Kindred Nursing Centers East, LLC v. National Labor Relations Board

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 13a0231p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________

X
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KINDRED NURSING CENTERS EAST, LLC, dba
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Kindred Transitional Care and Rehabilitation
-Mobile, fka Specialty Healthcare and -
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Nos. 12-1027/1174
Rehabilitation Center of Mobile,
,
>
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Petitioner/Cross-Respondent,

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v.
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Respondent/Cross-Petitioner, -
NATIONAL LABOR RELATIONS BOARD,

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UNITED STEEL, PAPER AND FORESTRY,
RUBBER MANUFACTURING, ENERGY, ALLIED -
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INDUSTRIAL AND SERVICE WORKERS

Intervenor. -
INTERNATIONAL UNION,
N
On Petition for Review and Cross Application for
Enforcement of a Decision and Order of the
National Labor Relations Board.
No. 15-CA-68248.
Argued: January 23, 2013
Decided and Filed: August 15, 2013
Before: MARTIN and ROGERS, Circuit Judges; TARNOW, District Judge*

_________________

COUNSEL
ARGUED: Matthew J. Ginsburg, AFL-CIO LEGAL DEPARTMENT, Washington,
D.C., for Intervenor. Charles P. Roberts III, CONSTANGY, BROOKS & SMITH,
Winston-Salem, North Carolina, for Petitioner/Cross-Respondent. Robert J. Englehart,
NATIONAL LABOR RELATIONS BOARD, Washington, D.C., for Respondent/Cross-
Petitioner. ON BRIEF: Matthew J. Ginsburg, AMERICAN FEDERATION OF
LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS LEGAL

*
The Honorable Arthur J. Tarnow, Senior District Judge for the Eastern District of Michigan,
sitting by designation.

1
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 2

DEPARTMENT, Washington, D.C., for Intervenor. Charles P. Roberts III,
CONSTANGY, BROOKS & SMITH, Winston-Salem, North Carolina, Clifford H.
Nelson, Jr., CONSTANGY, BROOKS & SMITH, Atlanta, Georgia, Edward Goddard,
KINDRED HEALTHCARE, Wrentham, Massachusetts, for Petitioner/Cross-
Respondent. Robert J. Englehart, Amy H. Ginn, Linda Dreeben, NATIONAL LABOR
RELATIONS BOARD, Washington, D.C., for Respondent/Cross-Petitioner. Thomas
V. Walsh, JACKSON LEWIS LLP, White Plains, New York, Ronald E. Meisburg,
James F. Segroves, Lawrence Z. Lorber, PROSKAUER ROSE LLP, Washington, D.C.,
Mark Theodore, PROSKAUER ROSE LLP, Los Angeles, California, Jonathan C. Fritts,
MORGAN, LEWIS & BOCKIUS LLP, Washington, D.C., Michael J. Hunter,
HUNTER, CARNAHAN, SHOUB, BYARD & HARSHMAN, Columbus, Ohio, Ryan
Griffin, SERVICE EMPLOYEES INTERNATIONAL UNION, Washington, D.C.,
Jennifer L. Branch, GERHARDSTEIN & BRANCH CO. LPA, Cincinnati, Ohio, for
Amici Curiae.
_________________

OPINION
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BOYCE F. MARTIN, JR., Circuit Judge. Under federal labor law, workers in
the private sector who wish to be represented by a union must petition the National
Labor Relations Board to hold an election to determine if a majority of the workers
wants union representation. Federal labor law gives the Board wide discretion to
delineate the “bargaining unit,” the term for the group of workers that will vote on union
representation. Kindred Nursing Centers East, LLC, a nursing home operator, has
petitioned for review of the Board’s order that a bargaining unit of Certified Nursing
Assistants “constitute[d] an appropriate unit.” Specialty Healthcare and Rehab. Ctr. of
Mobile, 357 N.L.R.B. No. 83, 2011 WL 3916077 at *2 (2011). The Board has petitioned
for enforcement of the order. The central issue in this case is whether the Board acted
within its discretion in deciding Specialty Healthcare. We conclude that it did, and we
therefore DENY Kindred’s petition for review and GRANT the Board’s cross-petition
for enforcement.

We derive the facts in this case from the Board’s opinion in Specialty
Healthcare, 357 N.L.R.B. No. 83, 2011 WL 3916077 (2011), which we will call
Specialty Healthcare II to distinguish it from the Board’s previous case, Specialty
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 3

Healthcare, 356 N.L.R.B. No. 56, 2010 WL 5195445 (2010), which we will call
Specialty Healthcare I.

Kindred operates a nursing home and rehabilitation center in Mobile, Alabama.
Specialty Healthcare, 357 N.L.R.B. No. 83, 2011 WL 3916077, at *2 (2011). There is
no history of collective bargaining at this nursing home. Id. The facility, which the
parties agree is a non-acute healthcare facility, consists of four floors and has beds for
about 170 residents. Id.

