1994 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-16-1994

NLRB v. New Assocs. d/b/a Hospitality Care

Center

Precedential or Non-Precedential:

Docket 93-3111

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Recommended Citation

"NLRB v. New Assocs. d/b/a Hospitality Care Center" (1994). 1994 Decisions. Paper 136.

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 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 Nos. 93-3111 and 3147 

 

 

 NATIONAL LABOR RELATIONS BOARD, 

 Petitioner in 93-3111, 

v. 

 NEW ASSOCIATES d/b/a HOSPITALITY CARE CENTER, 

 

 Respondent. 

 

 NEW ASSOCIATES, d/b/a Hospitality Care, 

 Petitioner in 93-3147, 

v. 

 NATIONAL LABOR RELATIONS BOARD, 

 Respondent. 

 

 On Appeal from a Decision of the 

 National Labor Relations Benefits Review Board 

 D.C. Civil Action Nos. 22-CA-17250 and 22-CA-17402 

 

 Argued on October 25, 1993 

 Before: BECKER, ROTH, and LEWIS, Circuit Judges

 (Opinion Filed: September 16, 1994) 

 
Charles P. Donnelly, Esquire (Argued) 

Jerry M. Hunter, 

 General Counsel 

Yvonne T. Dixon, 

 Acting Deputy General Counsel 

Nicholas E. Karatinos, 

 Acting Associate General Counsel 

Aileen A. Armstrong, 

 Deputy Associate General Counsel 

Deborah Schrager, Esquire 

National Labor Relations Board 

1099 14th Street, N.W. 

Washington, D.C. 20570-0001 

 Attorneys for Petitioner/ 

 Cross-Respondent 

Elliot J. Mandel, Esquire (Argued) 

Peter A. Schneider, Esquire 

Carmelo Grimaldi, Esquire 

Kaufman, Naness, Schneider & Rosenweig 

425 Broad Hollow Road 

Suite 315 

Melville, NY 11747-4730 

 Attorneys for Respondent/ 

 Cross-Petitioner 

 

 OPINION OF THE COURT 

 

ROTH, Circuit Judge: 

 The National Labor Relations Board (NLRB or the Board) 

petitions to enforce its July 6, 1992, order against employer New 

Associates d/b/a Hospitality Care (Hospitality Care). The order 

requires Hospitality Care to recognize 1115 Nursing Home and 

Hospital Employees Union (the Union), a division of 1115 Joint 
Board, as the exclusive bargaining representative of a certain 

unit of Hospitality Care employees and to cease and desist from 

certain unfair labor practices. Hospitality Care cross-petitions 

for review of the order. 

 The issue for our consideration is whether Hospitality 

Care was guilty of an unfair labor practice when, due to a 

pending decertification petition, it withdrew from further 

collective bargaining and it refused the Union's request for 

certain employee and financial records. For the reasons set out 

below, we will deny the NLRB's petition for enforcement of its 

order, we will grant Hospitality Care's petition for review, and 

we will remand this case to the NLRB to permit it to determine 

whether, under the rule we adopt here, the Board chooses to 

inform Hospitality Care of the percentage of employees who signed 

the decertification petition. 

I. 

 Hospitality Care operates a nursing home facility in 

Newark, New Jersey. Through several collective bargaining 

agreements (CBAs), Hospitality Care has recognized the Union as 

the exclusive bargaining representative of a unit of Hospitality 

Care employees. On May 1, 1990, pursuant to the terms of the 

then existing CBA, the Union sought to reopen and negotiate wages 

and other general terms and conditions of employment. It asked 

Hospitality Care for the names, addresses, dates of hire, 
categories, and wage rates of all employees covered by the CBA in 

order to formulate future bargaining demands and to make the 

employees aware of their eligibility for benefits and raises. 

Apparently, there was some confusion regarding the request and 

Hospitality Care did not supply the information. 

 On June 1, 1990, the Union sent Hospitality Care a list 

of demands for a new CBA. The list requested a wage increase for 

each year of the proposed agreement as well as other increases 

and benefits. Thereafter, the parties conducted three 

negotiating sessions. At each meeting, Hospitality Care rejected 

the Union's demands stating that, because it was having 

difficulty obtaining reimbursement from the state of New Jersey, 

it needed to have a total wage freeze for the first year of the 

new agreement. While the Union agreed to wage reductions in the 

third year, it would not agree to the first year wage freeze. 

