Opinions of the United
1994 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


9-16-1994

NLRB v. New Assocs. d/b/a Hospitality Care
Center
Precedential or Non-Precedential:

Docket 93-3111




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Recommended Citation
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          UNITED STATES COURT OF APPEALS
              FOR THE THIRD CIRCUIT



               Nos. 93-3111 and 3147



          NATIONAL LABOR RELATIONS BOARD,

                         Petitioner in 93-3111,

                        v.

  NEW ASSOCIATES d/b/a HOSPITALITY CARE CENTER,

                         Respondent.



     NEW ASSOCIATES, d/b/a Hospitality Care,

                         Petitioner in 93-3147,

                        v.

          NATIONAL LABOR RELATIONS BOARD,

                         Respondent.



         On Appeal from a Decision of the
  National Labor Relations Benefits Review Board
D.C. Civil Action Nos. 22-CA-17250 and 22-CA-17402



            Argued on October 25, 1993


Before:   BECKER, ROTH, and LEWIS, Circuit Judges


       (Opinion Filed: September 16, 1994)
Charles P. Donnelly, Esquire (Argued)
Jerry M. Hunter,
 General Counsel
Yvonne T. Dixon,
 Acting Deputy General Counsel
Nicholas E. Karatinos,
 Acting Associate General Counsel
Aileen A. Armstrong,
 Deputy Associate General Counsel
Deborah Schrager, Esquire
National Labor Relations Board
1099 14th Street, N.W.
Washington, D.C. 20570-0001

          Attorneys for Petitioner/
          Cross-Respondent


Elliot J. Mandel, Esquire (Argued)
Peter A. Schneider, Esquire
Carmelo Grimaldi, Esquire
Kaufman, Naness, Schneider & Rosenweig
425 Broad Hollow Road
Suite 315
Melville, NY   11747-4730

          Attorneys for Respondent/
          Cross-Petitioner




                       OPINION OF THE COURT




ROTH, Circuit Judge:

          The National Labor Relations Board (NLRB or the Board)

petitions to enforce its July 6, 1992, order against employer New

Associates d/b/a Hospitality Care (Hospitality Care).   The order

requires Hospitality Care to recognize 1115 Nursing Home and

Hospital Employees Union (the Union), a division of 1115 Joint
Board, as the exclusive bargaining representative of a certain

unit of Hospitality Care employees and to cease and desist from

certain unfair labor practices.    Hospitality Care cross-petitions

for review of the order.

          The issue for our consideration is whether Hospitality

Care was guilty of an unfair labor practice when, due to a

pending decertification petition, it withdrew from further

collective bargaining and it refused the Union's request for

certain employee and financial records.   For the reasons set out

below, we will deny the NLRB's petition for enforcement of its

order, we will grant Hospitality Care's petition for review, and

we will remand this case to the NLRB to permit it to determine

whether, under the rule we adopt here, the Board chooses to

inform Hospitality Care of the percentage of employees who signed

the decertification petition.



                                  I.

          Hospitality Care operates a nursing home facility in

Newark, New Jersey.   Through several collective bargaining

agreements (CBAs), Hospitality Care has recognized the Union as

the exclusive bargaining representative of a unit of Hospitality

Care employees.   On May 1, 1990, pursuant to the terms of the

then existing CBA, the Union sought to reopen and negotiate wages

and other general terms and conditions of employment.   It asked

Hospitality Care for the names, addresses, dates of hire,
categories, and wage rates of all employees covered by the CBA in

order to formulate future bargaining demands and to make the

employees aware of their eligibility for benefits and raises.

Apparently, there was some confusion regarding the request and

Hospitality Care did not supply the information.

          On June 1, 1990, the Union sent Hospitality Care a list

of demands for a new CBA.    The list requested a wage increase for

each year of the proposed agreement as well as other increases

and benefits.    Thereafter, the parties conducted three

negotiating sessions.    At each meeting, Hospitality Care rejected

the Union's demands stating that, because it was having

difficulty obtaining reimbursement from the state of New Jersey,

it needed to have a total wage freeze for the first year of the

new agreement.    While the Union agreed to wage reductions in the

third year, it would not agree to the first year wage freeze.

          The parties held their last meeting on August 9, 1990.

The Union again requested the employee information it had been

seeking since May.    Hospitality Care indicated that it was still

in the process of compiling the information.   The meeting ended

without an agreement and without a date for further negotiations.

          Shortly after the August 9 meeting, the Union contacted

Hospitality Care and requested the employee information as well

as permission to audit Hospitality Care's financial records in

order to verify that Hospitality Care was unable to afford a
first year wage increase.    Despite the Union's repeated requests,

Hospitality Care failed to supply any of the information.