Kindred places its employees in one of eight separate departments: nursing,
nutrition services, resident activity, maintenance, administration, medical records,
central supply, and social services. Id. at *3. The facility’s executive director is the
highest-ranking management official on site. The nursing director and business office
manager report to the executive director. Id. The individual heads of all but one
department report to the nursing director, as do the staffing coordinator, the medical
records clerk, and the data entry clerk. Id.

The nursing department consists of fifty-three Certified Nursing Assistants
(CNAs) not including the Licensed Practical Nurses (LPNs) and Registered Nurses
(RNs). Id. The LPNs directly supervise the CNAs on each nursing wing. Id. The RNs
supervise the LPNs and report to the nursing director. Id. The CNAs work one of three
eight-hour shifts and work directly with up to seventeen residents each. Id. Kindred
typically assigns three to five CNAs to work on each nursing floor and usually assigns
each CNA to work in a particular area of a nursing floor. Id.

As for job duties, CNAs help residents with daily functions, such as grooming,
oral hygiene, bathing and dressing, and incontinence care. Id. CNAs get food trays for
residents who have their meals on a nursing floor and help these residents eat. Id. CNAs
turn and lift residents in their beds, move residents to their wheelchairs, assist with
walking short distances, and help them get around the facility. Id. CNAs also
accompany residents to appointments outside the nursing home. Id. CNAs take
residents’ vital signs and monitor their daily food and fluid intake and output. Id. CNAs
complete an “Activities for Daily Living” flow sheet on which they record the residents’
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 4

vital signs and daily functions and activities, such as bathing, dressing, and walking. Id.
CNAs also note on their medical charts the services and therapies that residents receive,
and note residents’ progress or lack thereof. Id. CNAs are the only employees other
than the RNs and LPNs who are certified or licensed to provide certain aspects of
residents’ care, such as feeding and positioning. Id.

Kindred has designated several CNAs as “restorative CNAs” who help residents
in therapeutic programs to maintain functions such as walking and eating or to increase
their range of motion. Id. The restorative CNAs also help residents with their meals in
the dining room and transport them back to their rooms after therapeutic activities or
meals. Id.

When a new resident comes to the nursing home, an interdisciplinary team of
employees from the nursing, nutrition-services, resident-activity, and social-services
departments assesses the new resident’s medical, dietary, and social needs. Id. The
CNAs attend these meetings and contribute to formulating the new resident’s care plan.
Id. CNAs may also attend additional meetings of the interdisciplinary team if a
resident’s care plan needs to be changed. Id. CNAs also attend in-service training
sessions. Id.

The CNAs retrieve food carts from the first floor kitchen and take them to their
assigned nursing floors for residents who eat meals in their rooms or on their floor’s sun
porch. Id. at *4. CNAs may contact the central-supply clerk if there is a shortage of
supplies on the floor, and the clerk may contact a CNA if the clerk has a question about
specific items that a resident under the CNA’s care may need. Id. The social-services
assistant may contact the CNA to get certain information about a resident, such as
whether the resident met with a particular doctor. Id.

Kindred prefers that its CNAs have a high-school diploma. Id. CNAs must be
certified by the state, with certification requiring completion of sixteen hours of
classroom training and seventy-two hours of general education. Id. The certification
course includes the basic components of caring for geriatric and incapacitated patients,
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 5

such as bathing, dressing, feeding, and the like. Id. To maintain their certification, the
state requires CNAs to periodically attend specialized training. Id.

Kindred pays the CNAs a starting wage of $8.50 per hour, and may pay them
raises of ten cents per hour for each year of experience up to fifteen years. Id. Kindred
pays the CNAs time-and-a-half for overtime work. Id. The CNAs’ immediate
supervisors evaluate the CNAs annually; the evaluation provides the basis for possible
pay increases (typically three percent) that the nursing home’s executive director must
approve. Id. The CNAs wear the same uniforms as the LPNs and RNs. Id. The Board
stated that the record did not show that any employees from other classifications had
transferred into a CNA position, although the record did show that one CNA transferred
to a unit-clerk position. Id.

Kindred sought to include in the bargaining unit with the CNAs about thirty-three
other employees whom it deems service and maintenance employees. Id. These
employees include: resident activity assistants, who design and lead individual and group
recreational activities for the residents; the social services assistant, who works with
residents and their families to identify residents’ needs and to resolve problems as they
arise; the staffing coordinator, who prepares work schedules for the nursing staff,
contacts replacement personnel as necessary, and determines which CNA will
accompany a resident to an appointment outside the nursing home; the maintenance
assistant, who performs routine maintenance, upkeep, and repair services on the
building, grounds and equipment; and the central-supply clerk, who maintains an
inventory of items used by each resident, and orders, receives, and stocks supplies. Id.

Kindred would also include: cooks, who prepare meals for residents; dietary
aides, who assist cooks and deliver prepared food to the dining room or the nursing
floors; the medical-records clerk, who creates and maintains residents’ medical records
and prepares correspondence and reports; the data-entry clerk, who inputs in the
employer’s electronic-records system the residents’ care plans, physicians’ orders,
resident-cash logs and financial charges, and other resident information; a business-
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 6

office clerical; and a receptionist. Id. The Board noted that the record contained no
information about the business-office clerical or the receptionist. Id. at *20 n.4.

