## F I L E D United States Court of Appeals Tenth Circuit 

### MAY 28 1999 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

ARAMARK CORPORATION,

Petitioner,

v. NATIONAL LABOR RELATIONS BOARD, Respondent,

THE FLORIDA PUBLIC EMPLOYEES COUNCIL 79, AFSCME (UNION), INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 465, AFL-CIO,

Intervenors. No. 97-9535
No. 97-9550

ON PETITION FOR REVIEW AND CROSS-APPLICATION FOR ENFORCEMENT OF AN ORDER OF THE NATIONAL LABOR RELATIONS BOARD (Petition Nos. 12-CA-18704 and 11-CA-17497)-2-

David W. Miller, of Baker & Daniels, Indianapolis, Indiana, (Philip J. Gibbons, Jr. with him on the briefs), for Petitioner. Howard E. Perlstein, Deputy assistant General Couns el, National Labor Relations Board, Washington, D.C., (Frederick L. Feinstein, G eneral Counsel, Linda Sher, Associate General Counsel, and Aileen A. Armstrong, Deputy Associate General Counsel, with him on the briefs), for Respondent. Marsha S. Berzon, Altshuler, Berzon, Nussbaum, Berz on & Rubin, San Francisco, California, (Jonathan P. Hiatt, AFL-CIO, Washington , D.C., John C. Dempsey, Larry P. Weinberg, and Margaret A. McCann, AFSCME, Washington, D. C., Richard Griffin and Helen L. Morgan, International Union of Operating Engineers, Washington, D.C., with her on the briefs ), for Intervenors.

Before SEYMOUR, Chief Judge, PORFILIO, ANDERSON, TACHA, BALDOCK, BRORBY, EBEL, KELLY, HENRY, BRISCOE, LUCERO and MURPHY, Circuit Judges.

MURPHY , Circuit Judge.

I. INTRODUCTION These matters originally came before the court on t he cross-petitions of Aramark Corporation (Aramark) and the National Labo r Relations Board (the Board). The Board sought enforcement of two orders finding that Aramark had committed unfair labor practices when it had refuse d to bargain with the Florida Public Employees Council 79, AFSCME (Council 79) an d the International Union of Operating Engineers, Local 465, AFL-CIO (Local 4 65) (collectively, the Unions). The Unions intervened to support the Boar d’s petition. Aramark, the1 Section 2(2) of the Act exempts from the Act’s cove rage “any State or

political subdivision thereof.” 29 U.S.C. § 152(2)

.

2 See Board of Trustees of Mem’l Hosp. v. NLRB , 624 F.2d 177, 185 (10 th Cir. 1980); R.W. Harmon & Sons, Inc. v. NLRB , 664 F.2d 248, 251 (10 thCir. 1981); Jefferson County Community Ctr. for Developmental D isabilities, Inc. v. NLRB , 732 F.2d 122, 126 (10 thCir. 1984); Denver Post of Nat’l Soc’y of Volunteers of Am. v. NLRB , 732 F.2d 769, 774 (10 thCir. 1984). -3- employer, argued that the Board was without jurisdi ction in these matters because: (1) the operations at issue are exempt fro m Board jurisdiction under the “political subdivision exemption” 1 to the National Labor Relations Act (the Act); and (2) Aramark’s government contracts do not leave it sufficient control over its labor relations to enable it to bargain meaningfull y with a labor union. A panel of this court denied enforcement of the Boa rd’s orders. See Aramark Corp. v. NLRB , 156 F.3d 1087, 1098 (10 thCir. 1998). The panel began by rejecting Aramark’s contention that it is an exe mpt political subdivision. See id . at 1092-95. Nevertheless, concluding it was boun d by the Memorial Hospital line 2 of circuit precedent, the panel held that the Boar d lacked jurisdiction over an employer operating under a government contract unle ss that employer retained sufficient control over the employment relationship to engage in meaningful collective bargaining (the so-called “governmental control test”). See id. at 1095- 98. Because the Board had not applied the governme ntal control test to the operations at issue here, the panel denied enforcem ent of the Board’s orders and remanded the case to the Board for further proceedi ngs. See id . at 1098.3 The en banc court has not reconsidered section II.A. of the pa nel opinion,

which rejects Aramark’s claim that it qualifies as a political subdivision under § 2(2) of the Act. See Aramark Corp. v. NLRB , 156 F.3d 1087, 1092-95 (10 thCir. 1998). That section of the opinion thus remains in effect. -4- Both the Board and the Unions filed petitions for r ehearing, requesting that the en banc court repudiate the Memorial Hospitalline of cases. The en banc court ordered the cases reheard. Upon review of th e Act and applicable authorities, the en banc court holds that the Board need not apply the governmental control test before exercising jurisdi ction under § 2(2) of the Act. Accordingly, we vacate sections II.B. and III. of the panel opinion and enforce the Board’s orders. 3

