The Waterbury Hospital, Petitioner-Cross-Respondent v. National Labor Relations Board, Respondent-Cross-Petitioner

950 F.2d 849, 139 L.R.R.M. (BNA) 2005, 1991 U.S. App. LEXIS 28850

• Court: Court of Appeals for the Second Circuit
• Decided: December 3, 1991
• Docket: 1528, 1529, Dockets 91-4018, 91-4032
• Status: Published

Opinions

KEARSE, Circuit Judge:

Petitioner The Waterbury Hospital (the “Hospital”) petitions for review of so much of an order of respondent National Labor Relations Board (the “Board”) as found the Hospital in violation of §§ 8(a)(1) and (3) of the National Labor Relations Act (“Act”), 29 U.S.C. §§ 158(a)(1) and (3) (1988), and ordered it to, inter alia, cease and desist from refusing to reinstate striking employees to their former positions and from according job preferences to nonstrikers over strikers. In support of its petition, the Hospital contends principally that the Board made inadequate findings of fact, applied incorrect standards of law, and improperly rejected the Hospital’s business-justification defense. The Board cross-petitions for enforcement of its order. For the reasons below, we deny the Hospital’s petition for review and grant the Board’s cross-petition for enforcement.

I. BACKGROUND

The Hospital operates a nonprofit community hospital in Waterbury, Connecticut, normally employing some 600 nurses. Pri- or to May 31, 1986, it was party to a collective bargaining agreement with the union representing the nurses, Connecticut Health Care Associates, District 1199, National Union of Hospital and Health Care Employees, AFL-CIO (“the Union”). The period covered by that agreement ended on May 31, 1986, without a new agreement having been reached, and the Union served a strike notice on the Hospital. The Hospital promptly shut down, laying off all employees. On June 4, the Union commenced a strike against the Hospital.

A. The Hospital’s Hiring of Nurses During the Strike

In mid-June, responding to community needs for prenatal care and one-day surgical services, the Hospital reopened two of its units, staffing them with managerial and/or supervisory nursing employees. Thereafter, it decided to reopen some, though not all, of its other units. Some employee nurses abandoned the strike and crossed the picket line (the “crossovers”). The Hospital also began to hire new nurses. It offered both the new employees and the crossovers (collectively the “nonstrik-ers”) their choices of positions, including shifts; if the nonstriker’s preferred position was in a department that was neither open nor immediately to be reopened, or in one that was open but not in immediate need of such a position, the Hospital guaranteed that that individual would be placed in the preferred position following the conclusion of the strike. Individual contracts with the nonstrikers stated:

In view of the labor dispute currently under way at the Hospital, the position offered to you is a permanent position which you shall retain, subject to satisfactory performance, regardless of how the labor dispute is finally resolved.... [Depending on scheduling, patient census, and other factors your first week of employment might require you to work on a rotating shift basis or in another unit until your job opens.

In August, the Hospital and the Union resumed contract negotiations. The Union proposed that all striking nurses, including crossovers, be returned to their prestrike positions. The Hospital took the stance that all nonstrikers were hired as permanent replacements in their guaranteed positions, although many of them did not occupy those positions during the strike. On October 4, 1986, a new collective bargaining agreement was signed, and the Union notified the Hospital of its unconditional offer to have the striking workers return to work. The new collective bargaining agreement provided that striking nurses would be returned to work as soon as the patient population warranted but did not guarantee that those nurses would be reinstated in their prior positions. In addition, while reserving to the Union and the Hospital their respective rights to pursue any legal claims, the agreement provided that the nonstrikers would not be subject to displacement from their chosen positions for a period of 12 months after the end of the strike (the “no-bumping provision”).

By October 4, the Hospital’s nursing staff totaled 109 nonstrikers: 62 crossovers who had returned to their prestrike positions, 19 crossovers who had taken different positions, and 28 newly hired nurses. After striking nurses began returning to work on October 5, 1986, the Hospital began opening the units that had been closed during the strike. Strikers whose positions had been filled by or promised to nonstrik-ers were not returned to those positions.