In general, the employees Kindred seeks to include in the bargaining unit report
to the managers of their respective departments. Id. at *5. The managers of all but one
of these departments report directly to the director of nursing. Id. None of the other
employees are in the nursing department and therefore none report to the RNs. Id. Most
of the classifications Kindred seeks to add to the bargaining unit have similar
educational requirements. Id. For example, cooks and dietary aids must have completed
the tenth grade. Id. Cooks must have a certification from the state, which they can get
by successfully completing a course taught by the local health department. Id. at *20
n.5. Employees in the remaining classifications must have a high-school degree or its
equivalent. Id. at *5. Activities assistants typically have only a high-school diploma
even though the job description states that the position requires a bachelor’s degree. Id.
at *20 n.6. The employer requires all employees to complete the same employment
application, go through the same hiring process, pass a drug test, and go through the
same new employee orientation. Id. at *5.

Kindred’s nursing home’s normal business hours are 8 a.m. to 4:30 p.m. Id.
Cooks and dietary aides typically work either of two shifts to cover the three daily meals,
with the first shift starting between 5 to 6 a.m. and covering breakfast and lunch, and the
later shift covering lunch and dinner. Id. One activity assistant works normal business
hours, while the other staggers her time to accommodate residents’ after-dinner
activities, which can run as late as 8 p.m. Id. The maintenance assistant works 7 a.m.
to 3 p.m. Id. None of the other employees staff the three 8-hour shifts that the CNAs
staff. Id. The employer pays all employees hourly and on a bi-weekly basis. Id. The
starting hourly wage rates are: $7 for dietary aides; $9 for cooks and the receptionist;
$10 for the central supply and medical records clerks and the staffing coordinator; and
$15 for the data entry clerk. Id.

Like the CNAs, Kindred gives these employees annual evaluations under the
same appraisal system, and gives them the opportunity for wage increases based on
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 7

favorable evaluations. Id. The employer makes all employees eligible for the same
benefits, such as: health and life insurance; retirement and profit-sharing plans; sick
leave and vacations; tuition reimbursement; and performance-based special awards
programs. Id. Kindred subjects all employees to the same personnel policies and
employee handbook. Id. Furthermore, all employees may purchase meals in the dining
room at the same prices; they all wear name badges; use the same parking lot, time
clock, break room, smoking area and bulletin boards; attend regular monthly meetings
as well as occasional group meetings and in-service training sessions; and are invited to
attend the annual holiday party and other social functions. Id. Dietary aides and the
maintenance assistant wear uniforms, but the uniform differs from the uniforms the
CNAs, LPNs, and RNs wear. Id.

The union petitioned to represent a unit of fifty-three full-time and regular part-
time CNAs. Id. at *2. At a proceeding before a hearing officer of the Board’s Region
15, Kindred argued that the bargaining unit should be expanded to include an additional
eighty-six non-supervisory, non-professional service and maintenance employees. Id.
Afterwards, Region 15's Regional Director issued a Decision and Direction of Election
in this proceeding, finding that the petitioned-for unit of full-time and regular part-time
CNAs at the employer’s nursing home and rehabilitation facility constituted an
appropriate unit in which to conduct an election. Id. at *1. The Region held the
election, and the union won. Id. Afterwards, Kindred filed a timely request for Board
review of the Regional Director’s decision, arguing that the Regional Director had erred
in finding the petitioned-for unit appropriate. Id. The Board granted review. Id.

Afterwards, in Specialty Healthcare I, the Board invited the parties in the case
and interested amici to file briefs to address the issues raised in the case. The Board
asked the parties and amici to address in their briefs some or all of the following eight
questions: (1) What had been their experience applying the “pragmatic or empirical
community of interests approach” of Park Manor Care Center, 305 N.L.R.B. 872 (1991)
and subsequent cases?; (2) What factual patterns had emerged in non-acute healthcare
facilities illustrating what units are typically appropriate?; (3) How had applying Park
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 8

Manor hindered or encouraged employee free choice and collective bargaining in non-
acute healthcare facilities?; (4) How should the rules for appropriate units in acute health
care facilities set forth in Section 103.30 be used in determining the appropriateness of
the proposed units in non-acute healthcare facilities?; (5) Would the proposed unit of
CNAs be appropriate under Park Manor?; (6) If such a unit would not be appropriate
under Park Manor, should the Board reconsider the test set forth in Park Manor?; (7)
Where there is no history of collective bargaining, should the Board hold that a unit of
all employees performing the same job at a single facility is presumptively appropriate
in non-acute healthcare facilities?; (8) Should the Board find a proposed unit appropriate
if, as found in American Cyanamid Co., 131 N.L.R.B. 909, 910 (1961), the employees
in the proposed unit are “readily identifiable as a group whose similarity of function and
skills create a community of interest.”? Specialty Healthcare I at *2. The employer and
amici then filed briefs.