 The parties held their last meeting on August 9, 1990. 

The Union again requested the employee information it had been 

seeking since May. Hospitality Care indicated that it was still 

in the process of compiling the information. The meeting ended 

without an agreement and without a date for further negotiations. 

 Shortly after the August 9 meeting, the Union contacted 

Hospitality Care and requested the employee information as well 

as permission to audit Hospitality Care's financial records in 

order to verify that Hospitality Care was unable to afford a 
first year wage increase. Despite the Union's repeated requests, 

Hospitality Care failed to supply any of the information. 

 On August 23, 1990, a Hospitality Care employee filed a 

decertification petition with the NLRB asserting that at least 

thirty percent of the employees no longer recognized the Union as 

their official bargaining representative. See National Labor 

Relations Act (NLRA), 29 U.S.C. § 159(c)(1)(A)(ii). Generally, 

an employee will file such a petition with a Regional Office of 

the NLRB in order to terminate the recognized union's status as 

bargaining representative. If the petition is supported by at 

least thirty percent of the unit employees and if the NLRB finds 

reasonable cause to believe that there is merit to the petition, 

the Regional Director will conduct a hearing. Id. at § 

159(c)(1). If the hearing demonstrates that there is a serious 

question of the union's representative status, the NLRB will hold 

a decertification election within the bargaining unit. Id. 

 In this case, although the NLRB made an initial 

determination that the prescribed minimum number of employees no 

longer supported the Union, it did not release the exact 

percentage of non-supporting employees to Hospitality Care. As a 

result, Hospitality Care did not know whether a majority of the 

employees sought decertification. Hospitality Care withdrew from 

further collective bargaining based on its assertion that the 

filing of the petition demonstrated a substantial showing of lack 

of support for the Union. 
 On September 12, 1990, while the decertification 

petition was still pending, the Union filed an unfair labor 

practice charge with the NLRB. The Union alleged that 

Hospitality Care had failed to bargain collectively in good faith 

because it refused to contribute to the Union's funds and to 

submit accurate lists of employees. After filing the charge, the 

Union attempted to schedule another bargaining session with 

Hospitality Care and requested audited financial statements 

covering several years. At the NLRB hearing, Hospitality Care 

indicated that it had denied the Union's requests due to the 

pending decertification petition. Hospitality Care argued that 

it had properly withdrawn from bargaining because a substantial 

number of employees no longer recognized the Union as their 

legitimate bargaining representative. 

 On September 19, 1991, Administrative Law Judge Fish 

concluded that Hospitality Care had violated sections 8(a)(1) and 

(5) of the NLRA, 29 U.S.C. §§ 158(a)(1),(5), by failing to meet 

and bargain with the Union. Judge Fish found in addition that 

Hospitality Care had engaged in an unfair labor practice by 

failing to furnish information relevant to collective bargaining 

and by refusing to permit an audit of its financial records. 

Judge Fish recommended that Hospitality Care cease and desist 

from refusing to bargain collectively with the Union. He held 

that, upon the Union's request, Hospitality Care should furnish 

the names, addresses, dates of hire, categories, and wage rates 
of unit employees. Moreover, Hospitality Care should provide 

the Union with audited financial statements or permit the Union 

to audit its financial records. Hospitality Care filed 

exceptions to Judge Fish's recommended order. 

 While the NLRB was considering Judge Fish's decision 

and Hospitality Care's exceptions to it, the parties resumed 

collective bargaining. On January 8, 1992, they executed a new 

agreement effective through December 23, 1995. The NLRB 

subsequently issued an order on July 6, 1992, adopting Judge 

Fish's determination. Hospitality Care has refused to provide 

the Union with its audited financial statements or to permit the 

Union to conduct an audit of its financial records. Hospitality 

Care maintains that such information is moot due to the new 

collective bargaining agreement. To date, Hospitality Care has 

not fully complied with the NLRB order.1 

 The NLRB filed an application for enforcement of its 

order with this Court. Hospitality Care filed a cross petition 

for review of the order. The NLRB has held the decertification 

petition in abeyance pending the outcome of this case. 

