Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-98-01484/USCOURTS-caDC-98-01484-0/pdf.json

Parties Involved:
International Union, United Plant Guard Workers of America
Intervenor
National Labor Relations Board
Respondent
Reno Hilton Resorts
Petitioner

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 7, 1999 Decided December 3, 1999

No. 98-1484

Reno Hilton Resorts,

Petitioner

v.

National Labor Relations Board,

Respondent

International Union, United Plant Guard

Workers of America,

Intervenor

On Petition for Review and Cross-Application

for Enforcement of an Order of the

National Labor Relations Board

Joseph E. Herman argued the cause and filed the briefs for

petitioner.

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Steven B. Goldstein, Attorney, National Labor Relations

Board, argued the cause for respondent. With him on the

brief were Linda Sher, Associate General Counsel, John D.

Burgoyne, Acting Deputy Associate General Counsel, and

David Habenstreit, Supervisory Attorney.

Scott A. Brooks argued the cause and filed the brief for

intervenor.

Before: Ginsburg, Rogers and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: Reno Hilton Resorts ("Reno Hilton") appeals the decision and order of the National Labor

Relations Board ("Board") that it had violated ss 8(a)(1) and

(3) of the National Labor Relations Act ("Act"), 29 U.S.C.

ss 158(a)(1) and (3), by contracting out the work of its

recently unionized security service. See Reno Hilton Resorts, 326 NLRB No. 154, 1998 WL 723981, at *1 (Sept. 30,

1998). Reno Hilton contends that the Board misstated and

misapplied the appropriate legal standard for determining

whether an employer's discharge of an employee constitutes

an unfair labor practice, and lacked substantial evidence to

support its finding of discriminatory intent. Finding these

contentions unpersuasive, we deny the petition for review and

grant the Board's cross-application for enforcement of the

order.

I.

When Reno Hilton began operating what was formerly a

Bally's hotel-restaurant-casino complex in 1992, it inherited

Bally's security staff, the members of which were not represented by any labor organization. Shortly thereafter, while

implementing a cost-savings plan, Reno Hilton considered and

rejected various proposals to contract out a number of security positions, despite a projected annual savings ranging from

$24,000 to $96,000.

In June 1993, International Union, United Plant Guard

Workers of America ("Union") began a campaign to organize

Reno Hilton's security employees. After losing an election by

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a vote of 51 to 34, the Union filed unfair labor practice

charges with the Board. While those charges were pending,1

the Union started another campaign in 1995 to organize Reno

Hilton's security employees, and an election was scheduled

for September 1995. Reno Hilton retained a labor consulting

firm, The Burk Group, to assist it in its opposition to the

union campaign, as it had done in the first campaign. Shortly

before the election, Gary Parillo, an "anti-union" security

employee, was called into the office of Reno Hilton's director

of security, Dave Bennett, to meet with a Burk Group official.

A color-coded chart in the office listed various security department employees and their position on the Union's organizing efforts. The Burk Group official asked Parillo to help

determine which security employees were pro- or anti-union,

advising Parillo that if the Union came in, the hotel would

contract out the security jobs and showing Parillo figures

purporting to represent the associated cost savings.

The Union won the election by a vote of 44 to 33 and was

certified by the Board on October 12, 1995, as the exclusive

collective-bargaining representative of the full-time and regular part-time security employees at the Reno Hilton. Shortly

before and after the election, Reno Hilton's management

indicated to rank-and-file employees that the presence of the

Union would mean that "things would get really rough."

Within two weeks of the Union's certification, the Hilton

Hotel's Vice President, Jim Anderson, met with Bennett

regarding contracting out Reno Hilton's security work. According to Lee Boekhout, a Reno Hilton security employee,

Bennett's impression after that meeting was that Reno Hilton

"may have lost the battle," but it had "won the war," and that

"they [i.e., the unit security employees] were gone." Bennett

reassured Boekhout, however, that his job was protected

because, Bennett claimed, he was able to save the jobs of the

__________

1 After finding in another proceeding that Reno Hilton had

violated sections 8(a)(3) and (1) of the Act, an administrative law

judge recommended that the 1993 election be set aside. See Reno

Hilton, Nos. 32-CA-13618, 32-RC-3777 (Aug. 18, 1994). The

Board substantially affirmed the decision of the ALJ. See Reno

Hilton Resorts, 320 NLRB 197, 197 n.4, 211 (1995).