The Board then decided the case before us, Specialty Healthcare II, which
purported to do three things: (1) overrule Park Manor Care Center, 305 N.L.R.B. No.
135 (1991), a test the Board had applied to determine the appropriateness of a bargaining
unit in a nursing home; (2) return to applying the “traditional community-of-interest
approach” to nursing homes; and (3):

reiterate and clarify that, in cases in which a party contends that a
petitioned-for unit containing employees readily identifiable as a group
who share a community of interest is nevertheless inappropriate because
it does not contain additional employees, the burden is on the party so
contending to demonstrate that the excluded employees share an
overwhelming community of interest with the included employees.

Specialty Healthcare II, 357 N.L.R.B. No. 83, 2011 WL 3916077, at *1 (2011)
(emphasis added).

Kindred refused to bargain. The union filed an unfair-labor-practice charge, and
the Board found that Kindred had violated the Act. An employer cannot get direct
judicial review of the Board’s bargaining unit determination—instead, it must refuse to
bargain with the union and then raise the issue of the unit’s appropriateness in a
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 9

subsequent unfair-labor-practice proceeding. Pittsburgh Plate Glass Co. v. NLRB, 313
U.S. 146, 154 (1941) (“While the ruling of the Board determining the appropriate unit
for bargaining is not subject to direct review under the statute, the ruling is subject to
challenge when, as here, a complaint of unfair practices is made predicated upon the
ruling.”) (citing Am. Fed’n of Labor v. N.L.R.B., 308 U.S. 401, 408–11 (1940)). Kindred
then appealed the Board’s decision to this court pursuant to 29 U.S.C. section 160(f).
We have jurisdiction over this case—even though it arose outside our Circuit—because
of section 160(f)’s quirk that allows review in the Circuit in which the person aggrieved
by the Board’s order resides or transacts business. 29 U.S.C. § 160(f). Kindred’s
corporate headquarters are in Louisville, KY. Therefore, we have jurisdiction over this
appeal.

We must uphold the Board’s bargaining-unit determination “unless the employer
establishes that it is arbitrary, unreasonable, or an abuse of discretion.” Mitchellace, Inc.
v. N.L.R.B., 90 F.3d 1150, 1157 (6th Cir. 1996) (citing Bry-Fern Care Ctr., Inc. v.
N.L.R.B., 21 F.3d 706, 709 (6th Cir. 1994); N.L.R.B. v. Hardy-Herpolsheimer, 453 F.2d
877, 878 (6th Cir. 1972)). We review deferentially the Board’s determination of an
appropriate bargaining unit because “[t]he Board has wide discretion in determining the
limits of an appropriate bargaining unit.” Indianapolis Glove Co., Inc. v. N.L.R.B.,
400 F.2d 363, 367 (6th Cir. 1968). We have even gone so far as to say that “[n]ormally
the Board exercises a discretion bordering on finality in determining the unit appropriate
for bargaining under Section 9(b) of the Act, 29 U.S.C. 159(b).” Uyeda v. Brooks,
365 F.2d 326, 330 (6th Cir. 1966) (citations omitted).

Furthermore, we must uphold the Board’s interpretation of the Act if it is
“reasonably defensible[;]” we may not reject the Board’s interpretation “merely because
the courts might prefer another view of the statute.” Ford Motor Co. v. N.L.R.B.,
441 U.S. 488, 497 (1979) (citing N.L.R.B. v. Iron Workers, 434 U.S. 335, 350 (1978)).
In exercising its discretion, however, the Board “must cogently explain why it has
exercised its discretion in a given manner.” Motor Vehicle Mfrs. Ass'n of U.S., Inc. v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 48 (1983) (citations omitted).
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 10

On appeal, Kindred does not argue that the Board has abused its discretion in
overruling Park Manor, which it says is a “non-issue.” Rather, Kindred argues that the
Board has abused its discretion because Specialty Healthcare II does the following four
things: (1) adopts a new approach and does not return to applying the traditional
community-of-interest approach; (2) does not “reiterate and clarify” the law by adopting
the overwhelming-community-of-interest test, but inappropriately imports this test from
another area of labor law; (3) violates section 9(c)(5) of the National Labor Relations
Act in its application of the traditional community of interest test and adoption of the
overwhelming-community-of-interest test; and (4) makes all of these changes through
adjudication instead of rulemaking. We address each argument in turn.

First, we address Kindred’s argument that Specialty Healthcare II adopts a new
approach and does not return to applying the traditional community-of-interest approach.
Kindred argues that Specialty Healthcare II represents a material change in the Board’s
jurisprudence under section 9 of the Act.