II. BACKGROUND A. The Evolution and Eventual Abandonment of the G overnmental Control Test Section 2(2) of the Act exempts from Board jurisdic tion “the United States or any wholly owned Government corporation, . . . o r any State or political subdivision thereof.” 29 U.S.C. § 152(2). By its plain terms, this exemption applies only to governmental entities. See Teledyne Econ. Dev. v. NLRB , 108 F.3d 56, 59 (4 thCir. 1997) (“There is nothing ambiguous about this language. By its terms, section 2(2) exempts only government ent ities or wholly owned government corporations from its coverage—not private entities acting as-5-

contractors for the government.”). Nevertheless, t he Board has historically declined to assert jurisdiction over governmental c ontractors, if the contracting governmental entity effectively controlled the basi c terms of employment. See infra pages 5-10 (discussing rise and fall of “intimate connection” and “governmental control” tests). For instance, prior to 1979, the Board utilized the intimate connection test for deciding whether to assert jurisdiction over pr ivate employers who had contracted with exempt governmental entities. See National Transp. Serv., Inc. , 240 N.L.R.B. 565, 1979 WL 8831, at *1-*2 (discussin g and overruling intimate connection test). The intimate connection test had two distinct aspects. First, the Board queried whether an “exempt [governmental] emp loyer exercises substantial control over the services and labor relations of th e nonexempt [private] contractor, so that the latter is left without suff icient autonomy over working conditions to enable it to bargain efficaciously wi th the union.” Rural Fire
Protection Co. , 216 N.L.R.B. 584, 1975 WL 5421, at *3. If the an swer to that question was “yes,” the Board would decline jurisdi ction. Id. If the answer was “no,” however, the Board would move on to examine “ the relationship of the services performed [by the nonexempt private contra ctor] to the exempted functions of the [governmental] institution to whom they were provided.” Id. at *4; see also National Transportation , 240 N.L.R.B. 565, 1979 WL 8831, at *2-6-

(discussing Rural Fire Protection and describing it as a “leading case enunciating the ‘intimate connection’ test”). If the nonexemptemployer provided services to the exempt entity which related directly to the ent ity’s governmental purpose, the Board would decline to assert jurisdiction. See Rural Fire Protection , 216 N.L.R.B. 584, 1975 WL 5421, at *4 (holding that fir efighting services provided by nonexempt employer to exempt city were so intimately connected to city’s “municipal purposes” as to justify declination of j urisdiction). As far back as 1969, the D.C. Circuit recognized that the Board co nsidered the intimate connection test a tool to help the Board exercise i ts discretion to decline jurisdiction in cases where “it believes the polici es of the Act will not be effectuated by an exercise of its authority.” Herbert Harvey, Inc. v. NLRB , 424 F.2d 770, 773-74 (D.C. Cir. 1969). In 1979, the Board jettisoned the intimate connecti on test in favor of the governmental control test. See National Transportation , 240 N.L.R.B. 565, 1979 WL 8831, at *2. In so doing, the Board concluded t hat “the first aspect of the [intimate connection] test—i.e., whether the employ er would be able to bargain effectively about the terms and conditions of emplo yment of its employees—is by itself the appropriate standard for determining whe ther to assert jurisdiction.” Id. Significantly, the Board characterized the intimate connection test as a tool created by the Board to help channel its discretion to decline jurisdiction under4 Section 14(c)(1) provides as follows: “The Board, i n its discretion, may,