II. 

 

1. We note that Hospitality Care has filed a motion to expand 

the record to include evidence that it partially complied with 

the order by providing the Union with, inter alia, the names, 

addresses, and dates of hire of employees in the bargaining unit. 

Because the evidence does not influence our decision, we will 

grant the motion. 
 The NLRB had subject matter jurisdiction pursuant to 

section 10(a) of the NLRA. 29 U.S.C. § 160(a). This Court has 

jurisdiction over both the NLRB's application for enforcement of 

its final order and Hospitality Care's cross-petition for review 

pursuant to sections 10(e) and (f) of the NLRA. 29 U.S.C. 

§§ 160(e),(f). 

 In reviewing a rule adopted by the NLRB, we will give 

deference to the Board's interpretation of the NLRA provided that 

the rule is rational and consistent with the Act. See Fall River 

Dyeing & Finishing Corp. v. N.L.R.B., 482 U.S. 27, 42 (1987). We 

will set aside the NLRB's factual findings only if they are not 

supported by substantial evidence. Systems Management, Inc. v. 

N.L.R.B., 901 F.2d 297, 300 (3d Cir. 1990) (citing Graham 

Architectural Products Corp. v. NLRB, 697 F.2d 534, reh'g denied, 

706 F.2d 441 (3d Cir. 1983)). 

III. 

 The NLRA is designed to foster collective bargaining 

and industrial stability by providing a procedural framework for 

employers and employees to resolve conflicts and negotiate toward 

suitable working and contractual conditions. 29 U.S.C. § 157; 

NLRB v. Pincus Bros., Inc.-Maxwell, 620 F.2d 367, 376 (3d Cir. 

1980); Brockway Motor Trucks, Div. of Mack Trucks, Inc. v. NLRB, 

582 F.2d 720, 727 (3d Cir. 1978). It expressly confers a duty on 

employers to bargain in good faith with union representatives. 

Specifically, section 8 of the Act provides, 
 (a) It shall be an unfair labor practice for an 

employer -- 

 (1) to interfere with, restrain, or coerce 

employees in the exercise of the rights guaranteed 

in section 157 of this title;. . .2

 (5) to refuse to bargain collectively with the 

representatives of his employees. 

29 U.S.C. §§ 158(a)(1),(5). In order to advance the bargaining 

process, an employer has an affirmative obligation to furnish the 

recognized employee representative with information relevant to 

an agreement. NLRB v. Acme Indus. Co., 385 U.S. 432, 435-36 

(1967); NLRB v. New Jersey Bell Tel. Co., 936 F.2d 144, 150 (3d 

Cir. 1991). 

 In this case, Hospitality Care admits that it refused the 

Union's requests for employee and financial data. It 

acknowledges that under certain circumstances such a refusal can 

constitute a failure to bargain in good faith. See NLRB v. 

Truitt Mfg. Co., 351 U.S. 149, 152 (1956) (holding that when an 

employer asserts that he cannot afford to pay a wage increase, 

the Union has a right to inspect his financial records). See

 

2. Section 7 of the Act states: 

 Employees shall have the right to 

self-organization, to form, join, or assist 

labor organizations, to bargain collectively 

through representatives of their own 

choosing, and to engage in other concerted 

activities for the purpose of collective 

bargaining or other mutual aid or protection. 

. . . 

29 U.S.C. § 157. 
also C-B Buick, Inc. v. NLRB, 506 F.2d 1086, 1091 (3d Cir. 1974) 

(employer failed to bargain in good faith when it claimed that it 

could not afford to meet union demands and then refused union's 

request for financial data); Facet Enters., Inc. v. NLRB, 907 

F.2d 963, 980 (10th Cir. 1990) (employer's offer of financial 

data after it claimed economic hardship was insufficient to meet 

the good faith bargaining standard because it did not provide a 

meaningful picture of the employer's financial condition). 