Section 9(b) of the Act gives the Board wide discretion to determine an
appropriate bargaining unit, providing that “[t]he Board shall decide in each case
whether, in order to assure to employees the fullest freedom in exercising the rights
guaranteed by this subchapter, the unit appropriate for the purposes of collective
bargaining shall be the employer unit, craft unit, plant unit, or subdivision thereof[.]”
29 U.S.C. § 159(b). The United States Supreme Court has consistently held that
“[s]ection 9(b) of the Act confers upon the Board a broad discretion to determine
appropriate units.” Packard Motor Car Co. v. NLRB, 330 U.S. 485, 491 (1947). The
Board’s discretion is broad indeed; the Court has stated that “[t]he issue as to what unit
is appropriate for bargaining is one for which no absolute rule of law is laid down by
statute, and none should be by decision[,]” because “[i]t involves of necessity a large
measure of informed discretion and the decision of the Board, if not final, is rarely to be
disturbed.” Id. As the Court observed more recently, a court is “not authorized to bind
the Board in ways not mandated by Congress.” NLRB v. Action Auto., Inc., 469 U.S.
490, 497 (1985).
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 11

Because of the wide discretion given to the Board by statute, judicial review of
bargaining-unit determinations is indeed limited. Therefore, we have held that, “[i]n
making a unit determination, the Board must select an ‘appropriate’ bargaining unit[,]”
among what is often a range of appropriate bargaining units, such that “‘the Board is not
required to select the most appropriate unit.’” NLRB v. ADT Sec. Servs., Inc., 689 F.3d
628, 633 (6th Cir. 2012) (quoting Bry-Fern, 21 F.3d at 709 (citing Am. Hosp. Ass’n v.
NLRB, 499 U.S. 606, 610 (1991))). We are not the only court to take a deferential
approach. Judge Posner remarked that “[t]he courts’ obeisant attitude” towards the
Board’s unit determinations “is epitomized by the frequent statement that the Board need
only choose an appropriate unit—its choice need not be the most appropriate unit.”
Cont’l Web Press, Inc. v. NLRB, 742 F.2d 1087, 1089 (7th Cir. 1984) (citations omitted).

Although section 9(b) provides no other guidance on how the Board should use
its authority to determine whether a bargaining unit is appropriate, “[t]he Board does not
exercise this authority aimlessly; in defining bargaining units, its focus is on whether the
employees share ‘a community of interest.’” Action Auto., Inc., 469 U.S. at 494 (1985)
(citations omitted). The community-of-interest test “requires simply that groups of
employees in the same bargaining unit ‘share a community of interests sufficient to
justify their mutual inclusion in a single bargaining unit.’” ADT Security Servs.,
689 F.3d at 633 (quoting Bry-Fern, 21 F.3d at 709). The test includes the following five
factors: “(1) similarity in skills, interests, duties and working conditions; (2) functional
integration of the plant, including interchange and contact among the employees; (3) the
employer’s organization and supervisory structure; (4) the bargaining history; and (5)
the extent of union organization among the employees.” Id. at 633-34 (quoting Bry-
Fern, 21 F.3d at 709).

Following the United States Supreme Court, we have held that “[i]t is within the
Board’s purview . . . to develop standards for ascertaining whether one unit is more
appropriate than another.” ADT Security Servs., 689 F.3d at 636 (citing Am. Hosp. Ass’n,
499 U.S. at 611–12). It follows, then, that it is within the Board’s purview to choose to
follow one of its precedents or reject another. An agency may depart from its
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 12

precedents, and provided that “the departure from precedent is explained, our review is
limited to whether the rationale is so unreasonable as to be arbitrary and capricious.”
State of Mich. v. Thomas, 805 F.2d 176, 184 (6th Cir. 1986) (citing West Coast Media,
Inc. v. F.C.C., 695 F.2d 617, 620–21 (D.C.Cir. 1982), cert. denied, 464 U.S. 816
(1983)). “An administrative agency may reexamine its prior decisions and may depart
from its precedents provided the departure is explicitly and rationally justified.” Id.
(citing Atchison, Topeka & Santa Fe Ry. Co. v. Wichita Bd. of Trade, 412 U.S. 800, 808
(1973) (plurality opinion); Ohio Fast Freight, Inc. v. United States, 574 F.2d 316, 319
(6th Cir. 1978); Am. Trucking Ass’n v. Atchison, Topeka & Santa Fe Ry. Co., 387 U.S.
397, 416 (1967) (administrative agencies are “neither required nor supposed to regulate
the present and the future within the inflexible limits of yesterday.”)).

Here, the Board has cogently explained why it adopted the approach it did in
Specialty Healthcare II. The Board explained that the “first and central right set forth
in Section 7 of the Act is the employees’ ‘right to self-organization.’” Specialty
Healthcare II, 357 N.L.R.B. No. 83, 2011 WL 3916077, at * 12. The Board further
explained that “‘[s]ection 9(b) of the Act directs the Board to make appropriate unit
determinations which will ‘assure to employees the fullest freedom in exercising rights
guaranteed by this Act.’ i.e. the rights of self-organization and collective bargaining.’”
Id. (quoting Fed. Elec. Corp., 157 N.L.R.B. 1130, 1132 (1966)). If the Board believes
that it can best fulfill its statutory duty by adopting a test from one of its precedents over
another, then the Board does not abuse its discretion. Indeed, it is a general tenet of
administrative law that “[a]n agency’s interpretation of its own precedents receives
considerable deference” from a reviewing court. Aburto-Rocha v. Mukasey, 535 F.3d
500, 503 (6th Cir. 2008) (citing NSTAR Elec. & Gas Corp. v. FERC, 481 F.3d 794, 799
(D.C.Cir.2007)).