B. The Board’s Ruling

During the strike, the Union had filed unfair labor practice charges with the Board, complaining of the Hospital’s refusal to reinstate all strikers to their prestrike positions, and it pursued those charges after the end of the strike. The Board, adopting the decision of an administrative law judge entered after an evidentiary hearing (“Board Decision”), concluded that the Hospital had engaged in unfair labor practices in violation of §§ 8(a)(1) and (3) of the Act by (1) refusing to reinstate some striking nurses to their prestrike positions and discriminating in favor of nonstrikers in the awarding of such positions, and (2) using the no-bumping provision to grant superseniority rights to nonstrikers for the 12 months following the conclusion of the strike.

The Board discussed the pertinent Supreme Court and circuit cases and stated that

[t]he law is clear that an employer may lawfully hire permanent replacements, including new hires and crossover employees, for striking employees during the course of an economic strike and at the end of the strike is not required to discharge or layoff such permanent replacements in order to cr[e]ate vacancies for the striking employees seeking reinstatement. ... However, both the Courts and the Board have recognized some limitation on an employer’s right to refuse reinstatement to an economic striker under the “legitimate and substantial business justification[”] [ Rationale on the basis of a consideration of what constitutes a “permanent replacement.”

Board Decision at 39-40. The Board rejected the contention that the Hospital had been forced to offer an unrestricted choice of positions and to make the replacements permanent in order to hire nurses during the strike, noting that the Hospital had offered no proof that nonstrikers could not have been recruited by other means. The Board found some of the circumstances of the present case somewhat analogous to those in Lincoln Hills Nursing Home, 257 N.L.R.B. 1145, 1159 (1981), in which replacements had impermissibly been given positions that were not actually vacant or available during the strike.

In the present case, the Board found that two categories of nonstrikers were not permanent replacements because they had been given poststrike positions that were not the positions they occupied during the strike. First, noting that some nonstrikers were given poststrike positions in departments that had not been open during the strike, it found those positions not actually available during the strike and concluded that the nonstrikers given those positions should not be considered permanent replacements. The Board judged it

inherently destructive of strikers[’] reinstated [sic] rights for the [Hospital] to accord striker replacements preferences by awarding them positions in areas of the hospital which did not open until after the strike ended and at a time when there were striking employees with greater seniority awaiting reinstatement.

Board Decision at 42. Second, with respect to departments that were open during the strike, the Board found that nonstrikers who during the strike were neither working in their poststrike positions nor being trained for those positions were not to be considered permanent replacements.

On the other hand, the Board ruled that nonstrikers who continued after the strike to fill positions they had filled during the strike were properly considered permanent replacements. Further, as to nonstrikers who did not fill their poststrike positions during the strike, the Board ruled that if their poststrike positions were in departments that were open during the strike and they were being trained for those positions during the strike, they would be deemed permanent replacements.

Thus, the Board summarized its rulings as follows:

The [Hospital] acknowledged that it had not and reasonably could not set an actual date for the reopening of the closed hospital areas nor predict with some reliability when already reopened areas would expand their services. Therefore, under these circumstances, unless the “replacement” commenced working in the position awarded during the strike and prior to the striker’s unconditional offer to return to work, the non-striking employee would not be a “permanent replacement” justifying the denial of reinstatement to returning strikers. Of course this would not include instances wherein the [Hospital] awarded positions to more nonstrikers in a hospital area than the Hospital’s operational needs required and some of these “replacements” were in training sessions or in orientation in or away from their positions or areas.

Board Decision at 43-44 (footnotes omitted). As an illustration of this last group, i.e., replacements who did not occupy their poststrike positions during the strike but whom the Board considered permanent replacements because their positions were in departments that were open during the strike and they were in training or orientation for those positions, the Board noted testimony that at the conclusion of the strike there were more nurses in the Recovery Room than would have been warranted by the then-patient population but that “some of these nurses were at training classes.” Id. at 44 n. 91. As to the departments that were closed throughout the strike, the Board rejected any notion that replacements whose poststrike positions were in those departments could be deemed permanent replacements on the theory that they were being trained for their eventual positions during the strike.