by rule of decision or by published rules . . ., de cline to assert jurisdiction over any labor dispute involving any class or category o f employers, where, in the opinion of the Board, the effect of such labor disp ute on commerce is not sufficiently substantial to warrant the exercise of its jurisdiction.” 29 U.S.C. § 164(c)(1). -7- § 14(c)(1) of the Act. 4 Id. According to the Board, the intimate connection t est had failed miserably at achieving this function. See id. (“The test does not aid the Board in determining whether the assertion of juris diction is appropriate in a given situation; on the contrary, the attempts to d efine the criteria of ‘intimate connection’ in cases subsequent to Rural Fire Protection . . . only indicate the difficulties inherent in applying so vague a standa rd.”). In the view of the Board, the governmental control test provided “a more obje ctive, precise, and definitive standard for determining discretionary jurisdiction al issues” because it focused solely on the utility of collective bargaining in agiven employment environment. Id. Accordingly, from that point forward, the Board w ould simply “determine whether the employer itself meets the definition of ‘employer’ in Section 2(2) of the Act and, if so, determine whether the employer has sufficient control over the employment conditions of its employees to enable [t he employer] to bargain with a labor organization [acting] as [the employees’] r epresentative.” Id. at *1.5 In so doing, the Board once again affirmed that the governmental control

test is not a jurisdictional element inherent in § 2(2) of the Act. According to the Board, Res-Care and our dissenting colleague both contend that we should base our determination on Sec. 2(2) of the Act. We do not agree. As the Board stated in National Transportation , our inquiry is twofold, i.e., “whether the employer itself meets the defini tion of ‘employer’ in Section 2(2) of the Act and, if so . . . whetherthe employer has sufficient control over the employment conditions o f its employees to enable it to bargain with a labor organization as t heir representative.” It is clear . . . that Res-Care itself is not a Fed eral Government agency, and is thus not exempt from our jurisdictio n under Sec. 2(2) of the Act. It is also clear that Res-Care employs “employees” as that term is defined in Sec. 2(3). Our only inquiry, therefore, is whether, in exercising our discretion, we should de cline to assert jurisdiction because of the extent to which DOL, an entity exempt (continued...) -8- The Board refined and reaffirmed the governmental c ontrol test in 1986. See Res-Care, Inc. , 280 N.L.R.B. 670, 1986 WL 53982, at *4-*6. The B oard began by noting that

In reviewing National Transportation and its progeny, we find that the Board has not set forth a clear or consist ent explanation of the elements of effective or meaningful bargaining. In particular, the decisions have failed to define (a) those areas of an employer’s labor relations that are sufficiently important that the employer cannot bargain meaningfully if the exempt entity removes o r severely restricts the employer’s discretion, and (b) the ci rcumstances under which the government entity will be deemed to have removed or severely restricted such discretion. Id. at *4. Despite this lack of clarity, the Board co ncluded that the governmental control test continued to provide the best guidepos t for the Board’s discretionary declinations of jurisdiction under § 14(c)(1). See id. at *1 n.1, *4. 5 Nevertheless,5 (...continued)

from our jurisdiction, controls the employment cond itions of Res-Care's employees. We answer that question today in the affirmative on the ground that the policies of the Act would not be effectuated by our assertion of jurisdiction in thi s case. Res-Care, Inc. , 280 N.L.R.B. 670, 1986 WL 53982, at *1 n.1. -9- in an effort to refine the governmental control tes t, the Board held that it would decline jurisdiction whenever an employer lacked ul timate authority over “a core group of ‘basic bargaining subjects.’” Id. at *6. This core group specifically included employee-compensation issues such as “wage s and fringe benefits.” Id. Thus, under Res-Care ’s refined governmental control test, the Board con tinued to decline jurisdiction over governmental contractors who lacked final authority over wages and benefits, even if the contractors maintai ned exclusive power to hire, fire, promote, and demote. See id. In 1995, however, the Board overruled the governmental control test and, in Management Training Corp. , announced that “in determining whether the Board should assert jurisdiction, the Board will only con sider whether the employer meets the definition of ‘employer’ under Section 2( 2) of the Act, and whether such employer meets the applicable monetary jurisdi ctional standards.” 317 N.L.R.B. 1355, 1995 WL 451936, at *6. The Board reasoned that focusing on control over economic terms and conditions of emplo yment under the governmental control test oversimplified the bargai ning process and improperly6 For a detailed recitation of the facts leading up t o these enforcement

