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AHA v. NLRB

July 25, 1989

AMERICAN HOSPITAL ASSOCIATION, Plaintiff,
v.
NATIONAL LABOR RELATIONS BOARD, JAMES M. STEPHENS, MARY M. CRACRAFT, JOHN E. HIGGINS, JR., DENNIS M. DEVANEY, and JOHN C. TRUESDALE, Defendants, and AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS AND THE BUILDING AND CONSTRUCTION TRADES DEPARTMENT, AMERICAN NURSES' ASSOCIATION, Permissive Intervenors Pursuant to Fed.R.Civ.P. 24(b)


James B. Zagel, United States District Judge.


The opinion of the court was delivered by: ZAGEL

JAMES B. ZAGEL, UNITED STATES DISTRICT JUDGE

 The American Hospital Association (the "AHA") seeks to permanently enjoin the National Labor Relations Board (the "NLRB" or the "Board") from enforcing a newly promulgated rule, 29 C.F.R. Part 103, pertaining to bargaining units in the health care industry (the "Rule"). *fn1" The Rule was promulgated pursuant to the Board's rule-making authority under section 6 of the National Labor Relations Act (the "NLRA" or the "Act"), 29 U.S.C. § 156 (1988), and the procedures set forth in section 553 of the Administrative Procedure Act (the "APA"), 5 U.S.C. § 553 (1988). If given effect, the Rule will establish eight units for the purposes of collective bargaining in acute care hospitals. Prior to this Rule the Board's policy was to determine the appropriateness of bargaining units in individual cases. The AHA asks us to declare this Rule invalid on three alternative grounds: 1) the Rule contravenes section 9(b) of the Act, 29 U.S.C. § 159(b) (1988), which provides that bargaining unit determinations must be made "in each case", 2) the Rule contravenes the 1974 Health Care Amendments which mandate that the Board avoid undue proliferation of bargaining units in the health care industry and 3) the Rule is arbitrary and capricious and is not supported by substantial evidence. The NLRB has filed a motion for summary judgment. *fn2"

 A. Legislative Enactments

 The Wagner Act (National Labor Relations Act of 1935, 29 U.S.C. secs. 151, et seq. (1935)), was enacted to promote unionization and collective bargaining. After a time, Congress found that the Wagner Act unduly favored unions over companies and Congress passed the Taft-Hartley Act, amending the Wagner Act and creating a more balanced statutory scheme, while continuing the right of employees to be free from employer coercion. See C. Morris, The Developing Labor Law 437 (2d Ed. 1983).

 In 1974 Congress amended the Act to cover all private health care institutions, including not-for-profit hospitals. *fn3" Act of July 26, 1974, Pub. L. No. 93-360, 88 Stat. 395 (hereinafter "Health Care Amendments"). At this time Congress also recognized that labor regulation in the health care industry involves distinctive considerations. Patient treatment cannot tolerate interruption because health institutions provide care to the sick, the aged and the infirm. A disturbance in health care services is more serious than a break, for example, in industrial plant production. See St. Vincent Hospital v. NLRB, 567 F.2d 588, 590 (3rd Cir. 1977).

 Ironically, the health care industry is particularly vulnerable to labor unrest. The industry is highly specialized and consists of many -- frequently unrelated -- professional and vocational specialties. Although only a few employees in each specialty may concentrate in a particular hospital, there is the potential for numerous job classifications and consequently the danger that collective bargaining units will proliferate. The greater the number of units, the stronger the likelihood of labor unrest, which in turn jeopardizes the functioning of health care facilities. This is because the more units there are in a particular hospital, the fewer employees that have to agree to call a strike. See NLRB v. Res-Care, Inc., 705 F.2d 1461, 1469 (7th Cir. 1983). Although it may be true that the smaller the unit the less critical an impact the strike will have, this may not be true in a health care institution where frequently each group of employees plays a significant role in the patient care and where the service cannot be prepared in advance. Id. Thus, the pattern of bargaining units organized in health care facilities has a considerable impact on the institutions. *fn4"

 In order to protect the health care industry Congress included in the Health Care Amendments special provisions that lengthen the strike notice period and require federal mediation. NLRA sec. 8(d)(A)-(C), (g), 29 U.S.C. sec. 158(d)(A)-(C), (g). Congress, however, neither amended section 9 of the Act, 29 U.S.C. § 159, the provision which controls determination of bargaining units by the Board, to reflect their concern over proliferation of bargaining units, nor accepted a proposal by Senator Taft which would have limited, by statute, the number of bargaining units to five (including guards) in non-profit health care institutions. S. 2292, 93 Cong., 1st Sess. (1973), reprinted in, Legislative History of the Coverage of Nonprofit Hospitals Under the National Labor Relations Act at 457-58 (hereinafter " Legis. Hist."). Instead, Congress, in both the House and Senate Committee Reports, expressed its concern by admonishing the Board to give due consideration "to preventing proliferation of bargaining units in the health care industry." Congress' statement was, in its entirety:

 
EFFECT On EXISTING LAW
 
Bargaining Units
 
Due consideration should be given by the Board to preventing proliferation of bargaining units in the health care industry. In this connection, the Committee notes with approval the recent Board decisions in Four Seasons Nursing Center, 208 NLRB No. 50, 208 N.L.R.B. 403, 85 L.R.R.M. 1093 (1974), and Woodland Park Hospital, 205 NLRB No. 144, 84 LRRM 1975 (1973), as well as the trend toward broader units enunciated in Extendicare of West Virginia, 203 NLRB No. 170, 203 N.L.R.B. 1232, 83 L.R.R.M. 1242 (1973) *

 Legis. Hist., at 12, 274-75.