In sum, the Board’s decision drew distinctions among four basic categories of replacements:

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The Board distinguished the present case from H. & F. Binch Co. v. NLRB, 456 F.2d 357 (2d Cir.1972), on the ground that in Binch the parties had an understanding that the replacements would fill the pertinent positions “at a reasonably early date,” see id. at 362; see also Superior National Bank & Trust Co., 246 N.L.R.B. 721, 721 (1979) (replacements were permanent because mutual understanding and commitment included actual scheduling of work commencement), whereas here the Hospital could reach no such understanding with the nonstrikers because their starting dates in new poststrike positions could not be ascertained with any degree of certainty during the strike. Finding that (a) nonstrikers who were granted poststrike positions in departments that remained closed throughout the strike, and (b) nonstrikers who, in open departments, were granted poststrike positions that they did not fill and for which they were not being trained during the strike were not permanent replacements, and noting the absence of persuasive proof as to the need for the preferences granted to those workers, the Board concluded that the Hospital had failed, to that extent, to establish a substantial business justification for refusing to reinstate striking nurses to their prior positions.

To remedy the unfair labor practices it found, the Board concluded that the Hospital should be ordered to, inter alia, (1) cease and desist from discriminating against striking employees, (2) “offer reinstatement to the strikers who, at the compliance stage of this proceeding, are determined to have been denied reinstatement as a consequence of the [Hospitales failure to reinstate them to their former or substantially equivalent jobs,” Board Decision at 48, and (3) compensate such employees for any loss of pay or benefits they suffered as a result of the Hospital’s discriminatory practices.

II. DISCUSSION

The Hospital challenges so much of the Board Decision as found that the Hospital committed an unfair labor practice by denying striking nurses reinstatement to their prior positions. It contends principally that the Board’s interpretation of the permanent-replacement rule was too narrow and that certain of the Board’s findings were flawed. For the reasons below, we reject all of the Hospital’s contentions and enforce the Board’s order.

A. The Applicable Legal Principles and the Standard of Review

In reviewing an order of the Board, we must give considerable deference to the Board’s findings of fact and its interpretation of the Act. We defer to its interpretations if they are rational and consistent with the goals of the Act. Beth Israel Hospital v. NLRB, 437 U.S. 483, 501, 98 S.Ct. 2463, 2473-74, 57 L.Ed.2d 370 (1978); see also WPIX, Inc. v. NLRB, 870 F.2d 858, 864 (2d Cir.1989) (Board’s judgment as to whether employer’s acts were unfair labor practices will not be disturbed “ ‘if its construction of the [Act] is reasonably defensible’ ”) (quoting Ford Motor Co. v. NLRB, 441 U.S. 488, 497, 99 S.Ct. 1842, 1849, 60 L.Ed.2d 420 (1979)). We uphold the Board’s findings of fact if they are supported by substantial evidence in the record considered as a whole. Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951).

Under § 2(3) of the Act, 29 U.S.C. § 152(3), an employee whose work has ceased as a consequence of a labor dispute continues to be an “employee” within the meaning of the Act if he has not obtained regular and substantially equivalent employment. See, e.g., NLRB v. Fleetwood Trailer Co., 389 U.S. 375, 378, 88 S.Ct. 543, 545-46, 19 L.Ed.2d 614 (1967). So long as he remains an employee under the Act, he has the right to be reinstated after the dispute is resolved. Id. at 381, 88 S.Ct. at 547; H. & F. Binch Co. v. NLRB, 456 F.2d at 364. If, without “ ‘legitimate and substantial business justifications,’ ” the employer refuses to reinstate an employee after the strike, it is guilty of an unfair labor practice, for such a refusal would clearly “discourage employees from exercising their rights to organize and to strike guaranteed by §§ 7 and 13 of the Act.” Fleetwood Trailer Co., 389 U.S. at 378, 88 S.Ct. at 546 (quoting NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 34, 87 S.Ct. 1792, 1798, 18 L.Ed.2d 1027 (1967)).