proceedings, see Aramark, 156 F.3d at 1089-92. -10- involved the Board in the substantive aspects of th at process. See id. at *4-*5. In addition, the Board noted that the governmental con trol test led to lengthy litigation. See id. at *5. The Board determined that it should not “b e deciding as a jurisdictional question which terms and condition s of employment are or are not essential to the bargaining process,” and stated th at “whether there are sufficient employment matters over which unions and employers can bargain is a question better left to the parties at the bargaining table and, ultimately, to the employee voters in each case.” Id. at *3, *1. The Board further stated that meaningf ul bargaining can occur even when the employer’s ability to respond to union demands [is] restricted by its contract with the exempt entity. The fact thatsome matters have to be approved by the contracting government agency does not mean that bargaining is meaningless; there are, after al l, proposals to be drafted—if not in the extant contract, then in futu re ones—as well as other matters to be negotiated which do not require contractual approval. Id. at *4. B. These Enforcement Proceedings Aramark is a Delaware corporation providing food se rvices nationwide. 6 Aramark manages food-service operations in the Duva l County School District (“School District”) in Jacksonville, Florida, and at The Citadel in Charleston,7 This court’s jurisdiction to review the Board’s ord ers arises under

subsections (e) and (f) of § 10 of the Act. See 29 U.S.C. § 160(e), (f) (providing that the Board may petition for enforcement, and any aggrieved person may petition for review, of any order of the Board to t he court of appeals for any circuit wherein an aggrieved person resides or tran sacts business). -11- South Carolina. The challenged Board orders arose out of Aramark’s refusal to recognize and bargain with the Unions who representAramark’s food service employees in Duval County and at The Citadel. 7 In July 1990, Aramark contracted with the Duval Cou nty School Board to manage all of the School District’s food-service op erations. Prior to this time, the School District had operated and managed its own fo od service program, which was staffed solely by public employees. Under the parties’ contract, employees in the food service operation as of the contract date, July 1, 1990, remained employees of Duval County and retained civil-servic e status. The employees were in a public-sector collective-bargaining unit represented by Council 79. All food service employees hired after July 1, 1990, we re Aramark employees and were not members of the public-sector collective-ba rgaining unit. Since the mid-1960s, Aramark and its predecessor, A RA Services, Inc., have contracted with the State of South Carolina to provide food services at The Citadel in Charleston, South Carolina. The Citadel is a military college owned and operated by the State of South Carolina.-12-

Council 79 and Local 465 each filed separate petiti ons with the Board, seeking to represent Aramark’s food-service employe es in Duval County and at The Citadel. Aramark resisted each petition, argui ng that the Board lacked jurisdiction because Aramark’s contracts with the S chool District and with The Citadel, respectively, did not give it sufficient c ontrol over the essential terms and conditions of employment to bargain meaningfully wi th a union. In each case, however, the Board’s Regional Director concluded th at the Board had jurisdiction under the Management Trainingtest, as Aramark was an “employer” with the meaning of § 2(2) and met the Board’s own monetary jurisdictional requirements. In each case, the Regional Director ordered an elec tion, which both unions won. The Board in each case rejected Aramark’s request t o reverse the assumption of jurisdiction and election order. After Aramark ref used to bargain with the duly elected unions, the Board issued an order in each c ase finding that Aramark had committed an unfair labor practice and ordering it to bargain. See Aramark Corp. , 323 N.L.R.B. 256, 1997 WL 101268 (Duval County pr oceedings); Aramark Corp. , 324 N.L.R.B. No. 10, 1997 WL 422767 (The Citadel proceedings). The cross-petitions to enforce and for review of those orders followed.8 “The Board has initial responsibility for determini ng who is an employer

for purposes of the Act . . . and its construction of its own statutory jurisdiction is entitled to great respect.” Jefferson County , 732 F.2d at 124 (citing, inter alia , NLRB v. E.C. Atkins & Co. , 331 U.S. 398, 403 (1947) and NLRB v. Natural Gas Utility Dist. , 402 U.S. 600, 605 (1971)).

9 See Pikeville United Methodist Hosp. of Ky., Inc. v . United Steelworkers of Am. , 109 F.3d 1146, 1152-53 (6 thCir. 1997); Teledyne Econ. Dev. v. NLRB , 108 F.3d 56, 59 (4 thCir. 1997).