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ten or eleven employees who supported Reno Hilton's position in the election campaign.

During contract negotiation sessions from November 1995

to early August 1996, Anderson continually proposed to the

Union that Reno Hilton would have the right to contract out

its security work. The Union presented counter proposals to

the subcontracting plans, which Reno Hilton rejected. According to the Union President, Anderson assured the Union

negotiators that Reno Hilton had no present intention to

contract out its security work. Be that as it may, in February 1996, Bennett sent a memorandum to Reno Hilton's

president advising that his investigation with two potential

subcontractors of the costs of bringing in an outside security

service indicated that Reno Hilton could save a considerable

amount of money. In April 1996, several high-ranking Hilton

Corporation and Reno Hilton officials discussed the economics of contracting out the security work. During this time the

administrative assistant to Reno Hilton's director of security,

and its director of human resources spoke to Boekhout about

changing the job titles of anti-Union employees to protect

their jobs from the imminent elimination in the wake of

contracting out.

Then, in June 1996, Reno Hilton presented the Union with

a proposed wage freeze and an unrestricted right to contract

out. When the Union rejected the proposal, Reno Hilton

responded with a proposal for a three-year contract with a

wage ceiling of $10.43 and a one-year bar on contracting out

security work. The Union rejected this proposal as well as a

third proposal for no wage adjustment and unrestricted rights

to contract out. The security employees went on strike. The

strike lasted from the end of July 1996 until mid-August 1996,

at which point Reno Hilton and the Union entered into a

collective bargaining agreement. The agreement froze

wages, prohibited discrimination against employees on the

basis of union or non-union status, and provided that Reno

Hilton had the right to "[c]ontract or subcontract any work."

In October 1996, Reno Hilton conducted a financial impact

analysis of contracting out that estimated savings of over $1.5

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million over three years. On November 1, 1996, hotel officials met with a potential subcontractor, American Protective

Services, to discuss cost and quality issues. The same day,

Anderson wrote to the Union President requesting a meeting

to discuss the results of the hotel's inquiry into contracting

out. Prior to the meeting, Anderson informed the Union that

contracting out security work at the available base wage rate

of $7.50 per hour would save Reno Hilton $4.23 per hour per

employee. Also, prior to the meeting, hotel officials made the

decision to contract out its security work in January 1997,

unless the Union would agree to a wage cut equal to the

projected cost savings of contracting out.2 Reno Hilton's

financial statement purported to show a decline of $10,587,156

in net revenues in 1996 from the prior year.

Before the contracting out decision was implemented in

January 1997, Reno Hilton made two offers to the Union to

avoid subcontracting. At the meeting with the Union President in late November 1996, Anderson stated first, that Reno

Hilton would save over $500,000 annually by contracting out

the security work of rank-and-file employees; second that the

Union counter-proposals projecting over $400,000 annual savings were unacceptable; and third, that if the Union wanted

to avoid contracting out, it would have to agree to a base

wage rate for Reno Hilton's security staff of $7.75 per hour,

which included the $0.25 per hour profit margin it would have

to pay the subcontractor. In response to the Union's protest

that the proposed wage decrease was an attempt to drive it

out, inasmuch as Reno Hilton had not tried to lower wages in

this manner during the contract negotiations, Anderson

claimed that the cost saving benefits of contracting out had

only recently become apparent. The Union rejected this

avoidance offer.

__________

2 In January 1997, Reno Hilton discharged all of the security

bargaining unit employees and contracted out their work to American Protective Services, which has supplied Reno Hilton the same

number of full-time security officers as those utilized prior to the

contracting out. Approximately thirteen of Reno Hilton's former

security employees obtained employment with American Protective

Services.

