, in exchange, the Hospital granted the Union's two most senior
employees a permanent shift. The Hospital refused to grant those
permanent shifts, and around 8:00 PM, the meeting ended without an
agreement.
On July 11, 2011, the Hospital sent a letter to the Union
describing the Parties' positions and stating "nothing else is
pending to address regarding the [subcontracting] issue." The
Union responded the same day, stating that the Union did not close
negotiations and wanted to continue negotiating. On July 18, the
Union again wrote to the Hospital asking that it engage in further
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dialogue. The Board claims the Hospital did not respond to the
Union's letters.
F. NLRB Adjudication
The Union filed charges against the Hospital with the
NLRB on April 12, 2011, and June 29, 2011, alleging that the
Hospital had engaged in unfair labor practices as part of its cost-
saving efforts.4 On August 31, 2011, the Acting General Counsel
of the NLRB, Lafe Solomon, issued a consolidated complaint
involving both cases, which was later amended on October 20 and
November 17, 2011. The complaint alleged that the Hospital
violated sections 8(a)(1) and 8(a)(5) of the NLRA by unilaterally
subcontracting work performed by respiratory therapy technicians,
prohibiting employees from discussing the Hospital's
subcontracting of the Department, limiting its past practice for
scheduling vacation of Department employees, and terminating
respiratory therapy technicians.
The Administrative Law Judge ("ALJ") Geoffrey Carter
heard the case in November and December of 2011. After a five-
day hearing, the ALJ concluded that the Hospital refused to bargain
with the Union, unilaterally terminated unit employees, and
subcontracted respiratory therapy technician work without
4 On August 19, 2011, the Union amended these charges.
-8-
affording the Union an opportunity to bargain the decision and its
effects. Hosp. San Cristóbal, 358 N.L.R.B. 769, 781 (2012). In
his decision, issued on February 2, 2012, the ALJ found that the
Hospital violated section 8(a)(1) of the NLRA by implementing a
rule that prohibited employees from discussing the Hospital's
subcontracting plans for respiratory therapy technicians, and
violated section 8(a)(1) and 8(a)(5) by unilaterally
subcontracting the Department's work and terminating all
respiratory therapy technicians in favor of workers from RTM. Id.
The Hospital filed various exceptions to the ALJ's findings. On
April 28, 2016, the Board, consisting of Chairman Pearce and
Members Hirozawa and McFerran, affirmed the ALJ's rulings, and
adopted the ALJ's recommended Order with some modifications. 5
Hosp. San Cristóbal, 2016 N.L.R.B. LEXIS 308 (2016). The Board
issued a Decision and Order agreeing with the ALJ's rulings,
findings, and conclusions. Id. That Order required the Hospital
5 Back on July 25, 2012, the Board, consisting of Members Hayes,
Griffin, and Block, had adopted the ALJ's decision. Hosp. San
Cristóbal, 358 N.L.R.B. 769 (2012). The Hospital filed a Petition
to Review before this Court, and the Board sought enforcement. On
January 30, 2015, in light of NLRB v. Noel Canning, 134 S. Ct.
2550 (2014) -- where the Supreme Court held that three recess
appointments to the Board from January 2012 were invalid, including
the appointment of Members Griffin and Block -- the Board requested
that this Court vacate the Board's July 25, 2012 Order and remand
the case to the Board. Hosp. San Cristóbal, 2016 N.L.R.B. LEXIS
308 (2016). Subsequently, the Board reviewed the ALJ's
determination de novo. Id.
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to: (1) cease and desist from all unfair labor practices
"interfering with, restraining, or coercing employees in the
exercise of" their statutory rights; (2) bargain with the Union;
(3) cease subcontracting the respiratory therapy technicians'
work; (4) make the impacted respiratory therapy technicians whole
and offer reinstatement to the terminated technicians; (5) post a
remedial notice; and (6) rescind the prohibition on discussing the
subcontracting decision, the decision to subcontract unit work to
as-needed employees, and the terminations. The Hospital timely
challenged this April 28, 2016 Decision and Order. The Board
subsequently submitted a cross-application for enforcement of its
Order.
II. Discussion
A. Jurisdiction to Consider the Validity of the Complaints
The Hospital challenges for the first time the validity
of the underlying unfair labor practice complaints. The Hospital
argues that because Acting General Counsel Solomon was serving in
violation of the Federal Vacancies Reform Act ("FVRA"), 5 U.S.C.
