NLRB v. 800 River Road Operating Co LL ( 2019 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________
Nos. 18-2336, 18-2426
________________
800 RIVER ROAD OPERATING CO. LLC, dba Woodcrest Health Care Center,
Cross-Petitioner/Respondent
v.
NATIONAL LABOR RELATIONS BOARD,
Cross-Petitioner/Respondent,
________________
On Application for Enforcement and Cross-Petition for Review of an Order of the
National Labor Relations Board
NLRB-1 : 22-CA-083628
________________
Argued April 3, 2019
Before: CHAGARES, HARDIMAN, and SILER, JR. *, Circuit Judges
(Filed: August 6, 2019)
________________
Stephen C. Mitchell [ARGUED]
Fisher & Phillips
1320 Main Street
Suite 750
Columbia, SC 29201
*
Hon. Eugene E. Siler, Jr., United States Court of Appeals for the Sixth Circuit,
sitting by designation.
Jared D. Cantor [ARGUED]
David Habenstreit
Kira D. Vol
National Labor Relations Board
1015 Half Street, S.E.
Washington, DC 20570
Counsel for National Labor Relations Board
Seth D. Kaufman
Fisher & Phillips
620 Eighth Avenue
36th Floor
New York, NY 10018
Stephen C. Mitchell, Esq. [ARGUED]
Fisher & Phillips
1320 Main Street
Suite 750
Columbia, SC 29201
Counsel for 800 River Road
Katherine H. Hansen [ARGUED]
William S. Massey
Gladstein Reif & Meginniss
817 Broadway
6th Floor
New York, NY 10003
Counsel for 1199 SEIU United Healthcare Workers East/Intervenor Respondent
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OPINION **
________________
SILER, Circuit Judge
For the second time, we are to decide whether the National Labor Relations Board
**
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
2
(“NLRB” or the “Board”) properly found 800 River Road Operating Co. LLC—known
here as “Woodcrest”—in violation of the Fair Labor Standards Act (“FLSA” or the
“Act”). The first time, we said no. But this time we say yes, and we will enforce the
Board’s order.
I.
About 200 employees at the Woodcrest rehabilitation and skilled nursing facility
in New Milford, New Jersey set a vote to unionize for March 9. But before the election,
Woodcrest made changes to the health plan. In a memorandum to employees, Woodcrest
introduced lower premiums and copays retroactive to the first of the year. But the
memorandum made it into the hands of only some employees. The 200 or so who
planned to vote in the upcoming election were not formally notified about the new plan.
Voting employees approved unionization. Woodcrest filed objections and sought
a new election. All the while, Woodcrest put the new and improved health plan into
place. But it did so only for the non-voting employees. With objections still pending,
Woodcrest declined to extend the benefits for voting employees.
The Union—the 1199 SEIU United Healthcare Workers East, New Jersey—filed
charges against Woodcrest with the NLRB’s regional director, alleging Woodcrest
committed unfair labor practices in violation of § 10(b) of the Act, 29 U.S.C. § 160(b). The
regional director issued a complaint claiming Woodcrest violated §§ 8(a)(1) and (a)(3) of
the Act. See 29 U.S.C. §§ 158(a)(1), (a)(3).
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An ALJ heard the case in 2013. Two months later, the ALJ determined Woodcrest’s
election process amounted to unfair labor practices in violation of the Act. After the parties
filed exceptions to the ALJ’s order, the Board affirmed (in relevant part), over a dissent.
A month later, Woodcrest petitioned for review of the Board’s decision under §
10(f) of the Act, 29 U.S.C. § 160(f), and the Board filed a cross-petition to enforce its
order. This court affirmed in part, vacated in part, and remanded the case to the
Board. 800 River Road Operating Co. LLC v. NLRB, 784 F.3d 902, 905 (3d Cir. 2015)
(“Woodcrest I”).
There, we held that the Board failed to properly analyze whether Woodcrest
violated the Act. Id. at 909. We explained that the Board had improperly found a
violation based on Woodcrest’s failure to meet the so-called “safe harbor,” under which
the Board allows an employer to postpone benefits if it makes clear to employees that the
“adjustment would occur whether or not they select a union, and that the sole purpose of
the adjustment’s postponement is to avoid the appearance of influencing the election[’s]
outcome.” Id. at 908. The Board erred because, while the safe harbor presents one way
for an employer to protect itself, an employer does not always need to meet the safe
harbor. Thus, the Board “treated the § 8(a)(3) (and § 8(a)(1)) inquiry as a ‘but for’ test—
i.e., asking only whether the employees would have received benefits but for the Union’s
presence—rather than considering the nature of the discrimination or the employer’s
purpose.” Id. at 910. That approach was “inconsistent with what the Board was required
to do, and the record was not developed regarding the issues that should have been
determinative.” Id. So we remanded to the Board to examine the claims under the proper
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burden-shifting test in NLRB v. Great Dane Trailers, Inc., 388 U.S. 26 (1967). Id. at
909-10.