Moreover, in Specialty Healthcare I, the Board did explain why it might be
modifying its approach to initial bargaining-unit determinations by stating that its
standards for determining if a proposed unit is an appropriate unit have, in the long-term
care industry and more generally, “long been criticized as a source of unnecessary
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 13

litigation.” Specialty Healthcare I, 356 N.L.R.B. No. 56, 2010 WL 5195445, at *4
(2010). The Board quoted the bipartisan Commission on the Future of Worker-
Management Relations as having reported, in 1994, that “parties engage in litigation
over the scope of the unit for tactical purposes such as to delay an election.” Id. Yet the
Board itself has often recognized the “‘Act’s policy of expeditiously resolving questions
concerning representation.’” Id. (quoting Northeastern University, 261 NLRB 1001,
1002 (1982)).

Because Specialty Healthcare II adopted a community-of-interest test based on
some of the Board’s prior precedents, and because it did explain its reasons for doing so,
the Board did not abuse its discretion in applying a version of its traditional community-
of-interest test to find a CNA-only bargaining unit to be appropriate. Rather, Specialty
Healthcare II clarified the community-of-interest test, which Judge Posner in one case
criticized as providing “little direction” and about which he expressed the wish that the
Board would give “a precise meaning[.]” Cont’l Web Press, 742 F.2d at 1090. The
Board did not abuse its discretion in clarifying the community-of-interest test.

We turn now to Kindred’s argument that the Board abused its discretion in
Specialty Healthcare II’s adoption of the overwhelming-community-of-interest test.
Specialty Healthcare II also purported to clarify the showing that an employer must
make if, after the Board’s initial unit determination, the employer argues that the
proposed unit must include more workers. Specialty Healthcare II claimed to “reiterate
and clarify” that:

in cases in which a party contends that a petitioned-for unit containing
employees readily identifiable as a group who share a community of
interest is nevertheless inappropriate because it does not contain
additional employees, the burden is on the party so contending to
demonstrate that the excluded employees share an overwhelming
community of interest with the included employees.

Specialty Healthcare II, 357 N.L.R.B. No. 83, 2011 WL 3916077, at *1 (2011)
(emphasis added). Kindred argues that this overwhelming-community-of-interest
standard represents a “material change in the law” and is not a mere reiteration nor
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 14

clarification. But this is just not so. The Board has used the overwhelming-community-
of-interest standard before, so its adoption in Specialty Healthcare II is not new.

For example, in Jewish Hosp. Ass’n of Cincinnati, 223 N.L.R.B. 614, 617 (1976),
the Board held that a unit limited to service employees was inappropriate because of
their “overwhelming community of interest” with maintenance employees. In Lodgian,
Inc., 332 N.L.R.B. 1246, 1255 (2000), the Regional Director required inclusion in a unit
employees who shared “an overwhelming community of interest with the employees”
whom the union sought to represent.

Moreover, as the Board explained in Specialty Healthcare II, not only has the
Board used this test before, but the District of Columbia Circuit approved of the Board’s
use of it in Blue Man Vegas, LLC v. N.L.R.B., 529 F.3d 417 (D.C. Cir. 2008), which
denied review of the employer’s challenge to a bargaining-unit determination and
enforced the Board’s order.

In Blue Man, the union proposed a bargaining unit that excluded some
employees. Id. at 420. Although the employer argued that the excluded employees
should be included in the proposed bargaining unit, the Regional Director approved the
unit as the union had petitioned. Id. The court said that if the employer wants to
successfully challenge the unit by arguing that it should include more employees, then
“the employer must do more than show there is another appropriate unit because ‘more
than one appropriate bargaining unit logically can be defined in any particular factual
setting.’” Id. at 421 (quoting Country Ford Trucks, Inc. v. N.L.R.B., 229 F.3d 1184,
1189 (D.C. Cir. 2000)). Rather, the employer’s burden is to show that the prima facie
unit is truly inappropriate. Id. (citing Country Ford Trucks, 229 F.3d at 1189; Dunbar
Armored, Inc. v. N.L.R.B., 186 F.3d 844, 847 (7th Cir. 1999); Serramonte Oldsmobile,
Inc. v. N.L.R.B., 86 F.3d 227, 236 (D.C. Cir. 1996)). The court explained that a unit
would be truly inappropriate if, for example, there were no legitimate basis upon which
to exclude certain employees from it. Id. The court further explained that even if the
excluded employees shared a community of interest with the included employees, this
would not mean that there would be no legitimate basis upon which to exclude them.
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 15

Id. If the only appropriate bargaining unit were required to include all employees that
shared a community of interest, then there could be only one appropriate bargaining
unit—and nothing in the Act specifies this. Id. The court then explained that if the
excluded employees shared “an overwhelming community of interest with the included
employees, then there [would be] no legitimate basis upon which to exclude them from
the bargaining unit.” Id. (emphasis added).