§ 3345 et seq., at the time he issued the complaints against the
Hospital, the complaints were voidable. The Hospital further
argues that because the incoming General Counsel did not ratify
the complaints, they must be set aside.
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In so contending, the Hospital relies mostly on
SW Gen., Inc. v. NLRB, in which the D.C. Circuit held that the
NLRB's Acting General Counsel Solomon was serving in violation of
the FVRA when he issued the complaint against SW General, and
therefore vacated the Board's order against SW General. 796 F.3d
67, 72 (D.C. Cir. 2015). The Supreme Court recently affirmed that
decision, concluding that after January 5, 2011, when President
Obama nominated Solomon to serve as General Counsel, the FVRA
prohibited Solomon from continuing to serve as Acting General
Counsel.6 NLRB v. SW Gen., Inc., 137 S. Ct. 929, 943-44 (2017).
According to the Hospital, because Acting General Counsel Solomon
issued the complaints against it after January 5, 2011, when the
FVRA prohibited him from continuing his acting service, those
complaints are invalid.
Unlike in SW General, however, the Hospital did not raise
this argument before the Board. See 796 F.3d at 82. The Hospital
6 5 U.S.C. § 3345(b) prohibits a person from serving as acting
officer once the President submits a nomination of such person to
the Senate for appointment to such office, unless: (1) the person
has served in that same office as first assistant for at least
ninety (90) days "during the 365-day period preceding the date of
the death, resignation, or beginning of inability to serve" of the
officer of the Executive agency, or (2) the Senate confirmed such
person as a first assistant of that office. 5 U.S.C. § 3345(b);
SW Gen., Inc., 796 F.3d at 72-73. Prior to his appointment as
NLRB's Acting General Counsel, Solomon had never served as first
assistant at the NLRB, or any other agency.
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acknowledges the general rule that arguments "not raised in the
lower courts [or administrative agencies] cannot be brought for
the first time on appeal[]" and concedes that it did not raise
this issue before the Board. Nonetheless, it urges us to relieve
it of its forfeiture, arguing that this case involves
"extraordinary circumstances."
We have jurisdiction to review the Board's final Order,
and the application for enforcement, pursuant to 29 U.S.C. § 160(e)
and (f). Our jurisdiction over particular issues, however, is
limited by section 10(e) of the NLRA, which establishes an
exhaustion requirement by providing that "[n]o objection that has
not been urged before the Board, its member, agent, or agency,
shall be considered by the court, unless the failure or neglect to
urge such objection shall be excused because of extraordinary
circumstances." 29 U.S.C. § 160(e); see Woelke & Romero Framing,
Inc. v. NLRB, 456 U.S. 645, 666 (1982) (holding that "the Court of
Appeals lacks jurisdiction to review objections that were not urged
before the Board"). Thus, we have jurisdiction to consider an
argument made for the first time before us only if the statutory
"extraordinary circumstances" exception is met. See Detroit
Edison Co. v. NLRB, 440 U.S. 301, 311 n.10 (1979) (stating that
"unless a party's neglect to press an exception before the Board
is excused by the statutory 'extraordinary circumstances'
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exception or unless the Board determination at issue is patently
in excess of its authority, we are bound by it"); see also Pegasus
Broad. of San Juan, Inc. v. NLRB, 82 F.3d 511, 514 (1st Cir. 1996)
("[W]e lack the same broad right or supervisory power over the
Board that we might have over a district court on new matter.").
We are not persuaded that this case presents extraordinary
circumstances that warrant relieving the Hospital of its
forfeiture.
The Hospital argues that the "extraordinary
circumstance" is met here because the validity of the complaints
issued by Acting General Counsel Solomon involves a "purely legal
issue" and that "this was a straightforward case of statutory
interpretation." But the Hospital does not cite any authority
establishing that raising a "purely legal issue" constitutes an
extraordinary circumstance. And, if we accepted this ground as
an extraordinary circumstance, little would be left of the
statutory forfeiture rule. Furthermore, if, as the Hospital
asserts, "this was a straightforward case of statutory
interpretation," we find it even harder to understand why it never
raised this issue before the Board and why its apparent ignorance
about the FVRA provisions amounts to an extraordinary
circumstance.