10 See supra note 2 (setting forth Memorial Hospitalline of cases). -13- III. ANALYSIS This case presents the en banc court with a very narrow legal question: Is the National Transportation /Res-Care governmental control test a jurisdictional prerequisite mandated by § 2(2) of the Act? Based on the plain language of § 2(2) and the substantial deference due the Board’ s determination of its own statutory jurisdiction, 8 this court answers the question in the negative. In so doing, we join the Fourth and Sixth Circuits in hol ding that the governmental control test is not statutorily mandated 9 and repudiate contrary precedent from this circuit. 10 In accordance with the first principle of statutory construction, this court begins its analysis with the plain language of § 2( 2). See Bailey v. United States , 516 U.S. 137, 144 (1995). Section 2(2) exempts fro m coverage of the Act “the United States or any wholly owned Government corpor ation, . . . or any State or-14-

political subdivisions thereof.” 29 U.S.C. § 152(2 ). As aptly noted by the Fourth Circuit, There is nothing ambiguous about this language. Byits terms, section 2(2) exempts only government entities or wh olly owned government corporations from its coverage—not private entities acting as contractors for the government. When ena cting section 2(2), Congress was surely aware that private employ ers contracted with government entities to provide needed goods an d services. Congress could not have intended to compel the Boar d to decline jurisdiction over private employers based upon cons traints that their government contracts might impose upon the collecti ve bargaining process. If it had so intended, it would have exempted private contractors as well as governmental entities from t he Act. Teledyne , 108 F.3d at 59; see also Pikeville United Methodist Hosp. of Ky., Inc. v. United Steelworkers of Am. , 109 F.3d 1146, 1152 (6 thCir. 1997) (“[Section] 2(2) simply and straightforwardly exempts only certain n amed governmental units and other organizations from the reach of the NLRB.”). This court agrees with the Fourth and Sixth Circuit s that the meaning of § 2(2) is plain and unambiguous. Accordingly, both the Board and this court “‘must give effect to the unambiguously expressed i ntent of Congress.’” Holly Farms Corp. v. NLRB , 517 U.S. 392, 398 (1996) (quoting Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. , 467 U.S. 837, 843 (1984)). Thus, because Congress has unambiguously limited the reac h of the exemption in § 2(2) to governmental entities and wholly owned governmen t corporations, this court will not extend the exemption to government contrac tors. See id. at 1401-0211 The Unions agree that, prior to Management Training, the Board

purported to exercise its discretionary powers unde r § 14(c)(1) when it declined to assert jurisdiction over government contractors und er the governmental control test. They vigorously contest, however, whether § 14(c)(1) actually empowers the Board to decline jurisdiction in such cases. Nevertheless, as conceded by the Unions, the resolution of that question is unnecess ary to the determination of this case. Aramark also asserts that § 14(c)(1) does not vest in the Board a grand reservoir of discretion to decline to exercise its statutory jurisdiction. Instead, according to Aramark, the legislative history of § 14(c)(1) “‘establishes that the purpose of that section was to eliminate the so-cal led “no man’s land,” that category of cases involving employers doing less th an a certain volume of business and over which the Board had refused to ex ercise jurisdiction.’” Appellant’s Supplemental en banc Br. at 13 (quoting National Transportation , 240 N.L.R.B. 565, 1979 WL 8831, at *2 n.6). Thus, according to Aramark, the governmental control test could not have been based on § 14(c)(1). As the final piece of this syllogism, Aramark asserts that becau se the governmental control test could not legitimately be based upon § 14(c)(1 ), it must have been based on § 2(2) all along. Even assuming the merits of Aramark’s contentions r egarding the extent of the discretion granted the Board in § 14(c)(1), Ara mark’s ultimate conclusion simply does not follow. In such an assumed state o f affairs, it would be equally (continued...) -15- (holding that exemptions from jurisdiction containe d in the Act should not be “so expansively interpreted as to deny protection to wo rkers the Act was designed to reach”). This reading of § 2(2) is entirely consistent with the Board’s interpretation of the Act. As noted at length above, although the Board has historically declined to assert jurisdiction over the employees of govern mental contractors, it has consistently maintained that such declinations of j urisdiction were undertaken solely as a matter of Board discretion pursuant to § 14(c)(1) of the Act. 11 See11 (...continued)

logical to conclude that the Board’s promulgation o f the governmental control test was an ultra vires act rather than an implicit agency interpretation of the contours of § 2(2). This is especially true given the Board ’s consistent statements during the relevant period that the governmental control t est was discretionary, rather than statutory, in nature. See supra Section II.A.