Specialty Healthcare II adopted this standard, quoting Blue Man for the rule that
“the proponent of the larger unit must demonstrate that employees in the more
encompassing unit share ‘an overwhelming community of interest’ such that there ‘is no
legitimate basis upon which to exclude certain employees from it.’” Specialty
Healthcare II, 357 N.L.R.B. No. 83, 2011 WL 3916077, at *16 (2011) (quoting Blue
Man, 529 F.3d at 421). If, in doing so, the Board overruled some of its precedents and
chose to follow a precedent approved by the Blue Man court, the Board may do so,
provided that it explains why.

In Specialty Healthcare II, the Board did cogently explain its reasons for
adopting the overwhelming-community-of-interest standard. The Board explained the
need to clarify its law, acknowledging that it had used some variation of a heightened
standard when a party (usually an employer) argues that the bargaining unit should
include more employees. The Board explained that it “has sometimes used different
words to describe this standard and has sometimes decided cases such as this without
articulating any clear standard.” Specialty Healthcare II, 357 N.L.R.B. No. 83, 2011
WL 3916077, at *17 (2011).

For example, in one case, the Board used the phrase “sufficiently distinct
community of interest.” Id. (quoting Seaboard Marine, 327 NLRB 556, 556 (1999))
(emphasis added). In another case, the Board held that a proposed unit was “‘too narrow
in scope in that it exclude[d] employees who share[d] a substantial community of
interest with employees in the unit sought.’” Id. (quoting Colorado Nat’l Bank of
Denver, 204 N.L.R.B. 243, 243 (1973) (emphasis added and footnote omitted by
Specialty Healthcare II opinion)). Specialty Healthcare II explained that “the use of
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 16

slightly varying verbal formulations to describe the standard applicable in this recurring
situation does not serve the statutory purpose “to assure to employees the fullest freedom
in exercising the rights guaranteed by th[e] Act.” Id. at *17. Nor, the Board continued,
does the use of slightly varying verbal formations “permit employers to order their
operations with a view toward productive collective bargaining should employees
choose to be represented.” Id. It is not an abuse of discretion for the Board to take an
earlier precedent that applied a certain test and to clarify that the Board will adhere to
this test going forward.

Furthermore, the Board acknowledged that its prior decisions did not expressly
impose the burden of proof on the party arguing that the petitioned-for unit was
inappropriate because the smallest appropriate unit would contain additional employees.
Id. at *20, n.28. But, the Board explained that allocating the burden in this manner is
appropriate for several reasons, one of which is that the employer is in “full and often
near-exclusive possession of the relevant evidence.” Id. The Board noted that it has
allocated the burden of proof for this reason in defining the scope of appropriate units
both pre- and post-election. Id. In support, the Board quoted Capri Sun, 330 N.L.R.B.
1124, 1126 n.8 (2000), as saying that it is “‘the [e]mployer that possesses and maintains
the records which would support its assertions. In these circumstances, the burden to
establish the time fame of the transfers is on the employer.’” Id. The Board quoted
Harold J. Becker Co., 343 N.L.R.B. 51, 52 (2004), as saying that, when an employer
argued that employees should be included in the unit as dual-function employees, the
Board held it was “the [e]mployer, of course, who [was] in the best position to establish
that status, because it ha[d] superior access to the relevant information.” Id. Because
the overwhelming-community-of-interest standard is based on some of the Board’s prior
precedents, has been approved by the District of Columbia Circuit, and because the
Board did cogently explain its reasons for adopting the standard, the Board did not abuse
its discretion in applying this standard in Specialty Healthcare II.

We now turn to Kindred’s argument that Specialty Healthcare II’s application
of either the American Cyanamid community-of-interest test, or of the overwhelming-
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 17

community-of interest test, violates section 9(c)(5) of the Act by making it impossible
for an employer to challenge the petitioned-for unit. In section 9(c)(5), Congress
provided a statutory limit on the Board’s discretion to define collective-bargaining units.
Section 9(c)(5) states that “the extent to which the employees have organized shall not
be controlling” in determining whether a unit is appropriate. 29 U.S.C. § 159(c)(5). The
Supreme Court has interpreted section 9(c)(5) as showing Congress’ intent to prevent
the Board from determining bargaining units based solely upon the extent of
organization, while at the same time allowing the Board to consider “the extent of
organization as one factor, though not the controlling factor, in its unit determination.”
N.L.R.B. v. Metro. Life Ins. Co., 380 U.S. 438, 441-42 (1965) (footnote omitted;
emphasis added).

But courts have struggled with what Congress meant by this provision; one court
even famously commented that “[s]ection 9(c)(5), with its ambiguous word ‘controlling,’
contains a warning to the Board almost too Delphic to be characterized as a standard.”
Local 1325, Retail Clerks Int’l Ass’n, AFL-CIO v. N.L.R.B., 414 F.2d 1194, 1199 (D.C.
Cir. 1969). Nevertheless, the court added, section 9(c)(5) “has generally been thought
to mean that there must be substantial factors, apart from the extent of union
organization, which support the appropriateness of a unit, although extent of
organization may be considered by the Board and, in a close case, presumably may make
the difference in the outcome.” Id. at 1199–200.