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Another avoidance offer was made the following month. In

early December 1996, Reno Hilton informed the Union that

the hotel would contract out its security work in January

1997. On December 20, 1996, the Union filed unfair labor

practice charges on the ground that the company contracted

out its security work in retaliation for the employees' union

activity while protecting the jobs of "loyal" employees. At an

eleventh hour meeting before Reno Hilton contracted out,

Anderson reiterated the $7.75 offer, informing the Union that

no amount of cost savings proposed by the Union would

substitute for accepting that wage rate. Reno Hilton also

proposed to make severance pay contingent upon the employees' agreeing not to sue Reno Hilton. The Union rejected the

offer.

In response to the Union's December 1996 charges, the

ALJ ruled that Reno Hilton had violated ss 8(a)(3) and (1) of

the Act by contracting out its security employees' work and

dismissing all of its security employees, and recommended

immediate and full reinstatement of the employees with back

pay and benefits. The Board affirmed substantially all of the

ALJ's rulings, findings, and conclusions, and expanded the

remedies to include a broader cease-and-desist order,3 rescission of the subcontract with American Protective Services,

and restoration of the status quo ante by ordering Hilton to

re-establish an in-house security force. Reno Hilton petitioned the court for review under 29 U.S.C. s 160(f), and the

Board cross-petitioned for enforcement of its order under

s 160(e).

II.

Under s 8(a)(3) of the Act, it is an unfair labor practice for

an employer "to encourage or discourage membership in any

labor organization," "by discrimination in regard to hire or

__________

3 The amended order provided for the expungement from the

employment records of the terminated security employees all references to the unlawful discharge, and required Reno Hilton to

produce employment records necessary to calculate back pay due to

the terminated employees.

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tenure of employment or any term or condition of employment." 29 U.S.C. s 158(a)(3). Such conduct also would

violate s 8(a)(1) because it "interfere[s] with, restrain[s], or

coerce[s] employees in the exercise of" their labor rights. 29

U.S.C. s 158(a)(1); see Power Inc. v. NLRB, 40 F.3d 409, 417

n.3 (D.C. Cir. 1994). An employer violates ss 8(a)(3) and (1)

if it takes adverse action against an employee because of the

protected union activity. See 29 U.S.C. ss 158(a)(3), (1);

LCF, Inc. v. NLRB, 129 F.3d 1276, 1281 (D.C. Cir. 1997).

At the outset, Reno Hilton maintains that the General

Counsel's decision not to pursue a s 8(a)(5) charge against

the hotel for bad faith in bargaining for the contracting out

clause precludes an unfair labor practice claim under

s 8(a)(3) for exercising its rights under that clause. We

disagree. A decision not to prosecute is made for many

reasons, sometimes for reasons unrelated to the merits of the

charge. See, e.g., Heckler v. Chaney, 470 U.S. 821, 831, 105

S. Ct. 1649, 1655-56, 84 L.Ed.2d 714 (1985). Reno Hilton

offers nothing to show that the General Counsel's decision

was based on an affirmative finding of good faith by Reno

Hilton in all its actions under the parties' agreement. Even

assuming the General Counsel's exercise of its prosecutorial

discretion could support an inference that the hotel had

bargained for the contracting out clause in good faith, Reno

Hilton proffers no persuasive authority for the proposition

that such an inference precludes a s 8(a)(3) violation for

discrimination in the exercise of rights under the bargainedfor contracting out provision.

In contending that its exercise of its contracting out rights

under the parties' agreement cannot be deemed a s 8(a)(3)

violation, Reno Hilton relies on the Sixth Circuit's decision in

"Automatic" Sprinkler Corp. of America v. NLRB, 120 F.3d

612, 620 (6th Cir. 1997), cert. denied, 118 S. Ct. 1675, 140

L.Ed.2d 813 (1998). In that case, the court held that the

employer's exercise of its contractual right to subcontract did

not constitute a violation of s 8(a)(3). But as the dissenting

judge noted, the majority did not address the findings of the

ALJ as adopted by the Board that the employer's conduct

was motivated by anti-union animus. See id. at 622 (Ryan, J.,

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dissenting). Further, the decision in Automatic Sprinkler,

which has not yet been cited with approval outside of the

Sixth Circuit, is at odds with the general principle that a

party cannot exercise its contractual rights in violation of the

law. Thus, the Tenth Circuit in Capitol Steel & Iron Co. v.