 Hospitality Care further admits that it withdrew from all 

negotiations with the Union. While such actions might be 

considered violations of sections 8(a)(1) and (5) of the NLRA, 

Hospitality Care argues against enforcement of the instant order 

stating that it was no longer under a duty to bargain with the 

Union because the pending decertification petition raised a 

serious question as to the Union's representative status.3 

 

3. Hospitality Care also contends that the order should not be 

enforced because the new collective bargaining agreement renders 

the requested financial information moot. See C-B Buick, Inc. v. 

NLRB, 506 F.2d 1086 (3d Cir. 1974) (employer not required to 

comply with union's request for financial information when 

parties subsequently signed a new collective bargaining agreement 

and information was deemed irrelevant to that agreement). We 

decline to exercise jurisdiction over this claim because 

Hospitality Care had the opportunity to raise the mootness issue 

during the administrative hearing and failed to do so. See 29 

U.S.C. § 160(e) (providing that, absent extraordinary 

circumstances, a reviewing court shall not consider an objection 

not raised before the Board). In declining to address this 

issue, we are in no way making any ruling on the merits of the 

argument that, under the circumstances of this case, the 

execution of the new agreement absolved Hospitality Care of any 

charge of an unfair labor practice that would be otherwise 

applicable. 
Hospitality Care contends that it would be a needless waste of 

time and expense to continue bargaining for an agreement that 

could be rendered void if the Union is later ousted in a 

decertification election. 

 Hospitality Care urges the court to set aside the instant 

order and apply the rationale articulated in Telautograph Corp., 

199 NLRB 892 (1972). That case addressed factually similar 

circumstances in which an employer withdrew from bargaining based 

solely on the filing of a decertification petition. The NLRB 

concluded that, in the absence of any evidence of employer 

misconduct, a decertification petition required the employer to 

refrain from further bargaining because the petition itself 

signified a genuine question as to the union's representative 

status. The Board stated that the NLRA's decertification 

procedure "assures employees the right to determine that a 

currently recognized union is no longer the majority 

representative . . .." Id. at 894. 

 In the years following Telautograph, the NLRB retreated from 

its bright line rule that an employer could suspend bargaining 

based on the filing of a decertification petition. See RCA Del 

Caribe, Inc., 262 NLRB 963 (1982) (filing of a representation 

petition by an outside union will not permit an employer to 

withdraw from bargaining with the incumbent union). See also

National Cash Register Co., 201 NLRB 1034, 1035 (1973) (where it 

appears that an employer's unfair labor practice precipitated the 
decertification filing, employer must submit some other objective 

evidence of loss of majority support). The NLRB eventually 

overruled Telautograph, stressing its concern with promoting 

increased stability in the bargaining relationship. Dresser 

Indus., Inc., 264 NLRB 1088 (1982). 

 Although Dresser involved the same circumstances as 

Telautograph, the NLRB held in Dresser that an employer could not 

withdraw from bargaining while awaiting resolution of a 

decertification proceeding. Id. at 1089. It conceded that 

suspension of bargaining could be justified if, in addition to 

the petition, the employer submitted some objective evidence that 

the union had lost majority support. Id. at 1089 n.7. The 

petition itself, however, only requires the signatures of thirty 

percent of the unit employees and therefore, it "indicates 

nothing more than the disaffection of a minority of unit 

employees." Id. at 1088. The NLRB concluded that "[a] rule 

permitting an employer to withdraw from bargaining solely because 

a decertification petition has been filed does not give due 

weight to the incumbent union's continuing presumption of 

majority status and is not the best way to achieve employer 

neutrality in the election." Id. at 1089. 

 Based on Dresser, the NLRB found that Hospitality Care 

committed an unfair labor practice for refusing to provide 

information to, or bargain with, the Union. The NLRB maintains 

that Dresser is more effective than Telautograph as a means of 
preserving the stability and continuity of the bargaining 

relationship. 

 While several Circuits have followed Dresser, see Asseo v. 

Centro Medico del Turabo, Inc., 900 F.2d 445, 452 (1st Cir. 

