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Parties Involved:
Deming Hospital Corporation
Petitioner
National Labor Relations Board
Respondent

Document Text:

United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 21, 2011 Decided December 20, 2011 

No. 11-1064 

DEMING HOSPITAL CORPORATION, DOING BUSINESS AS 

MIMBRES MEMORIAL HOSPITAL, 

PETITIONER

v. 

NATIONAL LABOR RELATIONS BOARD, 

RESPONDENT

Consolidated with 11-1095 

On Petition for Review and Cross-Application for 

Enforcement of an Order of the National Labor Relations 

Board 

Kaitlin Kaseta argued the cause for petitioner. On the 

briefs was Bryan T. Carmody. 

Milakshmi V. Rajapakse, Attorney, National Labor 

Relations Board, argued the cause for respondent. With her 

on the brief were John H. Ferguson, Associate General 

Counsel, Linda Dreeben, Deputy Associate General Counsel, 

and Robert J. Englehart, Supervisory Attorney. Julie B. 

Broido, Supervisory Attorney, entered an appearance. 

USCA Case #11-1064 Document #1348620 Filed: 12/20/2011 Page 1 of 12
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Before: BROWN and GRIFFITH, Circuit Judges, and 

EDWARDS, Senior Circuit Judge. 

 Opinion for the Court filed by Circuit Judge BROWN. 

 BROWN, Circuit Judge: Deming Hospital Corporation 

operates Mimbres Memorial Hospital (the “Hospital”) in New 

Mexico. In 2004, the National Labor Relations Board found 

the Hospital had acted unlawfully by unilaterally reducing the 

hours of its full-time respiratory department employees from 

40 per week to between 32 and 36 per week. The Board 

ordered the Hospital to rescind the hours reduction, bargain 

with the labor union representing the affected employees (the 

“Union”), and “make whole any employee for any loss of 

earnings and other benefits suffered.” Cmty. Health Servs., 

Inc., 342 N.L.R.B. 398, 404 (2004) (the “2004 Order”). The 

Tenth Circuit enforced the 2004 Order in full. NLRB v. Cmty. 

Health Servs., Inc., 483 F.3d 683, 684 (10th Cir. 2007). 

 An administrative law judge subsequently determined the 

Hospital owed 13 current and former employees roughly 

$105,000 in backpay to compensate them for the unlawful 

hours reduction. In reaching this conclusion, the ALJ held, 

among other things, that the backpay due each employee 

should not be reduced by any interim earnings the employees 

may have made from other employment during the backpay 

period; that employees hired after the unlawful hours 

reduction were entitled to a remedy under the 2004 Order; and 

that the Hospital’s backpay liability should not be tolled as of 

the date when it attempted to bargain with the Union, or when 

the Union assertedly waived bargaining by failing to respond. 

In 2011, the Board adopted the ALJ’s findings without 

elaboration and ordered the Hospital to pay up. Cmty. Health 

Servs., Inc., 356 N.L.R.B. No. 103 (2011) (the “2011 Order”). 

USCA Case #11-1064 Document #1348620 Filed: 12/20/2011 Page 2 of 12
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The Hospital now petitions for review of the 2011 Order, 

while the Board cross-applies for enforcement. We grant in 

part the Board’s cross-application for enforcement with 

respect to all issues except the matter relating to interim 

earnings. The Board did not err in applying a backpay 

remedy to those employees hired into the bargaining unit after 

the Hospital unlawfully reduced the employees’ hours; and 

the Board correctly held the Union’s failure to communicate 

with the Hospital did not toll the employer’s liability, because 

the Hospital had not rescinded the unlawful unilateral 

reduction in hours when it sought to negotiate with the Union. 

However, the Board did not adequately explain its failure to 

consider interim earnings when calculating the backpay 

award. Therefore, we vacate the Board’s backpay 

computation and remand the case so the Board may amplify 

its position on interim earnings. 