NLRB, 89 F.3d 692, 696-97 (10th Cir. 1996), declined to

countenance the calculated use of waiver clauses in a contract

to undermine the collective bargaining process, affirming the

Board's finding of a s 8(a)(5) violation where the employer

had announced wage increases "in such a way and at such a

time as to sway the employees who would immediately thereafter vote on [the employer's] 'last and final offer.' " Similarly, the Third Circuit in NLRB v. Joy Technologies, Inc., 990

F.2d 104, 111 n.7 (3d Cir. 1993), noting that "contract language does not exempt the Employer from its obligation to

act lawfully under the NLRA," affirmed the Board's finding

that the employer had unlawfully abused the superseniority

clause in the parties' contract by transferring a position so as

to "ensure that Beightol would remain union committeeman

and obtain the higher-paying position." So too, in Gannett

Rochester Newspapers v. NLRB, 988 F.2d 198, 203 (D.C. Cir.

1993), this circuit observed that "[u]nder the clear-andunmistakable standard [for waiver], courts may 'not infer

from a general contractual provision that the parties intended

to waive a statutorily protected right unless the undertaking

is explicitly stated.' " Id. (quoting Metropolitan Edison Co.

v. NLRB, 460 U.S. 693, 708 (1983) (internal quotation omitted)). Even when the waiver is explicit, moreover, the waiver

is not read broadly. See id. Because the record is devoid of

evidence to infer, much less show, that the Union waived its

s 8(a)(3) rights by entering into the agreement with Reno

Hilton, there is no basis for adopting either Reno Hilton's

contention or the Sixth Circuit's analysis in Automatic Sprinkler.

III.

Consequently, the heart of Reno Hilton's appeal turns out

to be its contention that the Board lacked substantial evidence of anti-union animus to find a violation of ss 8(a)(3) and

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(1). First, it maintains that the General Counsel did not

establish a violation of the Act under Wright Line,4 because

the ALJ misstated the test, gave controlling weight to evidence outside the s 10(b) period, failed to consider changed

circumstances prompting the contracting out decision, and

made inappropriate comparisons between Reno Hilton and

other Hilton hotels. Second, Reno Hilton maintains that it

rebutted any evidence of anti-union animus by establishing

that its decision to contract out was driven by economic

considerations, and that the ALJ erred by not considering

such evidence and by drawing negative inferences from Reno

Hilton's failure to call certain witnesses. Neither contention

is persuasive.

The court will affirm the findings of the Board unless they

are "unsupported by substantial evidence in the record considered as a whole," General Elec. Co. v. NLRB, 117 F.3d

627, 630 (D.C. Cir. 1997), or unless the Board "acted arbitrarily or otherwise erred in applying established law to the facts."

Allegheny Ludlum Corp. v. NLRB, 104 F.3d 1354, 1358 (D.C.

Cir. 1997) (quotation and citation omitted). The court must

"take account of anything in the record that 'fairly detracts'

from the weight of the evidence supporting the Board's

conclusion." General Elec., 117 F.3d at 630 (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S. Ct. 456,

464-65, 95 L.Ed. 456 (1951)). Even if the court might have

reached a different conclusion had the court considered the

issue de novo, the court will uphold the Board's decision if it

is supported by substantial evidence in the record. See

Synergy Gas Corp. v. NLRB, 19 F.3d 649, 651 (D.C. Cir.

1994). The court gives even greater deference to the Board's

determination of questions of motive, see Laro Maintenance

__________

4 251 N.L.R.B. 1083, enf'd, 662 F.2d 899 (1st Cir. 1981), cert.

denied, 455 U.S. 989, 102 S. Ct. 1612, 71 L.Ed.2d 848 (1982), which

was upheld in NLRB v. Transportation Management Corp., 462

U.S. 393, 399-403, 103 S. Ct. 2469, 2473-75, 76 L.Ed.2d 667 (1983),

overruled in part on other grounds by Director, Office of Workers'

Compensation Programs, Dep't of Labor v. Greenwich Collieries,

512 U.S. 267, 276-78, 114 S. Ct. 2251, 2257-58, 129 L.Ed.2d 221

(1994).