          On August 23, 1990, a Hospitality Care employee filed a

decertification petition with the NLRB asserting that at least

thirty percent of the employees no longer recognized the Union as

their official bargaining representative.    See National Labor

Relations Act (NLRA), 29 U.S.C. § 159(c)(1)(A)(ii).   Generally,

an employee will file such a petition with a Regional Office of

the NLRB in order to terminate the recognized union's status as

bargaining representative.   If the petition is supported by at

least thirty percent of the unit employees and if the NLRB finds

reasonable cause to believe that there is merit to the petition,

the Regional Director will conduct a hearing.   

159(c)(1).   If the hearing demonstrates that there is a serious

question of the union's representative status, the NLRB will hold

a decertification election within the bargaining unit.     

case, although the NLRB made an initial

determination that the prescribed minimum number of employees no

longer supported the Union, it did not release the exact

percentage of non-supporting employees to Hospitality Care.       As a

result, Hospitality Care did not know whether a majority of the

employees sought decertification.   Hospitality Care withdrew from

further collective bargaining based on its assertion that the

filing of the petition demonstrated a substantial showing of lack

of support for the Union.
          On September 12, 1990, while the decertification

petition was still pending, the Union filed an unfair labor

practice charge with the NLRB.   The Union alleged that

Hospitality Care had failed to bargain collectively in good faith

because it refused to contribute to the Union's funds and to

submit accurate lists of employees.   After filing the charge, the

Union attempted to schedule another bargaining session with

Hospitality Care and requested audited financial statements

covering several years.   At the NLRB hearing, Hospitality Care

indicated that it had denied the Union's requests due to the

pending decertification petition.   Hospitality Care argued that

it had properly withdrawn from bargaining because a substantial

number of employees no longer recognized the Union as their

legitimate bargaining representative.

          On September 19, 1991, Administrative Law Judge Fish

concluded that Hospitality Care had violated sections 8(a)(1) and

(5) of the NLRA, 29 U.S.C. §§ 158(a)(1),(5), by failing to meet

and bargain with the Union.   Judge Fish found in addition that

Hospitality Care had engaged in an unfair labor practice by

failing to furnish information relevant to collective bargaining

and by refusing to permit an audit of its financial records.

Judge Fish recommended that Hospitality Care cease and desist

from refusing to bargain collectively with the Union.     He held

that, upon the Union's request, Hospitality Care should furnish

the names, addresses, dates of hire, categories, and wage rates
of unit employees.   Moreover, Hospitality Care should provide

the Union with audited financial statements or permit the Union

to audit its financial records.    Hospitality Care filed

exceptions to Judge Fish's recommended order.

          While the NLRB was considering Judge Fish's decision

and Hospitality Care's exceptions to it, the parties resumed

collective bargaining.     On January 8, 1992, they executed a new

agreement effective through December 23, 1995.      The NLRB

subsequently issued an order on July 6, 1992, adopting Judge

Fish's determination.    Hospitality Care has refused to provide

the Union with its audited financial statements or to permit the

Union to conduct an audit of its financial records.      Hospitality

Care maintains that such information is moot due to the new

collective bargaining agreement.       To date, Hospitality Care has

not fully complied with the NLRB order.1

          The NLRB filed an application for enforcement of its

order with this Court.   Hospitality Care filed a cross petition

for review of the order.    The NLRB has held the decertification

petition in abeyance pending the outcome of this case.



                                 II.


1
 .  We note that Hospitality Care has filed a motion to expand
the record to include evidence that it partially complied with
the order by providing the Union with, inter alia, the names,
addresses, and dates of hire of employees in the bargaining unit.
Because the evidence does not influence our decision, we will
grant the motion.
          The NLRB had subject matter jurisdiction pursuant to

section 10(a) of the NLRA.   29 U.S.C. § 160(a).    This Court has

jurisdiction over both the NLRB's application for enforcement of

its final order and Hospitality Care's cross-petition for review

pursuant to sections 10(e) and (f) of the NLRA.     29 U.S.C.

§§ 160(e),(f).

          In reviewing a rule adopted by the NLRB, we will give

deference to the Board's interpretation of the NLRA provided that

the rule is rational and consistent with the Act.     See Fall River

Dyeing & Finishing Corp. v. N.L.R.B., 

, 42 (1987).       We

will set aside the NLRB's factual findings only if they are not

supported by substantial evidence.     Systems Management, Inc. v.