I 

 

 The narrow question before us is whether the Board 

calculated backpay in the 2011 Order in accordance with the 

2004 Order and relevant precedents. The Hospital contends 

the answer is no because the Board erroneously: (1) deemed 

interim earnings irrelevant to the backpay calculation; (2) 

awarded backpay to employees hired after the unlawful hours 

reduction; and (3) found the backpay period had not been 

tolled by the Hospital’s unreciprocated efforts to bargain with 

the Union. We address those arguments in turn. 

A 

The 2004 Order directs the Board to calculate backpay 

“as prescribed in Ogle Protection Service, 183 NLRB 682 

(1970).” Cmty. Health Servs., Inc., 342 N.L.R.B. at 404. In 

the 2011 Order, the Board found Ogle barred its normal 

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practice of reducing a backpay award to account for “interim 

earnings”—amounts affected employees made from other 

jobs during the backpay period. See Cmty. Health Servs., 356 

N.L.R.B. No. 103, at *16. The Board’s explanation for that 

ruling is a non sequitur. 

 First, a bit of history. Before 1950, the Board calculated 

backpay by subtracting what an employee actually earned 

during the entire backpay period from what she would have 

earned during that period had the unlawful action not 

occurred. See Bufco Corp. v. NLRB, 147 F.3d 964, 970 (D.C. 

Cir. 1998). The Board came to realize, however, that 

computing backpay in that manner encouraged employers to 

delay reinstating wrongfully terminated employees: if the 

employer waited long enough, the employee could start 

earning more at her new job than she would have earned at 

her old job, decreasing the employer’s total backpay liability. 

See id. To eliminate this perverse incentive, the Board 

announced a new approach in F.W. Woolworth, 90 N.L.R.B. 

289 (1950), under which it subtracted what an employee 

actually made from what she would have made on a quarterly 

basis, with the condition that “[e]arnings in one particular 

quarter . . . ha[d] no effect upon the back-pay liability for any 

other quarter.” Id. at 293. Thanks to the Woolworth 

approach, an employer no longer benefitted if a wrongfully 

terminated employee eventually started making more money 

at her new job than she would have made at her old job—

those additional earnings did not offset what the employer 

owed in backpay for any previous quarters. 

 In Ogle, the Board carved out an exception to the 

Woolworth approach. Quarterly computation of backpay was 

deemed “unnecessary and unwarranted” when backpay 

liability “result[ed] from [an employer’s] repudiation and 

failure to apply the terms of a collective-bargaining 

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agreement, a violation of the [National Labor Relations] Act 

which does not involve cessation of employment status or 

interim earnings that would in the course of time reduce 

backpay.” 183 N.L.R.B. at 683. The Board appeared to 

assume that an employee who had not been terminated would 

not seek another job (and thus would not generate interim 

earnings). And if the employee did not generate any interim 

earnings, an employer would have no incentive to delay 

taking corrective action. 

 We have noted that Woolworth and Ogle, taken together, 

establish a clear framework for the calculation of backpay 

awards: “In the event unit employees were laid off or 

terminated [Woolworth applies]. . . . In the event that unit 

employees . . . were neither laid off nor terminated [Ogle

applies].” Bufco, 147 F.3d at 970. Here, the Board followed 

that framework in the 2004 Order by ordering backpay 

calculated in accordance with Ogle. But in the subsequent 

proceeding to calculate backpay, the Hospital submitted an 

offer of proof that—contrary to the Board’s assumption in 

Ogle—two of the affected employees had in fact taken on 

additional work at other hospitals to offset the unlawful hours 

reduction. As a result, the Board had to decide how to 

calculate backpay under Ogle when affected employees had

generated interim earnings. 

 In the 2011 Order, the Board chose to ignore interim 

earnings. It based its decision on the “clear language” of 

Ogle, and its concern that accounting for interim earnings 

“would have the effect of imposing a duty on employee 

victims . . . to moonlight in order to minimize the impact of 

the unlawful conduct for the benefit of the wrongdoer.” 