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Corp. v. NLRB, 56 F.3d 224, 229 (D.C. Cir. 1995), and

"accept[s] the ALJ's credibility determinations that are

adopted by the Board 'unless they are patently unsupportable.' " Schaeff Inc. v. NLRB, 113 F.3d 264, 266 (D.C. Cir.

1997) (quoting NLRB v. Creative Food Design Ltd., 852 F.2d

1295, 1297 (D.C. Cir. 1988)); see also Capital Cleaning Contractors, Inc. v. NLRB, 147 F.3d 999, 1004 (D.C. Cir. 1998).

When examining an allegation of a s 8(a)(3) violation, the

Board applies the two-stage test first articulated in Wright

Line, under which the Board's General Counsel has the

burden of persuasion to show that union activity was a

substantial or motivating factor in the employer's decision to

contract out. See Wright Line, 251 N.L.R.B. at 1089; Southwest Merchandising Corp. v. NLRB, 53 F.3d 1334, 1339-40

(D.C. Cir. 1995); see also Laro Maintenance Corp., 56 F.3d

at 228. The employer, in turn, may rebut the inference by

showing by a preponderance of the evidence that it would

have taken the same action absent the union activity and the

employer's anti-union motivation. See Wright Line, 251

N.L.R.B. at 1089.

Reno Hilton maintains that the ALJ misstated and misapplied the Wright Line test by referring to the General

Counsel's initial burden as a "prima facie showing," and by

failing to consider Reno Hilton's proffered economic justification or evidence of its cost savings matching offers as part of

the threshold determination whether the General Counsel

met its initial burden. Any misstatement or misapplication of

the Wright Line test is immaterial, however, so long as there

is substantial evidence supporting the Board's determinations

that anti-union animus was a motivating factor in the employer's decision to contract out its unit security work and that

Reno Hilton failed to carry its burden of proof that it would

have made the same decision regardless of such animus. Cf.

NLRB v. GATX Logistics, Inc., 160 F.3d 353, 357 (7th Cir.

1998).

The Board relied primarily on the following factual findings

by the ALJ in concluding that the General Counsel carried

his burden of persuasion showing that Reno Hilton was

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motivated by anti-union animus when deciding to contract out

its security work. First, there was the matter of timing.

The contracting out decision came on the heels of heavy union

activity, most notably following the strike preceding negotiation of the collective bargaining agreement. The timing of

the decision to contract out is suspect in view of evidence that

Reno Hilton knew long before the Union's certification that

contracting out its security work could save a significant

amount of money given Reno Hilton's above-market wages

for its security employees. As the court pointed out in Meco

Corp. v. NLRB, 986 F.2d 1434, 1437 (D.C. Cir. 1993), timing

is a telling consideration in determining whether employer

action is motivated by anti-union animus. See also General

Elec., 117 F.3d at 638 (citing Parsippany Hotel Management

Co. v. NLRB, 99 F.3d 413, 422 (D.C. Cir. 1996)).

Second, reasonable inferences of anti-union motivation were

virtually compelled by the statements of Reno Hilton officials

during the Union campaign to the effect that the hotel would

strongly consider contracting out security jobs if the Union

prevailed in the election.5 Particularly compelling is the

evidence of comments by security director Bennett to Boekhout regarding his post-unionization efforts to contract out the

security work while preserving the jobs of the anti-union

employees.6 There was evidence as well of other discussions

__________

5 Contrary to Reno Hilton's contention, the Board could properly consider evidence outside of the s 10(b) six-month-limitations

period for purposes of illuminating the events taking place within

the period. See Sheet Metal Workers' Int'l Ass'n. AFL-CIO, 989

F.2d 515, 519 (D.C. Cir.1993). The evidence of the hotel's unfair

labor practices during the election was not so remote in time as to

be unrelated to the hotel's decision to contract out, see Meco Corp.,

986 F.2d at 1437, particularly where, as here, the formulation of

that decision began two weeks after the certification of the Union.

6 Boekhout's unrebutted affidavit stated in pertinent part:

On or about October 25 or 26, [1995], about a month or so after

the election, I was in the security office when Director of

Security Dave Bennett returned from a meeting upstairs....