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The Hospital also urges us to find that this case
presents extraordinary circumstances because, at the time the
Board cross-applied for enforcement of the NLRB Order, "the Board
knew or should've known of the problems that would arise from
Solomon's actions" after his nomination in January 2011. But that
argument cuts both ways. We are hard-pressed to find that this
amounts to an extraordinary circumstance when all of the facts and
legal arguments necessary to raise this issue were also available
to the Hospital before the Board, and when this same matter was so
prominently litigated in other courts. As it turns out, by the
time this case was before the Board, both the D.C. Circuit and the
Ninth Circuit had issued opinions addressing the validity of
complaints issued by Acting General Counsel Solomon after he was
nominated to fill the position of General Counsel. See Hooks v.
Kitsap Tenant Support Servs. Inc., 816 F.3d 550 (9th Cir. 2016);
SW Gen., Inc., 796 F.3d 67. Thus, the Hospital was also in a
position to raise the argument before the Board. And, although
it is true that the Board must have known by that time that there
were problems with Solomon's actions while he was serving as Acting
General Counsel after January 5, 2011, the Board also disagreed
with the D.C. Circuit's ruling in SW General and was actively
contesting it before the Supreme Court. See Ford Motor Co. v.
NLRB, 441 U.S. 488, 493 (1979) (noting that the Board had adhered
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to its legal position despite the fact that said position had "not
been accepted by reviewing courts"). Furthermore, if an attempt
to salvage a barred claim by relying "on arguments raised in a
dissent or on a discussion of the relevant issues by the majority"
has been found insufficient to overcome the section 10(e) bar,
see, e.g., HTH Corp. v. NLRB, 823 F.3d 668, 673 (D.C. Cir. 2016),
it certainly should not suffice in a case such as this one where
the issue was nowhere raised by anyone.
Finally, the Hospital argues that this case meets the
"extraordinary circumstances" exception because this is an issue
of great importance that involves the "type of over-reaching for
authority by the Board . . . that the Supreme Court struck down in
Noel Canning v. NLRB, 134 S. Ct. 2550 (2014)." We are unpersuaded.
We have previously rejected the argument that merely raising a
potentially important issue satisfies the extraordinary
circumstance requirement. See Edward St. Daycare Ctr., Inc. v.
NLRB, 189 F.3d 40, 44 (1st Cir. 1999) ("[The petitioner] raise[d]
a potentially important issue which was never presented to the
Board during the unfair labor practice proceedings. This omission
is fatal to the consideration of this issue here."). Furthermore,
we find Noel Canning distinguishable. In Noel Canning the D.C.
Circuit found an order of the NLRB to be void ab initio for lack
of quorum because the President had appointed three of the five
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Board members under the Recess Appointments Clause while he lacked
authority to do so, meaning that the Board could not exercise its
power. Noel Canning v. NLRB, 705 F.3d 490, 493, 497-98, 513-14
(D.C. Cir. 2013) (citing New Process Steel, L.P. v. NLRB,
130 S. Ct. 2635 (2010)), aff'd, 134 S. Ct. 2550 (2014). These
amounted to extraordinary circumstances that allowed the
petitioner to challenge the validity of the NLRB order
notwithstanding section 10(e)'s exhaustion requirement. Id. at
497; see also NLRB v. Cheney Cal. Lumber Co., 327 U.S. 385, 388
(1946) ("[I]f the Board has patently traveled outside the orbit of
its authority" then "there is legally speaking no order to
enforce."). Here, however, the Hospital does not challenge the
Board's authority to act, but rather challenges the service of a
single officer. See Marquez Bros. Enters., Inc. v. NLRB, 650 F.
App'x 25, 27 (D.C. Cir. 2016) (declining to consider the
petitioner's argument that Acting General Counsel Solomon's
service violated the FVRA inasmuch as the petitioner had not
presented the issue to the Board, and drawing a distinction between
a challenge "based on the agency's lack of authority to take any
action at all" and "attack[ing] the service of a single officer").