12 See also Pikeville , 109 F.3d at 1152 (“[T]he ‘control’ test elucidate d in Res-Care, Inc. is only a tool previously used by the Board to def ine the parameters of the agency’s discretionary, as oppose d to statutory, jurisdiction. Only after jurisdiction pursuant to § 2(2) was established would the Board examine the control exercised by the employer over aspects of employment conditions to determine whether the NLRB would neve rtheless choose to forego examination of alleged labor law violations.”); Teledyne , 108 F.3d at 59 (“Other courts have recognized that the Res-Care governmental control test . . . was an exercise of the Board’s discretion.”); Human Dev. Ass’n v. NLRB , 937 F.2d 657, 660-61 (D.C. Cir. 1991) (“[The government contracto r] is unquestionably an ‘employer’ within the statutory jurisdiction of the Board. Based upon the exclusion of ‘any State or political subdivision th ereof’ from the definition of an employer, however, the Board may exercise its discr etion, with respect to a particular bargaining unit, not to assert jurisdict ion over a statutory employer that provides services exclusively to an exempt governme nt entity.” (citation omitted)); NLRB v. Kemmerer Village, Inc. , 907 F.2d 661, 663, 664 (7 thCir. 1990) (describing governmental control test as “a reasona ble systematization of the Board’s inherent discretion to allocate its limited resources efficiently” and as a discretionary “doctrine of prioritization” rather t han a “rule of law”); Herbert Harvey, Inc. v. NLRB , 424 F.2d 770, 773-74 (D.C. Cir. 1969) (holding th at Board clearly had statutory jurisdiction over government contractor quagovernment contractor, but noting that Board “has traditionall y reserved a discretion to decline jurisdiction in particular cases where it b elieves the policies of the Act will not be effectuated by an exercise of its autho rity”). -16- supraSection II.A. (discussing evolution and eventual d emise of governmental control test and noting Board’s position that test was purely discretionary). 12 The Board’s consistent view that governmental contracto rs fall outside § 2(2)’s political subdivision exemption and inside that pro vision’s definition of an13 See also NLRB v. Town & Country Elec., Inc. , 516 U.S. 85, 89-90 (1995)

(holding that “the Board often possesses a degree o f legal leeway when it interprets its governing statute, particularly wher e Congress likely intended an understanding of labor relations to guide the Act’s application”); NLRB v. Curtin Matheson Scientific, Inc. , 494 U.S. 775, 786 (1990) (holding that Congress delegated to Board “primary responsibility for deve loping and applying national labor policy”); E.C. Atkins , 331 U.S. at 414 (holding, in statutory jurisdicti on case, that the “responsibility for representing the public interest in [labor] matters and of reaching a judgment after giving due weight to all the relevant factors lay[s] primarily with the Board”).

14 Because the Board has not altered its view of its s tatutory jurisdiction under § 2(2), but has instead reconsidered the effi cacy and wisdom of declining jurisdiction over governmental contractors under § 14(c)(1), this court need not consider the amount of deference due under Chevron when an administrative agency alters its interpretation of a statute. See National Fed’n of Fed. Employees v. Department of Interior , 119 S. Ct. 1003, 1015-16 (1999) (O’Connor, J., dissenting) (arguing that agency interpretation is entitled to less deference in such situations). -17- employer “is entitled to great respect.” NLRB v. Natural Gas Utility Dist. , 402 U.S. 600, 605 (1971). 13 Based on the Act’s plain language and the Board’s consistent view of its statutory jurisdiction, 14 this court concludes that the governmental control test is not a prerequisite to the Board’s exercise of jurisdiction over a governmental contractor pursuant to § 2(2). The plain language of § 2(2) aside, Aramark argues that the Supreme Court incorporated the governmental control test into the Act in its decision in NLRB v. E.C. Atkins & Co. , 331 U.S. 398 (1947). Aramark reads far too much into the E.C. Atkins opinion. See Teledyne , 108 F.3d at 59 n.2 (rejecting notion that E.C. Atkins mandated governmental control test and noting thatopinion instead-18-

