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Coral Harbor Rehabilitation and Nursing Center v. National Labor Relations Board

United States Court of Appeals, Third Circuit

December 26, 2019

CORAL HARBOR REHABILITATION AND NURSING CENTER, Petitioner
v.
NATIONAL LABOR RELATIONS BOARD, Respondent NATIONAL LABOR RELATIONS BOARD, Petitioner
v.
CORAL HARBOR REHABILITATION AND NURSING CENTER, Respondent

          Submitted March 11, 2019

          On Application for Enforcement and Cross-Petition for Review of an Order of the National Labor Relations Board (NLRB-1 No. 22-CA-167738)

          Louis J. Capozzi, Jr. Brandon S. Williams Capozzi Adler Counsels for Petitioner in No. 18-2220

          Ruth E. Burdick David Habenstreit Saulo Santiago. David A. Seid, National Labor Relations Board Counsels for Petitioner in No. 18-2619

          Before: McKEE, PORTER, and ROTH, Circuit Judges.

          OPINION

          McKEE, Circuit Judge

         Coral Harbor Rehabilitation and Nursing Center (the "Center") asks us to review the National Labor Relations Board's determination that the Center violated Sections 8(a)(5) and (1) of the National Labor Relations Act by (1) refusing to bargain with 1199 Service Employees International Union United Healthcare Workers East (the "Union") as the representative of the Center's licensed practical nurses ("LPNs") and (2) unilaterally changing their wages and benefits without notice to the Union or providing the Union an opportunity to bargain.[1] Because the Board's decision is consistent with precedent and supported by substantial evidence, we will deny the Center's petition for review and grant the Board's cross-application for enforcement.

         I. BACKGROUND

         The Center purchased a nursing home in which the Union represented two separate units of employees - a unit of LPNs and a unit of service employees that included certified nursing assistants ("CNAs").[2] After the purchase, the Center hired a majority of the LPNs who had worked for the former employer, increased their wages, and changed their paid leave and health benefits, without making any effort to bargain the changes with the Union. Approximately 25 LPNs and 36 CNAs were ultimately employed by the Center.

         After the Center changed the terms of the LPNs' employment, the Union filed charges of unfair labor practices, alleging that the Center had violated Sections 8(a)(5) and (1) of the NLRA by refusing to bargain with the Union as the representative of the LPNs, and by later making unilateral changes to their wages and benefits without notice to the Union or providing the Union an opportunity to bargain.

         After an initial investigation, the Board's General Counsel filed a complaint of unfair labor practices against the Center. The Center responded that it was a Burns successor and therefore not under any obligation to recognize or bargain with the Union over the changes in the terms of the LPNs' employment because the LPNs had been converted into supervisors and were therefore exempt from the protections of the NLRA.

         Thereafter, an administrative law judge conducted an evidentiary hearing at which four of the Center's LPNs, its Director of Nursing ("DON"), and its Administer testified about the activities and responsibilities of the LPNs. According to that testimony, the LPNs did not attend morning staff meetings with managers but did receive completed master schedules and could add or subtract CNAs on the schedule with permission from the DON. The LPNs were told that they would play an active role in supervising CNAs, would have the authority to exercise their independent judgment, were expected to discipline employees, and complete employee evaluations.

         A section of the employee handbook entitled "Role of Licensed Professional Nurses (LPNs) and Registered Nurses (RNs)" stated: "RN and LPN Supervisors . . . have the responsibility to issue discipline (oral and written warnings) to nursing assistants when they believe warranted. Discipline can be for matters relating to resident care or for violations of the employee rules of conduct under Coral Harbor's Progressive Disciplinary System."[3] A Notice of Disciplinary Action ("disciplinary notice") is a form containing a narrative about an employee's infraction and the type of discipline issued, i.e., verbal warning or write-up.

         Testimony offered by the LPNs at the hearing regarding specific instances of imposing discipline can be summarized as follows: LPN 1 testified that she has not personally disciplined anyone, but that she has signed and delivered disciplinary notices for two employees that were completed by the DON. The DON filled out the disciplinary notices and gave them to her to issue. In fact, according to LPN 1, she was not present when either employee committed their respective infractions.

         LPN 2 testified that she twice imposed discipline against the same CNA-a verbal warning and a written discipline for re-education. However, like LPN 1, LPN 2 did not witness the infraction and did not have access to the personnel file of the CNA to know what "level" of discipline to administer. She was, however, instructed by the Administrator and DON on how to proceed in terms of discipline. The severity and ultimate approval of the discipline was left to the discretion of the DON.