He told me that they had made a presentation to Jim Anderson

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of job protection for anti-union employees, including a suggestion by the head of human resources at Reno Hilton that job

titles could be manipulated to avoid termination of employerallied employees due to the contracting out of all security

work. Although Bennett ultimately was unable to protect

jobs as he promised, the various statements by hotel officials

strongly support the inference that the security employees'

union activity was a substantial and motivating factor in Reno

Hilton's decision to contract out its security work.

That evidence notwithstanding, Reno Hilton contends that

the Board erred by failing to consider evidence at each step

of analysis under Wright Line. Reno Hilton points to the

evidence that on two occasions it offered to refrain from

contracting out its security work if the Union would match

the subcontractor's wages. The ALJ did not refer to these

two avoidance offers in his decision. On a different evidentiary record, the Board might view evidence of two avoidance

offers as successfully rebutting the evidence of anti-union

animus. Here, however, there was evidence that Reno Hilton

was engaged in a pervasive, continuing effort to undermine

union organizing efforts prior to certification and afterwards,

when it limited the Union's knowledge of the contracting out

plans and frustrated the Union's efforts by offering an unreasonable $7.75 wage rate, which not only was below the

__________

and the others (he didn't name who) at the meeting concerning

going to contract security and they had bought it. He said that

they had told them that they could save more than $500,000.

He told me that they had said do it. He then told me that they

may have lost the battle but that they had won the war. He

said that they were gone. I believe I said oh, s[* * *].

Bennett told me not to worry about it, that my job was

protected, that he had managed to save the 10 or 11 of us.

Bennett did not actually say the word subcontracting [i.e.,

contracting out], but I knew what he meant. When he said

"they were gone" I knew he meant the [employees in the]

Union. When he referred to the 10 to 11 of us he meant those

security officers who supported the Company and not the

Union.

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prevailing average wage rate in the area, but represented a

severe wage cut for most Reno Hilton security employees.7

Under the circumstances, the two avoidance offers could

hardly rebut the pervasive and stark evidence of anti-union

animus. Because the evidence was legally irrelevant, the

ALJ's failure to address it is of no moment. The relevant

comparison, in analyzing the s 8(a)(3) charge that Reno Hilton discriminated against its security employees because of

their protected union activity, is between the unionized security employees and their non-union predecessors. It follows,

therefore, that the General Counsel satisfied the first step of

the Wright Line test: there is substantial evidence in the

record to support the Board's finding that Reno Hilton was

motivated by anti-union animus when it decided to contract

out its security work.

As to the second step of Wright Line, Reno Hilton contends that its financial statement for 1996 and other evidence

established that it would have contracted out its security

work absent anti-union animus. Specifically, Reno Hilton

relies on evidence that the decision to subcontract was being

considered prior to its security employees' union activity as

part of an ongoing cost reduction plan, and was prompted, in

1996, primarily by falling revenues and profits. Reno Hilton

produced evidence that it and its sister hotel, the Flamingo

Hilton-Reno, had been engaged in cost-cutting programs,

including closing, combining, or consolidating certain operations and laying off employees.8 The ALJ concluded, and the

__________

7 A 1995 Reno Hilton wage survey indicated that Reno Hilton's

maximum wage rate of $12.62 per hour for security employees was

almost three dollars higher than the $9.64 average maximum wage

rate paid by nine competing hotels. Seventy percent of Reno

Hilton's security employees were paid at or near the top rate.

8 No other Hilton Hotel casino has a unionized security staff,

nor has any Hilton Hotel casino contracted out the work of its

security force. Reno Hilton relies on evidence that it engaged in

joint cost-cutting measures with the Flamingo Hilton-Reno, yet

maintains that consideration of the Flamingo Hilton-Reno's comparative treatment of its security employees is irrelevant. We

decline, in any event, to draw any inference from the fact that the

Flamingo Hilton-Reno, which is in the same wage market as the

Board agreed, that the evidence supporting Reno Hilton's

contention that it was motivated by lawful business considerations "is sorely wanting, as not one individual who was

instrumental in making such a decision was called by [Reno

Hilton] as a witness in this proceeding." The Board correctly

noted that the ALJ had improperly drawn adverse inferences

from Reno Hilton's failure to produce testimony from relevant witnesses who were no longer in its employ at the time

of the hearing. See Reno Hilton Resorts, 326 NLRB No. 154,

1998 WL 723981, *2 n.1 (citing Irwin Industries, Inc., 325

NLRB No. 149, 1998 WL 261141, *35 n.12 (May 19, 1998);