Cmty. Health Servs., 356 N.L.R.B. No. 103, at *16. Neither 

rationale withstands our scrutiny. 

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 The “clear language” of Ogle does not address the current 

situation. Ogle simply states that if the employer’s unlawful 

action “does not involve . . . interim earnings,” then the Board 

should not calculate backpay on a quarterly basis. 183 

N.L.R.B. at 683. Ogle does not state the converse 

proposition—that if the Board cannot calculate backpay on a 

quarterly basis, then it should not consider interim earnings—

and the Board’s inference of that proposition from Ogle is a 

logical fallacy. See Nat’l Treasury Emp. Union v. United 

States, 101 F.3d 1423, 1428 n.1 (D.C. Cir. 1996) (noting the 

converse of a proposition is not necessarily true). 

 Nor are we swayed by the Board’s fear of imposing a 

“duty to moonlight.” The Board’s position seems to conflate, 

and thus confuse, an employee’s duty to mitigate with rules 

governing when backpay should be reduced by interim 

earnings. Employees who have been unlawfully discharged 

or laid off from their jobs have a duty to mitigate. See NLRB 

v. Madison Courier, Inc., 472 F.2d 1307, 1323 (D.C. Cir. 

1972) (noting that an employee who has been “improperly 

deprived” of his position must at least make reasonable efforts 

to find new employment which is substantially equivalent to 

the position he has lost). Victims of unfair labor practices 

who have not lost their jobs have no such duty. See 88 

Transit Lines, Inc., 314 N.L.R.B. 324, 325 (1994) (holding 

the duty to mitigate “makes sense only with respect to 

employees who have been unlawfully discharged”), enforced, 

55 F.3d 823 (3d Cir. 1995). Neither the Board nor the 

Hospital suggest otherwise. But even when there is no duty to 

mitigate, the Board might in some circumstances be obliged 

to consider interim earnings to ensure that employees who did 

choose to find other work do not receive windfalls. See 

Grondorf, Field, Black & Co. v. NLRB, 107 F.3d 882, 888 

(D.C. Cir. 1997) (remanding to allow employers to 

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demonstrate how their contributions to a union benefit fund 

had to be reduced to avoid improper windfall to the fund). 

Moreover, the Board can consider interim earnings 

without imposing a duty to seek additional employment. 

Under that approach, a non-terminated employee who seeks 

out interim earnings after an unlawful hours or wage 

reduction would have his backpay award reduced by those 

earnings, but would have the potential to earn more money 

overall. Meanwhile, a non-terminated employee who chooses 

not to seek interim earnings would receive his full backpay 

award (because he had no duty to find additional work), but 

would forego the potential to make even more money through 

additional employment. Both outcomes are consonant with 

the Board’s obligations “to ensure that its remedies are 

compensatory and not punitive, and to guard against windfall 

awards that bear no reasonable relation to the injury 

sustained.” Oil Capitol Sheet Metal, Inc., 349 N.L.R.B. No. 

118, at *8 (2007). 

 The Board’s concern about imposing a duty to mitigate is 

also belied by its willingness to account for interim earnings 

in other cases involving relatively small reductions in hours or 

wages. The Board has ordered make-whole relief “less any 

net interim earnings” when employees suffered an unlawful 

30- to 45-cent decrease in hourly wages, Atlantis Health Care 

Grp., 356 N.L.R.B. No. 26, at *1 (2010), and when they 

suffered an unlawful reduction in work hours from 40 to 32 

per week, Amerigas Propane L.P., 1997 WL 33315927 (Feb. 

12, 1997). In neither case did the Board fret about imposing a 

“duty to moonlight” on employees who had not been 

terminated. 