Furthermore, the Hospital concedes that, unlike the complaint in
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Noel Canning, the complaints at issue here were not void ab initio,
but rather simply voidable.7
Because the Hospital failed to raise the issue before
the Board, and has not shown any extraordinary circumstances
excusing its forfeiture, we lack jurisdiction to consider its claim
regarding the validity of the complaints issued by Acting General
Counsel Solomon. Our decision is consistent with SW General, on
which the Hospital heavily relies, in which the D.C. Circuit
"emphasize[d] the narrowness of [its] decision," clarified that
the case was "not Son of Noel Canning," and that it did not expect
its decision to "undermine a host of NLRB decisions." SW Gen.,
Inc., 796 F.3d at 82-83. The D.C. Circuit explained that it had
"address[ed] the FVRA objection in [that] case because the
petitioner [had] raised the issue in its exceptions to the ALJ
decision as a defense to an ongoing enforcement proceeding," id.
at 83, and expressed "doubt that an employer that failed to timely
raise an FVRA objection -- regardless [of] whether [the]
7 Although we find it unnecessary to decide whether the complaints
were void or voidable, we accept the Hospital's concession and
note that, while section 3348(d) of the FVRA states that "[a]n
action taken by any person who is not acting [in compliance with
the FVRA] . . . shall have no force or effect" and "may not be
ratified", thus rendering any action taken in violation of the
statute void ab initio, the NLRB's General Counsel is exempted
from the provisions of section 3348. See 5 U.S.C. § 3348(d)(1)-
(2) and (e)(1).
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enforcement proceedings are ongoing or concluded -- will enjoy the
same success." Id. In conformity with its suggestion in
SW General, in Marquez Bros. Enters., Inc., the D.C. Circuit
declined to consider the petitioner's similar argument inasmuch as
the petitioner had not raised it before the Board. 650 F. App'x
at 27. Moreover, other circuits have similarly refused to allow
petitioners to challenge the validity of actions taken by Acting
General Counsel Solomon when those petitioners failed to challenge
them first before the Board. See NLRB v. Pier Sixty, LLC, 855 F.3d
115, 121 (2d Cir. 2017) (holding that "even an apparently
meritorious challenge to the authority of an NLRB agent in itself
does not qualify as an 'exceptional circumstance' allowing the
party to raise the argument for the first time before our Court");
1621 Route 22 West Operating Co., LLC v. NLRB, 825 F.3d 128, 142
(3d Cir. 2016) (refusing to consider the petitioner's challenge to
the validity of a complaint issued by Acting General Counsel
Solomon after January 5, 2011, because the petitioner failed to
make that objection before the Board, and refusing to look to "some
non-statutory ground" beyond the extraordinary circumstances
exception to section 10(e) for purposes of excusing petitioner's
failure to exhaust); see also Hooks, 816 F.3d at 564 (noting that
"not . . . every violation of the FVRA will result in the
invalidation of the challenged agency action").
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Accordingly, pursuant to the section 10(e) exhaustion
bar, we lack jurisdiction to consider the Hospital's challenge, on
the basis of the FVRA, to the Board's Order. We now proceed to
consider the objections that the Hospital did make before the
Board.
B. The Hospital's NLRA Violations
This Court defers to the Board's interpretation of the
Act, "as long as its interpretation is rational and consistent
with the statute." Ryan Iron Works, Inc. v. NLRB, 257 F.3d 1, 6
(1st Cir. 2011) (quoting NLRB v. Beverly Enters.-Mass., Inc.,
174 F.3d 13, 25 (1st Cir. 1999)). "A Board order must be enforced
if the Board correctly applied the law and if its factual findings
are supported by substantial evidence on the record." NLRB v.
Ne. Land Servs., Ltd., 645 F.3d 475, 478 (1st Cir. 2011).
Substantial evidence, in turn, means "relevant evidence" that a
"reasonable mind might accept as adequate to support a conclusion."
NLRB v. Int'l Bhd. of Teamsters, Local 251, 691 F.3d 49, 55
(1st Cir. 2012) (internal quotations omitted). When this Court
must decide "between two fairly conflicting views," this Court
will not substitute its judgment for the Board's, even if it "would
justifiably have made a different choice had the matter been before
it de novo." Universal Camera Corp. v. NLRB, 340 U.S. 474, 488
(1951). Specifically, due to the ALJs' proximity to witnesses,
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their credibility determinations "are entitled to great weight."
NLRB v. Hosp. San Pablo, Inc., 207 F.3d 67, 70 (1st Cir. 2000).