On remand, the parties submitted new position statements to the Board in
November 2017, and Woodcrest argued that no record evidence suggested it acted with
discriminatory intent. The Union and Board General Counsel argued that under Great
Dane, Woodcrest still violated the Act.
In its Supplemental Order issued in 2018, the Board concluded that Woodcrest’s
“withholding of improved healthcare benefits from employees in the stipulated unit while
announcing an intent to grant those benefits to other employees was ‘discriminatory
conduct that could have adversely affected employee rights to some extent.’” Applying
Great Dane, the Board then shifted the burden to Woodcrest to show that its conduct was
motivated by a “substantial and legitimate business justification.” Ultimately, though, the
Board determined that Woodcrest “failed to establish or even assert such a justification.”
Thus, the Board concluded that it was “unnecessary to determine whether the record
contains independent evidence of improper motivation.” So, the Board found that
Woodcrest violated the Act.
Woodcrest now argues that the Board again failed to properly analyze this case.
In Woodcrest’s view, the Board erred in its application of Great Dane, and this court
should again remand to the Board or decline to enforce its order. Plus, Woodcrest says,
the Board failed to reopen the record to take additional evidence, as this court instructed
in Woodcrest I. The Board filed a petition for enforcement with this court, and
Woodcrest filed a cross-petition for review.
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II.
The Board receives broad deference since it has the “primary responsibility for
developing and applying national labor policy.” 800 River Road, 784 F.3d at 906 (quoting
NLRB v. Curtin Matheson Scientific, Inc., 494 U.S. 775, 786 (1990)). That does not mean
the Board can do anything—its interpretation of the Act must be “rational and
consistent.” Curtin Matheson, 494 U.S. at 787. But all that is required to enforce the
Board’s order is “substantial evidence” supporting the application of a rational rule. 800
River Road, 784 F.3d at 906 (quoting Fall River Dyeing & Finishing Corp. v. NLRB, 482
U.S. 27, 42 (1987)).
This is not an exacting review. Our inquiry is limited to whether a “reasonable
mind” could say that enough evidence supported the Board’s conclusion. Id. at 906-
07. And this “reasonable mind” standard does not require one outcome or the other—it
can support competing determinations. Id. Even if we think the Board got it wrong,
reasonable minds can disagree. And so long as a reasonable mind could decide that
substantial evidence supported the Board’s conclusion, we will enforce the Board’s order.
III.
An employer commits an “unfair labor practice” under § 8(a)(1) when it
“interfere[s] with, restrain[s] or coerce[s] employees in the exercise of the rights
guaranteed in section 157 of this title.” 29 U.S.C. § 158(a)(1). Under § 8(a)(3), an unfair
labor practice occurs when an employer discriminates “in regard to hire or tenure of
employment or any term or condition of employment to encourage or discourage
membership in any labor organization.” 29 U.S.C. § 158(a)(3). “[A] violation of §
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8(a)(3) normally turns on an employer’s antiunion purpose or motive.” 800 River Road,
784 F.3d at 908. When a claim involves targeted benefit withholdings, we analyze §
8(a)(1) and § 8(a)(3) claims under the same framework. NLRB v. Hudson Transit Lines,
Inc., 429 F.2d 1223, 1227 n.8 (3d Cir. 1970). In short, to establish a violation of § 8(a)(1)
or (a)(3) in targeted benefits withholding cases, the Board must find that the employer
had an improper motive in doing so. Great Dane, 388 U.S. at 34.
In benefit withholding cases, the Board first determines whether an employer
engaged in “discriminatory conduct which could have adversely affected employee rights
to some extent.” 800 River Road, 784 F.3d at 909 (quoting Great Dane, 388 U.S. at 34).