Nonetheless, during an economic strike the employer has the right to hire workers as permanent replacements in order to continue operations, see, e.g., NLRB v. Mackay Radio & Telegraph Co., 304 U.S. 333, 345-46, 58 S.Ct. 904, 910-11, 82 L.Ed. 1381 (1938), and if there was a legitimate and substantial business justification for such hiring, the employer is excused from reinstating strikers to positions that have been thus filled, Fleetwood Trailer Co., 389 U.S. at 379, 88 S.Ct. at 546 (justification may be found if “the jobs claimed by the strikers are occupied by workers hired as permanent replacements during the strike in order to continue operations”). This principle may be applied not only to new hires but also to employees who cross the picket line and are assigned permanently to positions other than those they occupied before the strike. Trans World Airlines v. Independent Federation of Flight Attendants, 489 U.S. 426, 435-38, 109 S.Ct. 1225, 1231-33, 103 L.Ed.2d 456 (1989).

The burden of proving justification is on the employer, and if it fails in its burden, its refusal to reinstate strikers who seek to return to work after the strike constitutes an unfair labor practice. Fleetwood Trailer Co., 389 U.S. at 378, 88 S.Ct. at 546. As to the evaluation of the employer's proffer, “[i]t is the primary responsibility of the Board and not of the courts ‘to strike the proper balance between the asserted business justifications and the invasion of employee rights in light of the Act and its policy.’ ” Id. at 378, 88 S.Ct. at 546 (quoting Great Dane Trailers, 388 U.S. at 33-34, 87 S.Ct. at 1797).

B. The Adequacy of the Board’s Findings

The Hospital challenges the Board’s findings to the extent that the Board found that certain nonstrikers who did not occupy their guaranteed positions during the strike were not “permanent replacements” within the meaning of Fleetwood Trailer Co. and H. & F. Binch Co. v. NLRB, and found that granting those employees preferences over strikers was not justified. It also contends that the Board Decision is flawed because the Board made no finding that strikers not “permanently] replace[d]” and not returned to their prior positions were not offered positions that were substantially equivalent to those positions. We see no indication that the Board misapplied the principles discussed in Part II.A. above; we conclude that its findings were sufficient; and we find ample evidence in the record to support its findings.

The Board’s finding that many of the nonstrikers did not occupy their guaranteed positions during the strike is supported by substantial evidence. The record reveals that some of the nonstrikers were guaranteed positions in departments that were closed throughout the strike. Indeed, the Hospital conceded this before the Board, though it characterized the instances in which this occurred as “ ‘few.’ ” Board Decision at 42. Other nonstrikers were guaranteed poststrike positions that they did not fill during the strike because they were in units that, though open, did not operate at full strength because the lower patient population warranted lower staffing levels. Even with respect to non-strikers who did not occupy their poststrike positions during the strike, however, the Board accepted the Hospital’s contention that some of those nonstrikers, i.e., those who were assigned to poststrike positions in departments opened during the strike and who were being trained for their post-strike positions during the strike, should be deemed permanent replacements.