“emphasized that the Board has considerable discret ion in deciding whether to exercise jurisdiction over non-exempt private entit ies”).
In E.C. Atkins , the Supreme Court analyzed whether the Board coul d validly assert jurisdiction over a bargaining unit of private guards who were employees of a governmental defense contractor, whe n the guards were required to be civilian auxiliaries to the United States Army military police. See 331 U.S. at 399. Military authorities reserved the right to veto the hiring and firing of individual guards and “were authorized to take appr opriate action through the plant management to correct conditions which might result in defective or inadequate performance by the guard forces of its o rdinary protective duties.” Id. at 407 (quotations omitted). Despite the substantial control exercised by the mi litary over the guards, the Court affirmed the Board’s exercise of jurisdic tion. See id. As a general matter, it noted that [T]he terms “employee” and “employer” in this statu te carry with them more than the technical and traditional common law definitions. They also draw substance from the policy and purpos es of the Act, the circumstances and background of particular empl oyment relationships, and all the hard facts of industrial life. And so the Board, in performing its delegated funct ion of defining and applying these terms, must bring to it s task an appreciation of economic realities, as well as a re cognition of the aims which Congress sought to achieve by this statute. This does not mean that it should disregard the technical and tra ditional concepts of “employee” and “employer.” But it is not confined to those concepts. It is free to take account of the more r elevant economic-19-

and statutory considerations. And a determination by the Board based in whole or in part upon those considerations is entitled to great respect by a reviewing court, due to the Boar d’s familiarity with the problems and its experience in the adminis tration of the Act. Id. at 403-04. Applying these general precepts to the facts before it, the Court concluded that jurisdiction was appropriate even th ough the military, an exempt governmental entity, controlled many functions of t he employment relationship. According to the Court,

In this setting, it matters not that respondent was deprived of some of the usual powers of an employer, such as th e absolute power to hire and fire the guards and the absolute power to control their physical activities in the performance of their service. Those are relevant but not exclusive indicia of an employer-e mployee relationship under this statute. As we have seen, judgment as to the existence of such a relationship for purposes of th is Act must be made with more than the common law concepts in mind . That relationship may spring as readily from the power t o determine the wages and hours of another, coupled with the obligation to bear the financial burden of those wages and the receipt of the benefits of the hours worked, as from the absolute power to hire an d fire or the power to control all the activities of the worker. In other words, where the conditions of the relation are such that the process of collective bargaining may appropriately be utilized as contemplated by the Act, the necessary relationship may be found to be present. Id. at 413-14. Consistent with E.C. Atkins , the Board’s decision to abandon the governmental control test was made based on the “ha rd facts of [modern] industrial life” and with reference to the question whether “the process of15 For exactly these reasons, this court rejects Arama rk’s claim that the

Board’s Management Trainingtest constitutes an arbitrary and capricious exerc ise of the Board’s jurisdiction. In particular, we agr ee with the Fourth Circuit that for each policy argument advanced by employers in o pposition to Management Training , there is a corresponding policy argument in favorof the approach offered by the Board. See Teledyne , 108 F.3d at 60. Congress left the resolution of these policy disputes to the Board, not the courts. See Charles D. Bonanno Linen Serv., Inc. v. NLRB , 454 U.S. 404, 418 (1982) (holding that courts mus t not “substitute [their] judgment for those of the Board with respect to the issues that Congress intended the Board should resolve”). -20- collective bargaining may appropriately be utilized as contemplated by the Act.” Id. at 403, 414. As noted by the Board,

In retrospect, we think the emphasis in Res-Care on control of economic terms and conditions was an over-simplific ation of the bargaining process. While economic terms are certa inly important aspects of the employment relationship, they are no t the only subjects sought to be negotiated at the bargaining table. . . . In times of downsizing, recession, low profits, or when economi c growth is uncertain or doubtful, economic gains at the bargai ning table are minimal at best. Here the focus of negotiations may be upon such matters as job security, job classifications, emplo yer flexibility in assignments, employee involvement or participation and the like. Management Training , 317 N.L.R.B. 1355, 1995 WL 451936, at *4; see also Pikeville , 109 F.3d at 1153 (“In today’s labor market, the e conomic packages offered to employees are no longer the sole prizes of a bargaining event.”). 15 We find no support in E.C. Atkins for the proposition that the National Transportation /Res-Care governmental control test is a prerequisite to the Board’s exercise of jurisdiction under § 2(2).-21-