This includes two categories of behavior: (1) an employer’s conduct that is “inherently
destructive” of employee rights, and (2) an employer’s conduct that falls short of
“inherently destructive” and is “comparatively slight.” Id. (quoting Great Dane, 388 U.S.
at 34). In the first case, the employer’s rationale is less important because “the Board can
find an unfair labor practice even if the employer introduces evidence that his conduct was
motivated by business considerations.” Id. (quoting Hudson Transit, 429 F.3d at
1229). But in the second, the employer’s justification matters because if it can “establish
that [it] was motivated by legitimate objectives,” then the employee must come forward
with specific evidence that the employer wanted to discourage union membership. Id.
(quoting Hudson Transit, 429 F.3d at 1228). If the employer fails to justify its conduct,
the Board can find an unfair labor practice even “without reference to intent.” Id. (quoting
Hudson Transit, 429 F.3d at 1228). Only when the employer provides a substantial and
legitimate business explanation does the charging party or Board have to present “specific
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evidence of the employer's intent to discourage Union membership.” Id. at 910 (quoting
NLRB v. Brown, 380 U.S. 278, 287 (2000)).
On remand, the Board first made an explicit threshold finding that Woodcrest’s
actions were discriminatory and could have “adversely affected” employee rights. J.
App’x 32. So the Board shifted the burden to Woodcrest to “show that its conduct was
motivated by substantial and legitimate business objectives.” Id. (citing Great Dane, 388
U.S. at 34). Although Woodcrest claimed that it withheld benefits “to maintain the status
quo and avoid impacting the election or exposing itself to unfair labor practice charges,”
the Board found that Woodcrest “offered no evidence that this was its actual motive.” Id.Woodcrest, the Board concluded, did not put forward any testimony about the decision to
withhold; nor did it introduce any evidence of “how when, or why the decision was
made.” Id. Instead, the Board concluded that Woodcrest’s actions sent “an unmistakable
message” that employees “were being punished for their support of the Union” and
employees were chilled from “engag[ing] in organizational activity without jeopardizing
their eligibility for benefits.” Id. What is more, Woodcrest did not point to “any relevant
evidence that it would introduce if the record were reopened.” Id. n.8. Thus, the Board
found it unnecessary to reopen the record. Id. On the Board’s view, Woodcrest’s
“justification” amounted to only a “bald assertion” untethered to any evidence or
testimony—and that is not enough to meet its burden. Id. at 32-33.
Woodcrest argues that the Board erred because although it found Woodcrest’s
behavior to be discriminatory, it failed to specify whether Woodcrest’s conduct was
inherently destructive or comparatively slight. And, it argues, this court previously said
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the Board must make that threshold determination. Here, though, the Board found only
that Woodcrest’s conduct was “discriminatory conduct which could have adversely
affected employee rights to some extent.” J. App’x 32, 34 (quoting Great Dane, 388
U.S. at 34).
True, the Board did not say whether Woodcrest’s conduct was either (1) inherently
destructive, or (2) comparatively slight. But we note first that the Board made the
explicit finding that Woodcrest discriminated in ways that affected employees. Then, the
Board employed the burden-shifting approach outlined in Woodcrest I. J. App’x 32-33.
The Board concluded that Woodcrest failed to present substantial and legitimate business
justifications for its behavior and thus sided with the union. J. App’x 32. This fits with
what Great Dane itself did. 388 U.S. at 34-35 (“it is not necessary for us to decide the
degree to which the challenged conduct might have affected employee rights” because
“the company came forward with no evidence of legitimate motives for its discriminatory
conduct.”). If the Board finds (1) discriminatory conduct that (2) the employer has no
substantial and legitimate justification for, then there is no need to differentiate between
whether the conduct was “inherently destructive” or comparatively slight. Even
Woodcrest says so. See Reply Br. at 8 (“Woodcrest recognizes that Great Dane
contemplates foregoing the determination of whether its conduct was inherently
destructive in some circumstances.”). If we remand to the Board, nothing in the Board’s
analysis would change because it already followed the burden-shifting framework this
court outlined.
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Woodcrest argues that the Board failed to consider Woodcrest’s motive on
remand. Woodcrest Br. at 23-26. It claims that the Board “ignored its burden to show
improper motive by summarily concluding that Woodcrest proffered no business
justification for its actions.” Id. at 26. The Board, Woodcrest maintains, “did not shift
the burden to the [Board’s General Counsel] to come forward with evidence of
discriminatory motive under the false finding that Woodcrest had not offered any
evidence of a legitimate business justification.” Id. at 26-27. This, Woodcrest argues
“relieve[]d the GC of its burden to prove unlawful motive,” and thus the Board again
failed to follow Great Dane. Id. at 27.