 The Board now claims its refusal to consider interim 

earnings is “consistent with well-established precedent,” 

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Respondent’s Br. 19, and cites 88 Transit Lines, where it 

chose not to consider interim earnings in a case “involving a 

violation other than discharge from employment.” 314 

N.L.R.B. at 325. But in its decision enforcing the Board’s 

order in that case, the Third Circuit included the caveat that it 

did “not read the [order] to mean that reduction for interim 

earnings is never appropriate in a nondischarge case,” and 

limited its “holding to approval of the Board’s rejection of the 

need to reduce backpay by interim earnings in this case, 

where the employees continued to work for the same 

company and there was no showing that they would not have 

absorbed the hours stipulated to have been lost by the unfair 

labor practice.” 88 Transit Lines, 55 F.3d at 827 n.2. That 

narrow holding does not support the Board’s ruling here. 

 To be clear, we do not hold the Board must consider 

interim earnings in this case. And because interim earnings 

“are earnings from employment that is a substitute for 

employment taken away as a result of unlawful conduct,” we 

do not mean to suggest the Board should consider earnings 

that did not stem from an employer’s unlawful labor practice. 

88 Transit Lines, 314 N.LR.B. at 325. Our holding regarding 

interim earnings is limited and simple: the Board’s 

explanation for its refusal to consider interim earnings is 

inadequate, therefore we remand for a more thorough analysis 

of the issue. See Bufco, 147 F.3d at 971 (“vacat[ing] the 

Board’s back pay computation and remand[ing] the case for 

reconsideration and a more adequate explanation” when the 

Board’s rationale for its decision was unpersuasive). Should 

the Board choose to consider interim earnings on remand, we 

also leave to it the task of deciding how to accommodate the 

various commands of Ogle, Woolworth, and their progeny. 

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B 

 The Hospital next claims the Board exceeded its 

authority by awarding backpay to employees hired into the 

respiratory department after the unlawful hours reduction took 

effect. We disagree. 

 In the 2011 Order, the Board found the “standard 

remedial action required in cases of this kind applies to 

individuals employed in the affected unit until Respondent 

rescinds its unlawful change and bargains with the Union 

about any future changes.” Cmty. Health Servs., 356 

N.L.R.B. No. 103, at *14. Because the Hospital still had not 

rescinded the unlawful hours reduction, the “reimbursement 

remedy continue[d] to apply to each subsequently-hired 

employee.” Id. 

The Hospital argues this case is akin to NLRB v. 

Dodson’s Market, Inc., 553 F.2d 617 (9th Cir. 1977), and 

Chauffeurs Local Union No. 171 v. NLRB, 425 F.2d 157 (4th 

Cir. 1970), in which the courts rejected backpay for 

subsequently hired employees. But those cases are 

distinguishable. In Dodson’s Market, the employer 

improperly reduced the work hours of two employees in 

retaliation for their decision to sign union representation 

cards. 553 F.2d at 618. The Ninth Circuit found the Board 

erred in awarding backpay to a third employee, who was hired 

for part-time work ten months after the retaliatory action, 

because there was no evidence the employer offered the new 

employee part-time employment instead of full-time 

employment for reasons relating to the prior unlawful act. Id.

at 619–20. Similarly, in Local Union No. 171, a successor 

company repudiated the collective bargaining agreement the 

preceding company had in place with its employees. 425 F.2d 

at 158. The Board found that conduct improper because 

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employees were entitled to “some protection . . . from a 

sudden change in the employment relationship.” Id. at 159. 

Accordingly, the Fourth Circuit affirmed the denial of 

backpay to employees hired after the takeover because they 

had not experienced any “sudden change in the employment 

relationship.” Id. 

 By contrast, the Hospital’s “permanent, department-wide 

reduction in the hours of work each week” limited the work 

(and pay) of those hired into the department after the 

reduction took effect. Cmty. Health Servs., 356 N.L.R.B. No. 