It is an unfair labor practice for an employer "to refuse
to bargain collectively with the representatives of his
employees." 29 U.S.C. § 158(a)(5). The duty to bargain
collectively is "the mutual obligation of the employer and the
representative of the employees to meet at reasonable times and
confer in good faith with respect to wages, hours, and other terms
and conditions of employment." 29 U.S.C. § 158(d). "An employer
violates this duty when he changes a mandatory term or condition
of employment without giving the employee's representative
adequate notice and an opportunity to bargain." Pan Am. Grain Co.
v. NLRB, 558 F.3d 22, 26 (1st Cir. 2009). "[A]n employer has a
duty to bargain to impasse with its employees over the terms and
conditions of employment before making a unilateral change in
conditions." Sociedad Española de Auxilio Mutuo y Beneficiencia
de P.R. v. NLRB, 414 F.3d 158, 165 (1st Cir. 2005) (citing Litton
Fin. Printing Div. v. NLRB, 501 U.S. 190, 198 (1991)).
Furthermore, an employer is subject to the duty to
bargain if its decision to subcontract work consists of
"replac[ing] existing employees with those of an independent
contractor to do the same work under similar conditions of
employment." Fibreboard Paper Prods. Corp. v. NLRB, 379 U.S. 203,
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213 (1964). This requirement encompasses, as a general rule, "an
employer's decision to subcontract work that could be performed by
members of the bargaining unit." Sociedad Española de Auxilio
Mutuo y Beneficiencia de P.R., 414 F.3d at 165 (citing Fibreboard
Paper, 379 U.S. at 209-17). "Failure to bargain over subcontracting
in such circumstances violates sections 8(a)(1) and 8(a)(5) of the
Act."8 Id.
Here, the Board affirmed the ALJ's determination that
the Hospital violated sections 8(a)(1) and 8(a)(5) of the Act in
both deciding to hire subcontractors and firing the Hospital's
respiratory therapy technicians without first bargaining with the
Union. Hosp. San Cristóbal, 358 N.L.R.B. at 779 & n.27. Because
substantial evidence in the record supports the Board's
determinations on both fronts, we affirm the Board's finding that
the Hospital engaged in unfair labor practices.
1. The Hospital's Decision to Subcontract the Department
First, substantial evidence supports the Board's
determination that the Hospital did not provide the Union adequate
8 Section 8(a) of the Act establishes that "[i]t shall be an
unfair labor practice for an employer -- (1) to interfere with,
restrain, or coerce employees in the exercise of the rights
guaranteed in [29 U.S.C. § 157]" and "(5) to refuse to bargain
collectively with the representatives of his employees, subject to
the provisions of [29 U.S.C. § 159(a)]." 29 U.S.C. § 158(a)(1),
(5).
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notice and opportunity to bargain regarding the Hospital's
decision to subcontract. The Hospital informed the Union of its
decision on March 15, 2011. On March 24, 2011, the Hospital first
invited the Union to discuss the decision, but only with regard to
the decision's impact. Shortly thereafter, on April 7, 2011, the
Hospital signed a contract with RTM to provide per diem respiratory
therapy technicians to the Hospital. The Hospital argues that it
was not required to bargain with the Union regarding this decision
because it had an established practice of using professional
services to hire per diem employees to cover vacant shifts or to
substitute for absent employees.
We have recognized an exception to the duty to bargain
for the subcontracting of union work, whereby an employer may
"benefit from [a] safe harbor for an established past practice of
subcontracting" by establishing "that it subcontracted [the] work
on a consistent basis prior to [the election of the Union]."
Sociedad Española de Auxilio Mutuo y Beneficiencia de P.R.,
414 F.3d at 166 (citing NLRB v. Westinghouse Broad. & Cable, Inc.,
849 F.2d 15, 20-22 (1st Cir. 1988)); Westinghouse Elec. Corp.,
150 N.L.R.B. 1574, 1577 (1965) (finding that an employer did not
need to provide an opportunity to bargain with the union regarding
its decision to subcontract union work because, among other
reasons, that decision was consistent with the employer's
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traditional business operations and established practices, and it
did not have a demonstrable impact on union employees).
Here, the Board concluded that the Hospital had failed
to show that it had consistently previously relied on
subcontracting and thus was not exempt from the duty to bargain.