The Board’s conclusions that (A) replacements who either were given poststrike positions in departments that remained closed during the strike, or were given poststrike positions in departments that were open during the strike but neither filled such positions during the strike nor were being trained for such positions during the strike should not be considered permanent replacements, but that (B) other nonstrikers should be considered permanent replacements, represent both an interpretation of the Act, its goals, and precedents, and a balancing of the rights of the strikers against the needs of the Hospital. The Board’s conclusions were consistent with this Court’s view that employers “must have latitude in hiring replacements sufficient, but no more than sufficient to th[e] end [of preserving production].” H. & F. Binch Co., 456 F.2d at 362. The right to hire permanent replacements was thus limited, and the burden was on the Hospital to establish that all of its guarantees were justified by legitimate and substantial business necessity. It did not show sufficient predictability as to when the strike would end or as to whether there would arise a sufficient demand for services in a closed department to cause the Hospital to reopen that department prior to strike’s end. It has not pointed to sufficient evidence in the record to persuade us that the Board abused its discretion in finding that the Hospital had failed to carry its burden of showing that guaranteeing the nonstrikers in the “A” group above permanent positions that they would first occupy after the strike was no more than was necessary to ensure Hospital operations during the strike. This is especially the case since nonstrikers were allowed to select their choices of positions, including shifts, apparently without reference to the Hospital’s existing or anticipated needs.

Giving due deference to the Board’s balancing of the persuasiveness of the asserted justification against the discouraging effect of the preferences granted, and given the discriminating lines drawn by the Board as to which replacements were or were not found reasonably necessary, we cannot say that its conclusions were irrational, indefensible, or inconsistent with the goals of the Act.

We also reject the Hospital’s contention that the Board’s order should not be enforced because the Board did not find that strikers who were not “permanent[ly] replace[d]” and were not returned to their prestrike positions were not offered substantially equivalent positions. The Board contends that such a finding was not necessary and that it was entitled to find an unfair labor practice even if these strikers were offered substantially equivalent positions. We need not decide the merits of the Board’s contention since our review of the Board Decision persuades us that the Board implicitly found that the positions offered these strikers were not substantially equivalent to their prior positions.

Although the Board did not explicitly state that each of the striking employees improperly denied reinstatement to their former positions had not been offered substantially equivalent positions, such an assessment is implicit in the Board Decision. Thus, in a detailed fact-finding section the Board discussed the staffing status of each Hospital department before, during, and after the strike, tracking individual nurses, both strikers and their replacements. As to striking nurses who were denied their former positions, the Board noted that several were offered only evening shifts instead of their prestrike day shifts; that one such striking nurse, for example, was denied her prior shift which had been designed to accommodate her child-care needs, and she was unable to return to work until another nurse voluntarily relinquished that shift; and that other such returning strikers were offered positions that required different skills from those previously required or that involved quite different patient care. The record also showed that some aggrieved strikers had to wait several months before acceptable positions were offered, and that several others were required to take reductions in pay due to reductions in hours or responsibility. These are the types of considerations that the Board has found relevant in determining whether positions were substantially equivalent. See, e.g., Providence Medical Center, 243 N.L.R.B. 714, 743-44 (1979).

It is thus plain that the poststrike positions offered to aggrieved strikers were not substantially equivalent to the positions they had occupied before the strike. This lack of equivalence is implicit in the Board’s descriptions of pre- and poststrike positions, and the implicit finding is amply supported by the record.

Finally, we note that though the Board’s Decision did not precisely identify or quantify the returning strikers who were denied their prior, or substantially equivalent, positions because their positions were occupied by nonstrikers who were not found to be permanent replacements, it was not inappropriate for the Board to postpone the identification of these injured strikers until the compliance stage of the proceedings. See, e.g., NLRB v. J.H. Rutter-Rex Manufacturing Co. 396 U.S. 258, 90 S.Ct. 417, 24 L.Ed.2d 405 (1969); NLRB v. Deena Artware, Inc., 361 U.S. 398, 411, 80 S.Ct. 441, 448, 4 L.Ed.2d 400 (1960); Rogers Manufacturing Co. v. NLRB, 486 F.2d 644, 649 (6th Cir.1973), cert. denied, 416 U.S. 937, 94 S.Ct. 1937, 40 L.Ed.2d 288 (1974).

CONCLUSION

We have considered all of the Hospital's arguments in support of its petition for review and have found them to be without merit. The petition for review is denied. The Board’s petition for enforcement is granted.