103, at *15. In that regard, this case more closely resembles 

88 Transit Lines. There, the employer improperly reduced the 

number of transit runs available to employees in a certain 

department. 55 F.3d at 825. Because the employees hired 

into that department after the unlawful schedule change 

“suffered the same disadvantage of not being able to bid on 

[the transit runs] as did the other unit employees,” 88 Transit 

Lines, 314 N.L.R.B. at 325, the Third Circuit approved the 

Board’s award of backpay to those subsequently hired 

employees. 55 F.3d at 826. That logic applies here: because 

the Hospital’s hours reduction denied newly hired employees 

a full work schedule, those employees suffered a “loss of 

earnings . . . as a result of [the Hospital’s] unlawful actions,” 

and deserve backpay under the 2004 Order. Cmty. Health 

Servs., 342 N.L.R.B. at 404. 

C 

 During the administrative hearing, the Hospital submitted 

an offer of proof claiming it had attempted to negotiate with 

the Union about the unlawful hours reduction, but the Union 

had failed to respond. The Hospital argued its backpay 

liability should be tolled as of August 28, 2007, the date on 

which it had “complied with its duty to bargain with the 

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Union” through its unreciprocated attempts to negotiate. 

Hospital’s Br. 28. The Board held the Union only had an 

obligation to negotiate if the Hospital had “restored the status 

quo ante.” Cmty. Health Servs., 356 N.L.R.B. No. 103, at *5. 

The Board thus found that, because the Hospital had not 

rescinded its unlawful action before it attempted to negotiate, 

the Union had no duty to bargain. Id. The Hospital now 

takes issue with the Board’s ruling, but we find the Board’s 

reasoning to be sound. 

 Employers must rescind their unlawful actions before 

attempting bargaining so they cannot “tak[e] advantage of 

[their] wrongdoing to the detriment of the employees.” U.S. 

Marine Corp. v. NLRB, 944 F.2d 1305, 1322 (7th Cir. 1991). 

Employers cannot force unions to come to the bargaining 

table in a position of weakness. That is why, “in cases 

involving unlawful unilateral changes, the Board’s normal 

remedy is to order restoration of the status quo ante as a 

means to ensure meaningful bargaining,” a policy that “has 

been approved by the Supreme Court.” Porta-King Bldg. 

Sys., 310 N.L.R.B. 539, 539 (1993) (citing Fibreboard Paper 

Prods. Corp. v. NLRB, 379 U.S. 203, 216 (1964)), enforced, 

14 F.3d 1258 (8th Cir. 1994). Accordingly, an employer’s 

attempt to negotiate without first rescinding the unlawful 

action “does not toll . . . backpay liability.” Porta-King Bldg. 

Sys., 310 N.L.R.B. at 540. 

 The Hospital asserts its situation is different because the 

Union “has decided to eschew the entire collective bargaining 

process,” and “backpay [should] not continue to run into 

eternity.” Hospital’s Reply Br. 9–10. The Hospital has not 

provided any evidence the Union has abandoned collective 

bargaining. And even if the Union has done so, the Hospital 

can simply rescind the hours reduction, and when its 

subsequent attempts to negotiate with the Union fail, it can 

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toll its backpay obligation by showing the bargaining process 

has reached a “lawful impasse.” NLRB v. Cauthorne, 691 

F.2d 1023, 1026 (D.C. Cir. 1982). 

 Finally, the Hospital cannot claim its backpay obligation 

has been tolled because the Union has waived its right to 

negotiate. The Board found such a waiver in American 

Diamond Tool, Inc., 306 N.L.R.B. 570 (1992), but there, the 

union had met with the employer shortly after the layoffs in 

question, had not requested bargaining about that issue, and 

had “expressly signaled its willingness to permit such conduct 

in the future” by proposing a process for laying off additional 

employees. Id. at 570–71. The Union’s conduct here does 

not approach that level of acquiescence. 

II 

 Because the Board did not adequately explain its refusal 

to consider interim earnings when calculating the backpay 

award, we grant the Hospital’s petition in relation to that 

issue, grant the Board’s cross-application for enforcement in 

all other respects, and remand for further consideration of the 

interim earnings question. 

 So ordered. 

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