As a final matter, Aramark contends that this court ’s Memorial Hospital line of cases, see supranote 2, was soundly decided and should guide our resolution of this appeal. As set out at some leng th in the panel opinion, the Memorial Hospitalline clearly held that the governmental control te st was a jurisdictional element inherent in § 2(2) of the Ac t. See Aramark, 156 F.3d at16 In its separate petition for rehearing en banc , the Unions argue that the

panel erred when it concluded that it was bound by the Memorial Hospitalline. According to the Unions, the panel should have appl ied a special rule of relaxed stare decisis applicable only in the administrative law context. Under this special rule, “where an agency has articulated a new statut ory interpretation, that interpretation should ordinarily be reviewed on its merits, even where the circuit has previously applied a different construction of the statute.” Intervenor’s Pet. for Reh’g at 5 (citing NLRB v. Viola Indus.-Elevator Div., Inc. , 979 F.2d 1384, 1394 (10 thCir. 1992) ( en banc ); Mesa Verde Constr. Co. v. Northern Cal. Dist. Council of Laborers , 861 F.2d 1124, 1134-36 (9 thCir. 1988) ( en banc )). Whatever the merits of such a special rule of admin istrative stare decisis , a question we need not and do not resolve here, it is inapplicable given the particular facts of this case. As the panel noted at some length, see Aramark, 156 F.3d at 1096-98 & n. 15, and as conceded by the Boa rd in its petition for rehearing en banc , the Memorial Hospitalline of cases cannot reasonably be read as merely deferring to the governmental control tes t as simply one of a series of reasonable interpretations to which § 2(2) was susc eptible. Instead, those opinions squarely, though erroneously, hold that § 2(2) mandates the governmental control test as a prerequisite to the Board’s statutory jurisdiction. See, e.g. , Memorial Hospital , 624 F.2d at 185 (holding that when a “private employer who has contracted to provide services to an exempt political subdivision does not retain sufficient control overthe employment relationship to engage in meaningful collective bargaining, § 2(2) deprives the Board of jurisdiction”); R.W. Harmon , 664 F.2d at 251 (“Courts have interpreted section 2(2) to prohibit the Board from asserting jurisdict ion over private employers . . . if the employer does not ‘retain sufficient control over the employment relationship to engage in meaningful collective bar gaining.’” (quoting Memorial Hospital , 624 F.2d at 185)). -22- 1096-97. 16 For those reasons set out above, this court concl udes that the Memorial Hospitalline of cases was wrongly decided. Furthermore, as persuasively argued by the Board, w e conclude that the Memorial Hospitalline is founded on a mistaken failure to distingui sh between the Board’s statutory and discretionary jurisdictio n. The Board is bound by its-23-

own rules until it changes them, “including the rul es that it has adopted in order to channel what would otherwise be an essentially u nreviewable discretion in the deployment of its limited prosecutorial resources.” Kemmerer Village, Inc. v.
NLRB , 907 F.2d 661, 663 (7 thCir. 1990); see also Burinskas v. NLRB , 357 F.2d 822, 827 (D.C. Cir. 1966) (holding that Board canno t “act arbitrarily nor can it treat similar situations in dissimilar ways”). Bec ause it had embraced the governmental control test for several decades priorto the advent of the Memorial Hospitalline, the Board had no reason to object to the app licability of the test in any of the cases in that lineage. Accordingly, it appears that both the Board and this court focused on the applicability of the testto the facts of each particular case without repeatedly intoning the test’s discret ionary and potentially transitory nature. The result appears to have been a blurring of the distinction in this court’s opinions. For instance, in Memorial Hospital , the court held that “[t]he governmental subdivision’s substantial control over the labor re lations policies of the party contracting with the governmental agency requires the Board to decline to
assert jurisdiction.” 624 F.2d at 185 (emphasis added). While the word “requires” implies a lack of statutory jurisdiction , the term “decline to assert” implies an act of discretion. Similarly, in R.W. Harmon , the court cast the petitioner’s claim in discretionary terms (“Petitio ner . . . argues that the Board-24-

should decline to exercise jurisdiction . . . .”), yet decided the case in terms of a statutory-jurisdictional bar (“Courts have interpre ted section 2(2) to prohibit the Board from asserting jurisdiction . . . .”). 664 F .2d at 248 (emphasis added) (citing Memorial Hospital). By the time Jefferson Countywas decided, this court recognized a distinction between the Board’s discre tionary and statutory jurisdiction, but concluded that the distinction ha d been rendered meaningless by the decision in Memorial Hospital

. See Jefferson County , 732 F.2d at 126. Whatever the genesis of the Memorial Hospitalline, this court is convinced that the entire pedigree is faulty. Accordingly, t hose portions of each decision in the Memorial Hospitalline, see supranote 2, inconsistent with this opinion are hereby overruled.

IV. CONCLUSION The orders of the Board are hereby ENFORCED . Aramark’s petition for
review is DENIED . Sections II.B. and III. of the panel opinion are VACATED

.