1990), Briggs Plumbingware, Inc. v. NLRB, 877 F.2d 1282, 1288 

(6th Cir. 1989), St. Agnes Medical Ctr. v. NLRB, 871 F.2d 137, 

146 (D.C. Cir. 1989), Bryan Memorial Hospital v. NLRB, 814 F.2d 

1259, 1262 (8th Cir.), cert. denied, 484 U.S. 849 (1987), this 

circuit has not yet addressed the Dresser issue. But cf. NLRB v. 

Wallkill Valley Gen. Hosp., 866 F.2d 632, 636 n.3 (3d Cir. 1989) 

(after filing of decertification petition with Board, employer 

may not avoid duty to bargain by demonstrating loss of union 

majority status resulting from employer's own unfair labor 

practice). 

 In order to better understand the impact of Dresser, it is 

helpful to review current NLRB decertification procedures.4 

According to section 9(a) of the NLRA, a union "designated or 

selected for the purposes of collective bargaining by the 

majority of the employees in a unit . . . shall be the exclusive 

representative[] of all the employees in such unit for the 

purposes of collective bargaining . . .." 29 U.S.C. 

 

4. For a general discussion of the decertification process, and 

what the author considers to be the "chaotic" impact of Dresser

on that process, see Timothy Silverman, Comment, The Effect of a 

Petition for Decertification on the Bargaining Process: The 

Reversal of Dresser Industries, 25 San Diego L. Rev. 581 (1988). 
§ 159(a). Once a union receives NLRB certification, there is an 

irrebuttable presumption that the Union is the employee 

bargaining representative. NLRB v. Frick Co., 423 F.2d 1327, 

1330 (3d Cir. 1970); Terrell Mach. Co. v. NLRB, 427 F.2d 1088, 

1090 (4th Cir. 1970), cert. denied, 398 U.S. 929 (1970); Celanese 

Corp. of Am., 95 NLRB 664, 672 (1951). The employer may not 

refuse to bargain with the representative for one year following 

the date of certification. NLRB v. Burns Int'l Sec. Servs., 

Inc., 406 U.S. 272, 279 n.3 (1972); NLRB v. Gissel Packing Co., 

395 U.S. 575, 599 n.14 (1969). The presumption of majority 

status only becomes rebuttable at the end of the certification 

year or when the collective bargaining agreement has expired. 

NLRB v. Pennco, Inc., 684 F.2d 340 (6th Cir.), cert. denied, 459 

U.S. 994 (1982). 

 An employer, employee, group of employees, or labor 

organization may challenge the certified union's representative 

status by filing a decertification petition with an NLRB Regional 

Office. 29 U.S.C. §§ 159(c)(1)(A) and (B). Upon receipt of such 

a petition, the NLRB evaluates whether a "question of 

representation . . . exists." Id. If its investigation shows 

that a substantial number of employees support the petition, the 

Regional Director conducts a hearing. A "substantial number" of 

the employees supporting such a petition is defined by regulation 

as "at least 30 percent." 29 CFR § 101.18(a). At the conclusion 

of the hearing, the NLRB may direct a secret ballot election to 
determine the union's representative status. Id. at § 159(c)(1). 

 In reviewing the petition to determine the percentage of 

employee support, the Regional Director counts the number of 

authorization cards or employee signatures in order to determine 

whether there is a thirty percent showing of interest. Dresser 

Indus., Inc., 264 NLRB 1088 (1982). It is NLRB policy not to 

divulge this information to the employer. See Wallkill Valley 

Gen. Hosp., 866 F.2d at 634 (NLRB refused employer's request for 

showing of interest information stating that such information was 

exempt from disclosure under the Freedom of Information Act, 5 

U.S.C. § 552). Thus, while the NLRB is aware of whether or not a 

majority of employees supports a petition, the employer does not 

have the benefit of this information in assessing whether to 

continue bargaining with a union whose representative status may 

be in question. 