 B. Bargaining Unit Determinations

 Section 7 of the Act, 29 U.S.C. § 157 (1988), gives employees the right of self-organization. In the absence of an agreement between the employer and the employees, a union can obtain recognition for the purposes of collective bargaining by petitioning the Board under section 9 of the Act, and the Board must determine if employees in the petitioned-for unit form an appropriate bargaining unit. *fn5" Section 9(b) instructs the Board that an appropriate unit is one which will "assure to employees the fullest freedom in exercising the rights guaranteed by . . . [the] Act." The Act prevents the Board from using the "extent to which the employees have organized" as controlling in certifying election petitions. NLRA sec. 9(c)(5), 29 U.S.C. § 159 (c)(5). The Act provides the Board with little other guidance in charging it to determine appropriate bargaining units for certification, thus the Board possesses broad discretion in this area. Allied Chemical & Alkali Workers, Local No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 171-72, 30 L. Ed. 2d 341, 92 S. Ct. 383 (1971); NLRB v. West Suburban Hospital, 570 F.2d 213, 214 (7th Cir. 1978). Where, as here, a statute entrusts an agency with broad discretion to make decisions, a court will usually review the agency action under the deferential "abuse of discretion" standard. NLRB v. Res-Care, 705 F.2d 1461. Indeed, this is the standard generally used in unit determination cases. Id.

 Unit determination requires that the Board weigh the competing interests of the employer and the employees. Employers seek few units with a greater number of workers presumably because many small units increase the likelihood of strikes and require repetitious bargaining, resulting in increased costs. If the units are too large, however, it impinges on the employees' right to union representation because too diversified a constituency may generate conflicts of interest and dissatisfaction within the group. Id. Generally, the Board's unit determinations are based on a "community of interest" standard. *fn6" Morris, Developing Labor Law, supra, at 416-17. Under this principle employees with similar interests would appropriately be placed together for the purposes of collective bargaining. See, e.g., In re Chrysler Corp., 1 N.L.R.B. 164, 169-70 (1936). Given the broad discretion permitted the Board, it would seem difficult for the courts to find fault with the community-of-interest standard. Res-Care, 705 F.2d at 1469. Nonetheless, in the fifteen years since the Health Care Amendments were enacted reviewing courts have tended to be less deferential to the NLRB's authority to make unit determinations when health care employees are at issue. E.g., Mary Thompson Hospital, Inc. v. NLRB, 621 F.2d 858, 864 (7th Cir. 1980) (because of Congressional admonition "Board must not rely exclusively on traditional community-of-interest analysis"). The court of appeals attributes their frequent rejection of the Board's orders to the Board's failure to properly consider Congress' admonition to void undue proliferation of bargaining units. See, e.g., NLRB v. HMO Int'l/California Medical Group Health Plan, Inc., 678 F.2d 806, 808 (9th Cir. 1982); Beth Israel Hosp. & Geriatric Center v. NLRB, 677 F.2d 1343, 1345 (10th Cir. 1981), cert. denied, 459 U.S. 1025, 74 L. Ed. 2d 522, 103 S. Ct. 433 (1982); Presbyterian/St. Luke's Medical Center v. NLRB, 653 F.2d 450, 455 (10th Cir. 1981), cert. denied, 459 U.S. 1025, 74 L. Ed. 2d 522, 103 S. Ct. 433 (1982); NLRB v. Mercy Hosp. Ass'n, 606 F.2d 22 (2nd Cir. 1979), cert. denied, 445 U.S. 971, 64 L. Ed. 2d 248, 100 S. Ct. 1665 (1980); NLRB v. St. Francis Hosp., 601 F.2d 404 (9th Cir. 1979); NLRB v. West Suburban Hosp., 570 F.2d 213 (7th Cir. 1978); St. Vincent's Hosp. v. NLRB, 567 F.2d 588 (3d Cir. 1977).

 In response to judicial criticism, in 1982 the Board introduced a new two-tiered approach for bargaining unit determination on health care, St. Francis Hospital, 265 N.L.R.B. 1025 (1982) (hereinafter " St. Francis I "). First, the Board would determine if the petitioned-for unit was one of the seven units identified as "potentially appropriate" (physicians, registered nurses, other professional employees, technical employees, business office clerical employees, service and maintenance employees, and skilled maintenance employees). Second, the Board determined whether a community of interest existed among the employees in the unit and if it did the unit would be approved. A unit which did not coincide with any of the seven categories would be approved only in extraordinary circumstances. Id. at 1029.

 When the hospital refused to bargain with the prevailing union in the unit approved in St. Francis I, the Board reevaluated its two-tier approach in light of the judicial criticism of the community-of-interest approach. St. Francis Hospital, 271 N.L.R.B. 948 (1984) (hereinafter " St. Francis II "). The NLRB adopted a "disparity-of-interest" test which, the Board asserted, took better account of the Congressional Admonition against undue proliferation. *fn7" The Board expressly indicated that it adopted this approach because it avoided a rigid standard which would be inappropriate for the "diverse nature of today's health care industry", id. at 953 ...


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