Hosp. San Cristóbal, 358 N.L.R.B. at 779 n.27. The Hospital argued
that its decision to subcontract employees was both consistent
with past practices and with the expired CBA between the Hospital
and the Union. That CBA had allowed for temporary employees to
"substitute a regular employee in case of absence due to illness,
vacation or any similar motive." However, the testimony of
Rodríguez, the Hospital's Human Resources Director, undermined
both of these contentions. During her testimony, Rodríguez
admitted that the Hospital only hired per diem employees
intermittently, and conceded that the new per diem subcontractors
were not considered temporary employees. Intermittent use of per
diem subcontracted employees is insufficient to establish past
practices for purposes of avoiding the duty to engage in collective
bargaining. See Sociedad Española de Auxilio Mutuo y Beneficiencia
de P.R., 414 F.3d at 166 (affirming the Board's conclusion that
the sporadic use of per diem employees for employee shortages was
not equivalent to a past practice of subcontracting that would
have allowed the defendant hospital to act unilaterally in hiring
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subcontractors). Furthermore, given Rodríguez's concession that
the new employees were not considered temporary employees, the
Hospital cannot rely on those provisions in the CBA to argue that
this new development was consistent with Union-negotiated past
practices. Therefore, substantial evidence supports the Board's
determination that the Hospital was not entitled to the past
practice exemption, and therefore that its unilateral decision to
hire subcontractors to perform union work violated sections
8(a)(1) and 8(a)(5).
2. The Hospital's Decision to Terminate the Respiratory
Therapy Technicians
Second, there is substantial evidence that the Hospital
did not bargain to an impasse with the Union regarding its decision
to terminate the union employees and subcontract their work to the
new per diem employees. Sections 8(a)(1) and 8(a)(5) prohibit an
employer from implementing "a unilateral change of an existing
term or condition of employment" without first bargaining to an
impasse. Litton Fin. Printing Div., 501 U.S. at 198 (citing NLRB
v. Katz, 369 U.S. 736, 743 (1962)); see also Beverly Enters.-
Mass., Inc., 174 F.3d at 25 (finding failure to bargain to impasse
prior to unilateral change constitutes an unfair labor practice
under the Act). A good-faith impasse occurs when "the parties are
deadlocked so that any further bargaining would be futile," and
"no realistic prospect" exists that continued bargaining would be
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"fruitful." Beverly Enters.-Mass., Inc., 174 F.3d at 27 (quoting
Teamsters Local Union No. 639 v. NLRB, 924 F.2d 1078, 1083
(D.C. Cir. 1991)). The party asserting the existence of an
impasse has the burden of proving that the impasse existed when it
implemented the unilateral change in question. Ryan Iron Works,
Inc., 257 F.3d at 12.
Determining whether an impasse exists is "an intensely
fact-driven question." Visiting Nurse Servs. of W. Mass., Inc.
v. NLRB, 177 F.3d 52, 58 (1st Cir. 1999). The Board may consider
factors such as "the bargaining history, the good faith of the
parties in negotiations, the length of the negotiations, the
importance of the issue or issues as to which there is
disagreement, [and] the contemporaneous understanding of the
parties as to the state of negotiations." Ryan Iron Works, 257
F.3d at 12 (quoting NLRB v. Charles D. Bonanno Linen Serv., Inc.,
630 F.2d 25, 35 n.24 (1st Cir. 1980)). Crucially, an impasse does
not exist where either party is willing to continue negotiating
towards an agreement. Teamsters Local Union No. 639, 924 F.2d at
1084 ("[T]he parties' perception regarding the progress of the
negotiations is of central importance to the Board's impasse
inquiry."); PRC Recording Co., 280 N.L.R.B. 615, 635 (1986),
enforced, 836 F.2d 289 (7th Cir. 1987) (asserting that an impasse
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does not exist unless "[b]oth parties . . . believe that they are
at the end of their rope").
Here, the Hospital and Union continued to negotiate
after the Hospital issued termination letters to the respiratory
therapy technicians in the Union. This supports the Board's view
that the Parties were not, in fact, at an impasse. While the
Hospital did allow the Union an opportunity to discuss the further
subcontracting of union work and those discussions did not bear
fruit, there is substantial evidence that the Parties did not
bargain to impasse before the Hospital terminated the respiratory
therapy technicians.