 The NLRB held that Hospitality Care was guilty of an unfair 

labor practice because it withdrew from bargaining on the basis 

of the decertification petition alone, without any further 

objective evidence that the Union had lost majority status. See

Dresser, 264 NLRB at 1089 n.7. We conclude that such a result is 

unsound when considered in combination with the NLRB's refusal to 

disclose to the employer the percentage of employees who 

supported the decertification petition. The NLRB possessed the 

data which would have enabled Hospitality Care to make an 

informed decision on whether the Union had lost majority support. 
 Dresser does not overturn the prior Board practice which 

permitted an employer to withdraw recognition of a union if the 

employer reasonably believed that a majority of the unit 

employees no longer supported the union, See Terrell Mach. Co., 

173 NLRB 1480, 1481 (1969), enf'd 427 F.2d 1088 (4th Cir. 1970), 

cert. denied, 398 U.S. 929 (1970). In the same light, the Board 

continues to acknowledge that, if the decertification petition, 

signed by a majority of the employees, is filed directly with the 

employer, the employer has objective grounds to believe that the 

union no longer has majority support and the employer need no 

longer recognize the union as the bargaining representative. See

National Medical Hosp. of Orange d/b/a Los Alamitos Medical Ctr., 

287 NLRB 415 (1987). We conclude that it follows logically that 

notification to the Board by a majority of unit employees should 

also constitute objective evidence of a lack of union majority 

support to the employer in the event that the employer learns of 

the percentage of support for the petition. With knowledge of 

majority support for the petition, the employer is justified in 

ceasing to bargain with the union. 

 We conclude that such an outcome is consistent with the aim 

of the NLRA to promote the resolution of conflict in the labor 

arena. If the employer knows of the filing of the petition but 

is not aware of the percentage of support, the employer faces the 

dilemma of either continuing to bargain with the union, which may 

lose its representational status, or of refusing to bargain and 
exposing itself to an unfair labor practice charge. On the other 

hand, if the union learns of the filing of a decertification 

petition, the union can delay having to face an election by 

seeking to bargain, having the employer deny that request, and 

then filing an unfair labor charge against the employer. The 

NLRB as a general practice will not schedule an election during 

the pendency of an unfair labor practice charge. See

Telautograph, 199 NLRB at 893 n.4, (citing Columbia Pictures 

Corp., 81 NLRB 1313, 1314 (1949)). With the filing of such a 

"blocking charge," a majority of employees who have filed a 

petition will not receive prompt resolution of the question of 

representation -- a result which has occurred in this case if in 

fact a majority of unit employees did sign the petition. 

 The NLRB contends, however, that the "showing of interest," 

e.g., the determination by the Board of the percentage of 

employees supporting the petition, is intended only to enable the 

Board to determine for itself whether further proceedings are 

warranted. See In re O.D. Jennings & Co., 68 NLRB 516, 518 

(1946) (showing of interest requirement is "to enable the Board 

to determine for itself whether or not further proceedings are 

warranted, and to avoid needless dissipation of the government's 

time, effort and funds"). The NLRB maintains that, if it did 

supply the employer with the percentage of employees supporting 

the petition, a strictly administrative requirement could result 

in the immediate termination of a union and compromise the right 
of employees to test the union's support through a 

decertification election. 

 We find that this contention lacks merit because the 

disclosure to an employer of majority support for 

decertification, if such should be the situation, meets the long 

recognized Board position that the loss of such majority support 

warrants the employer's withdrawal of recognition of the union as 

the bargaining representative and justifies the scheduling of an 

election. On the other hand, if a majority of the employees have 

not joined in the petition, bargaining will continue. 

 Moreover, absent any existent charge that the employer's 

unfair labor practices have caused the decertification petition 

to be filed in the first place, we are not persuaded that such 

disclosure places an undue burden on the NLRB. Because the 

Regional Director must determine whether the petition is 

supported by thirty percent of the employees in order to proceed 

with a hearing and election, it appears that, without any 

additional administrative costs, he could also calculate whether 

over fifty percent of the employees advocate decertification. 

 IV. 

 Based on the foregoing analysis, we will grant Hospitality 

Care's petition for review of the NLRB order. We find that the 

Dresser holding is a rational interpretation of the governing 

statute, but only in those situations where the employer has 
requested from the NLRB information on the percentage of 

employees who support the decertification petition and the NLRB 

has informed the employer that the percentage is less than a 

majority. 

 We acknowledge, however, that the NLRB may choose to 

continue its policy of refusing to disclose the percentage of 

employees supporting a decertification petition. If this should 

b