N.L.R.B., 

, 300 (3d Cir. 1990) (citing Graham

Architectural Products Corp. v. NLRB, 

, reh'g denied,

(3d Cir. 1983)).

                                III.

          The NLRA is designed to foster collective bargaining

and industrial stability by providing a procedural framework for

employers and employees to resolve conflicts and negotiate toward

suitable working and contractual conditions.     29 U.S.C. § 157;

NLRB v. Pincus Bros., Inc.-Maxwell, 

, 376 (3d Cir.
1980); Brockway Motor Trucks, Div. of Mack Trucks, Inc. v. NLRB,

, 727 (3d Cir. 1978).      It expressly confers a duty on

employers to bargain in good faith with union representatives.

Specifically, section 8 of the Act provides,
     (a) It 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 section 157 of this title;. . .2

          (5) to refuse to bargain collectively with the
          representatives of his employees.


29 U.S.C. §§ 158(a)(1),(5).   In order to advance the bargaining

process, an employer has an affirmative obligation to furnish the

recognized employee representative with information relevant to

an agreement.   NLRB v. Acme Indus. Co., 

, 435-36

(1967); NLRB v. New Jersey Bell Tel. Co., 

, 150 (3d

Cir. 1991).

     In this case, Hospitality Care admits that it refused the

Union's requests for employee and financial data.   It

acknowledges that under certain circumstances such a refusal can

constitute a failure to bargain in good faith.   See NLRB v.

Truitt Mfg. Co., 

, 152 (1956) (holding that when an

employer asserts that he cannot afford to pay a wage increase,

the Union has a right to inspect his financial records).   See

2
.   Section 7 of the Act states:

                    Employees shall have the right to
          self-organization, to form, join, or assist
          labor organizations, to bargain collectively
          through representatives of their own
          choosing, and to engage in other concerted
          activities for the purpose of collective
          bargaining or other mutual aid or protection.
          . . .

29 U.S.C. § 157.
also C-B Buick, Inc. v. NLRB, 

, 1091 (3d Cir. 1974)

(employer failed to bargain in good faith when it claimed that it

could not afford to meet union demands and then refused union's

request for financial data); Facet Enters., Inc. v. NLRB, 

, 980 (10th Cir. 1990) (employer's offer of financial

data after it claimed economic hardship was insufficient to meet

the good faith bargaining standard because it did not provide a

meaningful picture of the employer's financial condition).

     Hospitality Care further admits that it withdrew from all

negotiations with the Union.   While such actions might be

considered violations of sections 8(a)(1) and (5) of the NLRA,

Hospitality Care argues against enforcement of the instant order

stating that it was no longer under a duty to bargain with the

Union because the pending decertification petition raised a

serious question as to the Union's representative status.3

3
 . Hospitality Care also contends that the order should not be
enforced because the new collective bargaining agreement renders
the requested financial information moot. See C-B Buick, Inc. v.
NLRB, 

(3d Cir. 1974) (employer not required to
comply with union's request for financial information when
parties subsequently signed a new collective bargaining agreement
and information was deemed irrelevant to that agreement). We
decline to exercise jurisdiction over this claim because
Hospitality Care had the opportunity to raise the mootness issue
during the administrative hearing and failed to do so. See 29
U.S.C. § 160(e) (providing that, absent extraordinary
circumstances, a reviewing court shall not consider an objection
not raised before the Board). In declining to address this
issue, we are in no way making any ruling on the merits of the
argument that, under the circumstances of this case, the
execution of the new agreement absolved Hospitality Care of any
charge of an unfair labor practice that would be otherwise
applicable.
Hospitality Care contends that it would be a needless waste of

time and expense to continue bargaining for an agreement that

could be rendered void if the Union is later ousted in a

decertification election.

     Hospitality Care urges the court to set aside the instant

order and apply the rationale articulated in Telautograph Corp.,

(1972).   That case addressed factually similar

circumstances in which an employer withdrew from bargaining based

solely on the filing of a decertification petition.    The NLRB

concluded that, in the absence of any evidence of employer

misconduct, a decertification petition required the employer to

refrain from further bargaining because the petition itself

signified a genuine question as to the union's representative

status.   The Board stated that the NLRA's decertification

procedure "assures employees the right to determine that a

currently recognized union is no longer the majority

representative . . .."   