Woodcrest misunderstands Great Dane. Here, the Board made a threshold
determination that Woodcrest engaged in discriminatory conduct that could adversely
affect employee rights. J. App’x 32; 800 River Road, 784 F.3d at 909. As this court
instructed in Woodcrest I, once the Board reaches this conclusion, “the burden shifts to
the employer to ‘come forward with evidence of legitimate and substantial business
justifications for the conduct.’” 800 River Road, 784 F.3d at 909 (emphasis added)
(quoting Great Dane, 388 U.S. at 34). If the employer fails to do so, “it will be found to
have violated” the Act. Id. The employer can avoid a violation only if it first “meets this
burden,” at which point the “charging party or the NLRB” must present “specific
evidence of the employer’s intent to discourage Union membership.” Id. (internal
quotations omitted).
Thus, at the point that the Board found Woodcrest’s actions were discriminatory,
the burden shifted to Woodcrest to justify its actions. Id. And because Woodcrest
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discriminated in a way that adversely affected employee rights, the Board examined the
“reason for, or purpose of, Woodcrest’s different treatment.” Id. at 910; J. App’x 32.
The Board said Woodcrest put forward no legitimate reason. J. App’x 32. Instead, the
Board found that Woodcrest sought to “discourage the future exercise of Section 7 rights
by sending an unmistakable message to the employees” that they were punished for
supporting the union. Id. So, all told, the Board (1) “ma[de] a finding as to the nature of
the effect on employee rights,” and (2) “ma[de] a finding as to the . . . reason for, or
purpose of, Woodcrest’s different treatment of the election-eligible employees.” 800
River Road, 784 F.3d at 910. Thus, contrary to Woodcrest’s arguments, the Board
applied the proper standard.
But that is not the end of the story. Given that the Board applied the proper test,
we ask whether substantial evidence supports the result.
It does. The Board acknowledged that “no dispute” existed that Woodcrest
“would have extended the benefit improvements to the employees in the stipulated unit
were it not for their protected activity.” J. App’x 32, 124. All agree that Woodcrest
singled out employees who sought union representation. And when voting employees
asked about the benefits, Woodcrest said only that “we cannot discuss the matter at this
time.” Id. at 125. The Board concluded that Woodcrest “granted the improvements to
certain employees ‘because they were not involved in a representation campaign,’ and
failed to grant the improvements to others ‘specifically because they were involved in
such a campaign.’” Id. at 32.
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The Board’s order is far from flawless. For example, the Board contradicted itself
when it found that Woodcrest failed to assert any justification and its asserted
justifications were unsupported or illegitimate. Compare J. App’x 25 (Woodcrest “failed
to establish or even assert such a justification.” (emphasis added)) with J. App’x 23-24
(describing Woodcrest’s asserted justification), and J. App’x 120, 182 (Woodcrest’s
pleadings including the justification). Had the Board stopped there its decision would
lack substantial evidence and be unenforceable.
And the Board understated the evidence supporting Woodcrest’s justification for
treating election-eligible employees differently (i.e., its good-faith effort to comply with
the law and avoid unfair labor practice charges). See J. App’x 32 (Woodcrest “offered no
evidence that this was its actual motive.” (emphasis added)). Woodcrest did provide
some circumstantial evidence of this justification. E.g., J. App’x 77-78 (Woodcrest
distributed the memo detailing the health care plan fixes in closed envelopes to election-
ineligible employees); id. 125 (Woodcrest implemented the fixes at three other facilities
with no union-organizing activity, made no announcement of the changes to election-
eligible Woodcrest employees, and declined to discuss the fixes with those who
nevertheless found out about the changes during the election period); see also S. Md.
Hosp. Ctr. v. NLRB, 801 F.2d 666, 671 (4th Cir. 1986) (employer’s silence “[m]ore likely
. . . evidences” good-faith effort to comply with the law). But because Woodcrest had to
prove this justification by a preponderance of the evidence, see NLRB v. Transp. Mgmt.
Corp., 462 U.S. 393, 401, 403 (1983) (quoting 29 U.S.C. § 160 (c)) abrogated on other
grounds by Dir., Office of Workers’ Comp. Programs, Dept. of Labor v. Greenwich
12
Collieries, 512 U.S. 267 (1994), a reasonable person could conclude Woodcrest’s scant
evidence fell short.