From April 14, 2011, to July 8, 2011, the Hospital and
the Union discussed allowing the Union to suggest alternative cost-
saving measures other than subcontracting. Then, on July 8, 2011,
the Hospital dismissed all of the respiratory therapy technicians
in order to subcontract all union work to RTM. However, later
that same evening, negotiations resumed at a meeting between the
Hospital and the Union, described by Rodríguez as "one last attempt
to reach an agreement." As Teamsters Local Union No. 639 suggests,
there is no impasse if either party is still willing to negotiate.
924 F.2d at 1084. Moreover, the Parties could not have been at
an impasse if the Hospital was willing to further discuss the issue
with the Union, for why would negotiations continue that evening
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if "further bargaining would be futile[?]" Beverly Enters.-Mass.,
Inc., 174 F.3d at 27. Thus, the Hospital's continued attempts to
negotiate with the Union belie its contention that the Parties
were at an impasse when it decided to dismiss the union employees.
There are, however, two exceptions to the requirement
that an employer bargain with a union to impasse. RBE Elecs. of
S.D., Inc., 320 N.L.R.B. 80, 81 (1995). An employer can act
unilaterally if the Union engages in delaying tactics or because
of economic exigencies. Id. The Hospital attempts to show that
both of these exceptions applied and, thus, that it did not violate
the Act. We are unpersuaded.
First, the Hospital argues that the Union used delaying
tactics to draw out negotiations. These allegations are
unfounded. There is no evidence in the record that the Union
unduly delayed negotiations. On the contrary, the Union responded
with a counterproposal to subcontracting within a mere three days
after the Hospital proffered accurate savings information
reflecting the correct number of employees. Further, the Union
reacted to the Hospital's implementation of its subcontracting
decision with specific requests for continued negotiations that
included concessions, demonstrating a flexibility and desire to
continue to negotiate and make progress towards a resolution.
Thus, the Union engaged in good-faith negotiations and the Hospital
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was not relieved of its duty to negotiate. See Katz, 369 U.S. at
742-43.
Second, we find substantial evidence in the record
supporting the Board's finding that the Hospital's conduct was not
justified by any economic exigency. Hosp. San Cristóbal, 358
N.L.R.B. at 781 n.28. Economic exigencies only justify unilateral
action absent an impasse when "extraordinary events which are 'an
unforeseen occurrence, [have] a major economic effect [requiring]
the company to take immediate action.'" RBE Elecs. of S.D., Inc.,
320 N.L.R.B. at 81 (second alteration in the original) (quoting
Hankins Lumber Co., 316 N.L.R.B. 837, 838 (1995)). The record
clearly demonstrates that the Hospital had known of its revenue
decline since 2009, making the need for cost savings, including
the possibility of subcontracting, foreseeable. The Hospital's
decision to subcontract two years later in 2011 was therefore not
in response to any immediate exigency. Absent an unforeseeable
emergency requiring immediate action, the Hospital's unilateral
implementation of subcontracting the Department and firing the
respiratory therapy technicians was not excused or justified.
Without showing that the bargaining was at an impasse,
that the Union did not engage in good-faith negotiations, or that
the Hospital was facing an economic emergency, the Hospital has
failed to show any reason to undermine the conclusion of the Board
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that the Hospital violated sections 8(a)(1) and 8(a)(5) of the Act
by terminating the respiratory therapy technicians on July 8, 2011.
C. The Hospital's Challenge to the Board's Remedy Is Not Properly
Before the Court.
Finally, the Hospital asks us to vacate the Board's Order
awarding reinstatement and back pay to the union employees
terminated in violation of the Act, alleging that enforcement of
the Order would require an investment that the Hospital cannot
afford at this time due to its delicate financial situation. The
Hospital, however, failed to raise this issue before the Board.
Further, the Hospital did not allege, much less prove, that its
failure to preserve its challenge to the remedy was due to
extraordinary circumstances. Accordingly, under section 10(e) of
the NLRA, we are precluded from reviewing this claim. See 29
U.S.C. § 160(e); Woelke & Romero Framing, Inc., 456 U.S. at 665.
III. Conclusion
For the foregoing, we deny the Hospital's petition for
review and we grant the Board's cross-petition for enforcement.
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