     In the years following Telautograph, the NLRB retreated from

its bright line rule that an employer could suspend bargaining

based on the filing of a decertification petition.    See RCA Del
Caribe, Inc., 

(1982) (filing of a representation

petition by an outside union will not permit an employer to

withdraw from bargaining with the incumbent union).    See also

National Cash Register Co., 

, 1035 (1973) (where it

appears that an employer's unfair labor practice precipitated the
decertification filing, employer must submit some other objective

evidence of loss of majority support).     The NLRB eventually

overruled Telautograph, stressing its concern with promoting

increased stability in the bargaining relationship.      Dresser

Indus., Inc., 

(1982).

    Although Dresser involved the same circumstances as

Telautograph, the NLRB held in Dresser that an employer could not

withdraw from bargaining while awaiting resolution of a

decertification proceeding.     

  It conceded that

suspension of bargaining could be justified if, in addition to

the petition, the employer submitted some objective evidence that

the union had lost majority support.     

n.7.   The

petition itself, however, only requires the signatures of thirty

percent of the unit employees and therefore, it "indicates

nothing more than the disaffection of a minority of unit

employees."   

    The NLRB concluded that "[a] rule

permitting an employer to withdraw from bargaining solely because

a decertification petition has been filed does not give due

weight to the incumbent union's continuing presumption of

majority status and is not the best way to achieve employer

neutrality in the election."    

     Based on Dresser, the NLRB found that Hospitality Care

committed an unfair labor practice for refusing to provide

information to, or bargain with, the Union.     The NLRB maintains

that Dresser is more effective than Telautograph as a means of
preserving the stability and continuity of the bargaining

relationship.

     While several Circuits have followed Dresser, see Asseo v.

Centro Medico del Turabo, Inc., 

, 452 (1st Cir.

1990), Briggs Plumbingware, Inc. v. NLRB, 

, 1288

(6th Cir. 1989), St. Agnes Medical Ctr. v. NLRB, 

,

146 (D.C. Cir. 1989), Bryan Memorial Hospital v. NLRB, 

, 1262 (8th Cir.), cert. denied, 

(1987), this

circuit has not yet addressed the Dresser issue.   But cf. NLRB v.

Wallkill Valley Gen. Hosp., 

, 636 n.3 (3d Cir. 1989)

(after filing of decertification petition with Board, employer

may not avoid duty to bargain by demonstrating loss of union

majority status resulting from employer's own unfair labor

practice).

     In order to better understand the impact of Dresser, it is

helpful to review current NLRB decertification procedures.4

According to section 9(a) of the NLRA, a union "designated or

selected for the purposes of collective bargaining by the

majority of the employees in a unit . . . shall be the exclusive

representative[] of all the employees in such unit for the

purposes of collective bargaining . . .."   29 U.S.C.



4
 . For a general discussion of the decertification process, and
what the author considers to be the "chaotic" impact of Dresser
on that process, see Timothy Silverman, Comment, The Effect of a
Petition for Decertification on the Bargaining Process: The
Reversal of Dresser Industries, 25 San Diego L. Rev. 581 (1988).
§ 159(a).   Once a union receives NLRB certification, there is an

irrebuttable presumption that the Union is the employee

bargaining representative.    NLRB v. Frick Co., 

,

1330 (3d Cir. 1970); Terrell Mach. Co. v. NLRB, 

,

1090 (4th Cir. 1970), cert. denied, 

(1970); Celanese

Corp. of Am., 

, 672 (1951).    The employer may not

refuse to bargain with the representative for one year following

the date of certification.    NLRB v. Burns Int'l Sec. Servs.,

Inc., 

, 279 n.3 (1972); NLRB v. Gissel Packing Co.,

, 599 n.14 (1969).    The presumption of majority

status only becomes rebuttable at the end of the certification

year or when the collective bargaining agreement has expired.

NLRB v. Pennco, Inc., 

(6th Cir.), cert. denied, 

(1982).

     An employer, employee, group of employees, or labor

organization may challenge the certified union's representative

status by filing a decertification petition with an NLRB Regional

Office.   29 U.S.C. §§ 159(c)(1)(A) and (B).   Upon receipt of such

a petition, the NLRB evaluates whether a "question of

representation . . . exists."    

investigation shows

that a substantial number of employees support the petition, the

Regional Director conducts a hearing.    A "substantial number" of

the employees supporting such a petition is defined by regulation

as "at least 30 percent."    29 CFR § 101.18(a).   At the conclusion

of the hearing, the NLRB may direct a secret ballot election to
determine the union's representative status. 

159(c)(1).

     In reviewing the petition to determine the percentage of

employee support, the Regional Director counts the number of

authorization cards or employee signatures in order to determine

whether there is a thirty percent showing of interest.    Dresser

Indus., Inc., 

(1982).   It is NLRB policy not to

divulge this information to the employer.    See Wallkill Valley

Gen. 