The Board also dismissed Woodcrest’s explanation for the timing of the changes
to its health plan. See J. App’x 34 (“Nor is there any evidence or claim that the timing
was compelled by exigency or external factors.” (emphasis added)). Woodcrest did
claim its parent company HealthBridge attempted to undo the unpopular benefit changes
at all four facilities because employees were complaining and dropping coverage. See,
e.g., J. App’x 182 (Woodcrest position statement on remand). The parties’ factual
stipulations provide some support for that claim as well. See J. App’x 124 ¶ 4. Once
again, though, a reasonable person could conclude this fell short of satisfying
Woodcrest’s burden. 1
1
Finally, the Board claimed that, even if the record supported Woodcrest’s
assertions, a good-faith effort to comply with the law can never be “a legitimate
justification.” J. App’x 33. That goes too far. We have found that reasonable, good-
faith efforts to comply with contractual obligations can constitute legitimate business
ends. Vesuvius Crucible Co. v. NLRB, 668 F.2d 162, 167 (3d Cir. 1981). And at least
two of our sister courts have held the same for legal obligations in general. See, e.g.,
Free-Flow Packaging Corp. v. NLRB, 566 F.2d 1124, 1130 (9th Cir. 1978) (holding that
failure to grant a wage increase could be lawfully motivated by a good-faith effort “to
comply with the requirements of law”); NLRB v. Dorn’s Transp. Co., 405 F.2d 706, 715
(2d Cir. 1969) (noting that “a good faith effort to conform to the requirements of the law”
would be a legal motivation for withholding benefits). That’s because the fundamental
inquiry is the employer’s motive. So although mere “difficulty navigating the law” and
“following faulty legal advice” may not provide sufficient justifications, 800 River Road,
784 F.3d at 910 n.5, good-faith compliance with a reasonable interpretation of the law
may suffice to show that an employer was not motivated by anti-union sentiment. See
Vesuvius, 668 F.2d at 167. This is not to say that Woodcrest’s efforts to comply with the
law were, in fact, reasonable or in good faith. The Board could have found those efforts
were not reasonable or not in good faith, but it could not write off that inquiry as a rule.
13
The Board’s order is not a model of precision. But a reasonable mind, on the
current record, could agree with the Board that Woodcrest failed to justify its actions.
That is all that is needed to enforce the Board’s order.
Finally, Woodcrest argues that the Board failed to follow Woodcrest I because the
Board declined to reopen the record. We previously noted that “the record was not
developed regarding the issues that should have been determinative.” 800 River Road,
784 F.3d at 910. The Board concluded it need not reopen the record because (1) the
material facts were already stipulated or undisputed, (2) Woodcrest did not identify any
new arguments or evidence it would produce if the record were reopened, and (3) the
Great Dane framework was not a novel standard in targeted withholding cases. J. App’x
32 n.8. Indeed, Woodcrest did not even argue that it “was prevented from introducing
such evidence because the case was litigated under a ‘per se’ theory of violation, and
[Woodcrest did] not identif[y] any relevant evidence that it would introduce if the record
were reopened.” Id. at 32.
We review the Board’s decision to not reopen the record for abuse of discretion.
NLRB v. Boyer Bros., Inc., 448 F.2d 555, 565 (3d Cir. 1971). In Woodcrest I, we did not
order or require that the Board reopen the record. See 800 River Road, 784 F.3d at 910.
Woodcrest points to no evidence that could come forward if the record reopened. As the
Board explained, the material and relevant facts are not in dispute. J. App’x 32. Indeed,
most are stipulated. Id. at 124-25. And on remand Woodcrest never even asked for the
Board to reopen the record as the regulations instruct. See 29 C.F.R. § 102.48(c)(1) (A
party requesting to reopen the record “must state briefly the additional evidence sought to
14
be adduced, why it was not presented previously, and that, if adduced and credited, it
would require a different result.”). Woodcrest did not attempt to “state . . . the additional
evidence sought,” or explain “why it was not presented previously,” let alone show that
additional evidence “would require a different result.” Id. Of course, as Woodcrest
argues, the Board may still reopen the record. See 29 C.F.R. § 102.48(b)(1). But the
Board is not required to do so, and declining to reopen here does not amount to an abuse
of discretion.
* * *
We will enforce the Board’s order and deny Woodcrest’s petition for review.
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