NLRB v. 800 River Road Operating Co LL

• Court: Court of Appeals for the Third Circuit
• Decided: August 6, 2019
• Docket: 18-2336
• Status: Unpublished

Opinion

NOT PRECEDENTIAL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

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).

3 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

4 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.

5 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 §

6 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

7 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

8 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.

9 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

10 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.

11 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.