(NLRB refused employer's request for

showing of interest information stating that such information was

exempt from disclosure under the Freedom of Information Act, 5

U.S.C. § 552).    Thus, while the NLRB is aware of whether or not a

majority of employees supports a petition, the employer does not

have the benefit of this information in assessing whether to

continue bargaining with a union whose representative status may

be in question.

     The NLRB held that Hospitality Care was guilty of an unfair

labor practice because it withdrew from bargaining on the basis

of the decertification petition alone, without any further

objective evidence that the Union had lost majority status.      See

n.7.   We conclude that such a result is

unsound when considered in combination with the NLRB's refusal to

disclose to the employer the percentage of employees who

supported the decertification petition.   The NLRB possessed the

data which would have enabled Hospitality Care to make an

informed decision on whether the Union had lost majority support.
     Dresser does not overturn the prior Board practice which

permitted an employer to withdraw recognition of a union if the

employer reasonably believed that a majority of the unit

employees no longer supported the union,   See Terrell Mach. Co.,

, 1481 (1969), enf'd 

(4th Cir. 1970),

cert. denied, 

(1970).   In the same light, the Board

continues to acknowledge that, if the decertification petition,

signed by a majority of the employees, is filed directly with the

employer, the employer has objective grounds to believe that the

union no longer has majority support and the employer need no

longer recognize the union as the bargaining representative.    See

National Medical Hosp. of Orange d/b/a Los Alamitos Medical Ctr.,

(1987).   We conclude that it follows logically that

notification to the Board by a majority of unit employees should

also constitute objective evidence of a lack of union majority

support to the employer in the event that the employer learns of

the percentage of support for the petition.   With knowledge of

majority support for the petition, the employer is justified in

ceasing to bargain with the union.

     We conclude that such an outcome is consistent with the aim

of the NLRA to promote the resolution of conflict in the labor

arena.   If the employer knows of the filing of the petition but

is not aware of the percentage of support, the employer faces the

dilemma of either continuing to bargain with the union, which may

lose its representational status, or of refusing to bargain and
exposing itself to an unfair labor practice charge.   On the other

hand, if the union learns of the filing of a decertification

petition, the union can delay having to face an election by

seeking to bargain, having the employer deny that request, and

then filing an unfair labor charge against the employer.    The

NLRB as a general practice will not schedule an election during

the pendency of an unfair labor practice charge.   See

n.4, (citing Columbia Pictures

Corp., 

, 1314 (1949)).   With the filing of such a

"blocking charge," a majority of employees who have filed a

petition will not receive prompt resolution of the question of

representation -- a result which has occurred in this case if in

fact a majority of unit employees did sign the petition.

     The NLRB contends, however, that the "showing of interest,"

e.g., the determination by the Board of the percentage of

employees supporting the petition, is intended only to enable the

Board to determine for itself whether further proceedings are

warranted.   See In re O.D. Jennings & Co., 

, 518

(1946) (showing of interest requirement is "to enable the Board

to determine for itself whether or not further proceedings are

warranted, and to avoid needless dissipation of the government's

time, effort and funds").   The NLRB maintains that, if it did

supply the employer with the percentage of employees supporting

the petition, a strictly administrative requirement could result

in the immediate termination of a union and compromise the right
of employees to test the union's support through a

decertification election.

     We find that this contention lacks merit because the

disclosure to an employer of majority support for

decertification, if such should be the situation, meets the long

recognized Board position that the loss of such majority support

warrants the employer's withdrawal of recognition of the union as

the bargaining representative and justifies the scheduling of an

election.   On the other hand, if a majority of the employees have

not joined in the petition, bargaining will continue.

     Moreover, absent any existent charge that the employer's

unfair labor practices have caused the decertification petition

to be filed in the first place, we are not persuaded that such

disclosure places an undue burden on the NLRB.    Because the

Regional Director must determine whether the petition is

supported by thirty percent of the employees in order to proceed

with a hearing and election, it appears that, without any

additional administrative costs, he could also calculate whether

over fifty percent of the employees advocate decertification.



                               IV.

     Based on the foregoing analysis, we will grant Hospitality

Care's petition for review of the NLRB order.    We find that the

Dresser holding is a rational interpretation of the governing
statute, but only in those situations where the employer has
requested from the NLRB information on the percentage of

employees who support the decertification petition and the NLRB

has informed the employer that the percentage is less than a

majority.

     We acknowledge, however, that the NLRB may choose to

continue its policy of refusing to disclose the percentage of

employees supporting a decertification petition.   If this should

b