Goldsmith Motors Corp., 310 NLRB 1279, 1280 n.1 (1993));

see also Property Resources Corp., 285 NLRB 1105, 1105 n.2

(1987), enf'd 863 F.2d 964 (D.C. Cir. 1988). But, the record

also contained potentially damaging evidence from Bennett,

who remained Reno Hilton's director of security and had

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written a crucial memorandum in February 1996 on contracting out, the only remaining copy of which was missing a key

portion.9 The absence of Bennett's testimony, therefore,

represents a glaring omission in Reno Hilton's case, especially

as it relates to Bennett's partially-recovered memorandum.10

__________

Reno Hilton, has not reduced the wage rates of its security staff as

Reno Hilton proposed to the Union as an alternative to subcontracting because there is insufficient information in the record about

Flamingo Hilton-Reno's financial condition during the relevant

period.

9 The omitted portion of Bennett's memorandum was relevant

to whether Reno Hilton had a legitimate business justification for

contracting out its security service; it purported to set forth

Bennett's "ideas as to why a contract security company can better

service us than in-house security." Memorandum of February 26,

1996, from Bennett to the president of Reno Hilton.

10 Reno Hilton's challenge to the ALJ's refusal to reopen the

administrative record is meritless. Reno Hilton sought to admit

evidence that, nearly three weeks after the hearing, Reno Hilton

contracted out one of its restaurant operations, resulting in the

termination of 132 non-union employees. Although the ALJ did not

elaborate on his ruling denying the motion to reopen the record, the

court will not find an abuse of discretion unless it "clearly appear[s]

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No more availing is Reno Hilton's contention that its

economic defense rebutted the evidence of anti-union motivation. In LCF, Inc. v. NLRB, 129 F.3d 1276 (D.C. Cir. 1997),

on which Reno Hilton relies, the employer presented overwhelming evidence of its grim economic situation that outweighed the inference arising from the otherwise suspect

timing of its decision to contract out. See id. at 1282-83. By

contrast, the persuasive force of Reno Hilton's evidence that

falling revenues and profits in 1996 were the impetus for the

contracting out decision is severely weakened by the evidence

that it proposed contracting out two weeks after the Union's

certification. This occurred despite the claim of Hilton's Vice

President when bargaining began that it had no present

intentions to contract out Reno Hilton's security work. Nor

did Reno Hilton present any evidence to explain why it chose

to contract out all of its security service in response to the

revenue decline. It presented no testimony from any decision maker linking the decision to contract out to the revenue

decline. It presented no testimony even as to when the

revenue decline became apparent to management; the only

testimony on the revenue decline is from Mike Caryl, who by

his own testimony, was not a decision maker. Given the

totality of the circumstances, the Board could find that evidence of changed circumstances in the form of a financial

statement suggesting a decline in earnings fails to demonstrate that the decision to contract out was prompted by that

decline.

Accordingly, because there is substantial evidence in the

record to support the Board's finding of anti-union animus

and its rejection of Reno Hilton's defense that the contracting

out of the entire security service would have occurred for

economic reasons absent anti-union animus, we deny the

__________

that the new evidence would compel or persuade to a contrary

result." Cooley v. FERC, 843 F.2d 1464, 1473 (D.C. Cir. 1988)

(alteration in original) (quotation and citation omitted). The proffered evidence does not meet this standard, and hence we find no

abuse of discretion. See Thomas-Davis Medical Ctrs. v. NLRB,

157 F.3d 909, 912 (D.C. Cir. 1998) (citing Road Sprinkler Fitters

Local Union No. 669 v. NLRB, 789 F.2d 9, 14 (D.C. Cir. 1986)).

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petition for review and grant the Board's petition for enforcement of its order.

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