         LPN 3 testified that she would first have to get the disciplinary notice from the DON and consult with the DON or a supervisor[4] before disciplining anyone. When she wrote the narrative on the disciplinary notice for an employee, the verbal warning and approval of the discipline was determined by the DON. LPN 3 further testified that on two separate occasions she was asked to deliver a disciplinary notice to a CNA, but the notice itself had been filled out by a supervisor. On each of those occasions, her only role was the physical delivery of the notice.

         Lastly, LPN 4 testified that she issued three disciplinary notices, without instruction or consultation and made formal recommendations, but the subsequent discipline was handled by the unit manager. However, LPN 4 also testified that for three other disciplinary notices she was simply asked for her signature on a notice that was already completed, or she was instructed to write up the notice for an infraction she had not observed.

         The DON testified that if an LPN completed a disciplinary notice for a CNA, she (the DON) would investigate and review the personnel file, which the LPN did not have access to, and then determine the appropriate severity of the discipline. The DON confirmed that she or the staffing coordinator determined CNA schedules. An LPN could not perform independent scheduling or direct employees in their assignment-only the DON could. The LPNs testified that they were not involved in training of the CNAs; again, that was the responsibility of the DON.

         Based on the testimony, the ALJ found that the Center was a Burns successor and that it had hired a majority of its predecessor's employees. The ALJ thus concluded that the Center had an obligation to bargain with the union of its predecessor. The ALJ also found that the LPNs were not supervisors as defined by Section 2(11) of the NLRA but were instead, statutory employees protected by the NLRA and represented by the Union. Accordingly, the ALJ held that the Center violated Sections 8(a)(5) and (1) of the NLRA by refusing to recognize and bargain collectively with the Union, and by making unilateral changes to the wages and benefits of the LPNs without notice to the Union or giving it an opportunity to bargain over the changes.

         The Center filed exceptions with the Board but limited its challenge to the ALJ's findings regarding the LPNs' role in discipline and adjusting grievances. The Board affirmed the ALJ's rulings and findings. The Board specifically concluded that the Center failed to establish that the LPNs (1) have supervisory authority to discipline or effectively recommended discipline or (2) possess the supervisory authority to adjust grievances.

         Thereafter, the Center petitioned us to review the Board's decision, and the Board cross-petitioned for enforcement of its order.[5]

         II. STANDARD OF REVIEW

         Our "review of orders of the Board is highly deferential."[6]"We accept the Board's factual findings if they are supported by substantial evidence . . . [and] exercise plenary review over questions of law and the Board's application of legal precepts."[7] Substantial evidence "means relevant evidence that a reasonable mind might accept as adequate to support a conclusion."[8]

         III. DISCUSSION

         A. NLRB v. Burns

         In NLRB v. Burns Int'l Sec. Servs., Inc., [9] the Supreme Court held that a successor employer is ordinarily free to set initial terms on which it will hire the employees of a predecessor. It is therefore undisputed that as a successor-employer, the Center had the right to set the initial terms of employment for LPNs when it took over operations for the nursing home. Accordingly, "[a] new employer has a duty under §8(a)(5) [of the NLRA] to bargain with the incumbent union that represented the predecessor's employees when there is a 'substantial continuity' between the predecessor and successor enterprises."[10] As the Court explained in Burns:

Although a successor employer is ordinarily free to set initial terms on which it will hire the employees of a predecessor, there will be instances in which it is perfectly clear that the new employer plans to retain all of the employees in the unit and in which it will be appropriate to have him initially consult with the employees' bargaining representative before he fixes terms.[11]

         Thus, under Burns, "the new employer, succeeding to the business of another, had an obligation to bargain with the union representing the predecessor's employees."[12]

         Section 7 of the NLRA guarantees employees "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."[13]

         Section 8(a)(1) states: "[i]t shall be an unfair labor practice for an employer . . . to interfere with, restrain, or coerce employees in the exercise of" their Section 7 rights.[14]Section 8(a)(5) states: "[i]t shall be an unfair labor practice for an employer . . . to refuse to bargain collectively with the representatives of [its] employees."[15]

         However, not all employees are included under the protective umbrella of the NLRA and collective bargaining. Employers are not required to afford collective bargaining rights to supervisory employees.[16] The Center concedes that it refused to bargain with the Union on behalf of the LPNs and that it unilaterally changed the LPNs' wages and benefits without notice to the Union and without providing the Union an opportunity to bargain. ...


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