Section 9(c)(5) appears to have been added to prevent the Board from deciding
cases like Botany Worsted Mills, 27 N.L.R.B. 687 (1940), in which the Board deemed
a bargaining unit appropriate without applying any kind of community-of-interest
analysis, but solely on the basis that the workers wanted to organize a union. The Board
at that time acted as a union partisan, encouraging organizing. In Botany Worsted Mills,
the Board explained, in the course of deeming that a bargaining unit of workers in two
job classifications (wool sorters and trappers) constituted an appropriate bargaining unit,
that “[w]herever possible, it is obviously desirable that, in a determination of the
appropriate unit, [it] render collective bargaining of the [c]ompany’s employees an
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 18

immediate possibility.” Botany Worsted Mills, 27 N.L.R.B. at 690. The Board thus
made clear that it based its determination that the bargaining unit was appropriate on the
mere fact that the employees wanted to engage in collective bargaining. The Board
observed that there was “no evidence that the majority of the other employees of the
[c]ompany belong[ed] to any union whatsoever; nor has any other labor organization
petitioned the Board for certification as representative of the [c]ompany’s employees on
a plant-wide basis.” Id. The Board said that “[c]onsequently, even if, under other
circumstances, the wool sorters or trappers would not constitute the most effective
bargaining unit, nevertheless, in the existing circumstances, unless they are recognized
as a separate unit, there will be no collective bargaining agent whatsoever for these
workers.” Id. The Board concluded by stating that “in view of the existing state of labor
organization among the employees of the [c]ompany, in order to insure to the sorters or
trappers the full benefit of their right to self-organization and collective bargaining and
otherwise to effectuate the policies of the Act,” it found that the wool sorters or trappers
of the company “constituted an appropriate bargaining unit.” Id. Kindred characterizes
Specialty Healthcare II’s certification of a CNA-only unit as “a throw-back to the
discredited Botany Worsted Mills analysis.”

But Kindred’s argument misses the mark, because here, in Specialty Healthcare
II, the Board did not assume that the CNA-only unit was appropriate. Instead, it applied
the community-of-interest test from American Cyanamid to find that there were
substantial factors establishing that the CNAs shared a community of interest and
therefore constituted an appropriate unit—aside from the fact that the union had
organized it. Indeed, nowhere in its briefs, nor before the Board, did Kindred dispute
that the CNAs shared a community of interest. Therefore, the Board’s approach in
Specialty Healthcare II did not violate section 9(c)(5).

Nor does the overwhelming-community-of-interest test violate section 9(c)(5).
In this regard, we find persuasive the District of Columbia Circuit’s analysis in Blue
Man, which Specialty Healthcare II relied upon and quoted as holding that “‘[a]s long
as the Board applies the overwhelming community of interest standard only after the
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 19

proposed unit has been shown to be prima facie appropriate, the Board does not run
afoul of the statutory injunction that the extent of the union’s organization not be given
controlling weight.’” Specialty Healthcare II, 357 N.L.R.B. No. 83, 2011 WL 3916077
at *20 n.25 (quoting Blue Man, 529 F.3d at 423) (emphasis added).

Here, in Specialty Healthcare II, the Board followed the Blue Man approach,
conducting its community-of-interest inquiry before requiring Kindred to show that the
other employees shared an overwhelming community of interest with the CNAs. It
would appear, then, that Specialty Healthcare II does not violate section 9(c)(5) of the
Act.

Lastly, we address Kindred’s argument that the Board abused its discretion by
making policy through adjudication rather than through notice-and-comment
rulemaking. Kindred argues that the Board must follow notice-and-comment rulemaking
if it wants to create a generally applicable rule for how the Board will determine an
appropriate bargaining unit. But the Board did not abuse its discretion in adopting a
generally applicable rule through adjudication instead of rulemaking because NLRB v.
Bell Aerospace Co. Div. of Textron, Inc., 416 U.S. 267, 294 (1974), holds both that “the
Board is not precluded from announcing new principles in an adjudicative proceeding
and that the choice between rulemaking and adjudication lies in the first instance within
the Board’s discretion.” Therefore, if the Board may announce a new principle in an
adjudication, it follows that it may choose to follow one of its already existing principles.
The United States Supreme Court did add that “there may be situations where the
Board’s reliance on adjudication would amount to an abuse of discretion or a violation
of the Act.” Id. at 294. But Kindred has not explained why the Board’s election of
adjudication in this case amounted to an abuse of discretion or a violation of the Act.
Moreover, as described above, the Board did solicit briefs from the parties and the
general public, thereby providing for the opportunity for the public’s input, which is one
of the hallmarks of notice-and-comment rulemaking under the Administrative Procedure
Act.
Nos. 12-1027/1174 Kindred Nursing v. N.L.R.B. Page 20

We DENY Kindred’s petition for review and GRANT the Board’s cross-petition
for enforcement.