National Labor Relations Board v. Regency Heritage Nursing & Rehabilitation Center

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 15-1883

NATIONAL LABOR RELATIONS BOARD,
Petitioner
v.

REGENCY HERITAGE NURSING
AND REHABILITATION CENTER,
Respondent

On Petition for Review
for Enforcement of an Order of the
National Labor Relations Board
(NLRB-1:22-CA-074343)

Submitted under Third Circuit LAR 34.1(a)
on April 6, 2016

Before: FISHER, RENDELL, and BARRY, Circuit Judges

(Opinion filed: August 16, 2016)

O P I N I O N*

RENDELL, Circuit Judge:

*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
 The National Labor Relations Board (the “Board”) seeks enforcement of the Order

it issued against Regency Heritage Nursing and Rehabilitation Center (“Regency”). The

Board found that Regency failed to provide 1199 Service Employees International Union,

United Healthcare Workers East, New Jersey Region (the “Union”), an opportunity to

bargain over a change to the terms and conditions of employment in violation of Sections

8(a)(1) and 8(a)(5) of the National Labor Relations Act (“NLRA”). We will grant the

Board’s Application and enforce its Order against Regency.

I. Background

As the Board found below, Regency currently operates a nursing home in

Somerset, New Jersey. A unit of “nonprofessional” employees of Regency’s nursing

home are represented by the Union. Regency and the Union reached a collective-

bargaining agreement (the “Agreement”) that was in effect between March 1, 2008, and

February 28, 2011. The Agreement set the minimum rates for Union-member wages and

provided the conditions necessary to earn those rates. Specifically, the Agreement

provided that eligible employees would be eligible for the minimum wage rates after

completing a “probationary” period of 90 to 120 days at the beginning of their

employment.

After the Agreement expired, however, Regency no longer paid the minimum

wages established by the Agreement to newly hired employees. Between March 1, 2011,

and December 4, 2012, Regency hired seventy individuals that would have been covered

by the then-expired Agreement. Once these seventy newly hired employees finished their

probationary periods, however, Regency failed to pay them the contractual minimum

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wages set in the Agreement. Regency did not notify the Union of this change in payment

rates. The Union filed a charge against Regency with the Board on February 7, 2012,

alleging that Regency had made a unilateral change to the Agreement, thereby denying

the Union an opportunity to bargain over a change to the terms and conditions of

employment in violation of Sections 8(a)(1) and 8(a)(5) of the NLRA.

The Board agreed and issued an order against Regency. Under the Order, the

Board directed Regency to take the following actions: (1) notify and bargain in good faith

with the Union before implementing changes to compensation or terms of employment;

(2) rescind the unlawful changes made to the minimum wage rates; and (3) make whole

all affected employees for losses sustained as a result of the unlawful changes to wage

rates.

II. Jurisdiction and Standard of Review

We have jurisdiction over the Board’s petition for enforcement pursuant to Section

10(e) of the NLRA. See 29 U.S.C. § 160(e). We review questions of law de novo but will

uphold the Board’s interpretations of the NLRA if they are reasonable. MCPC Inc. v.

NLRB, 813 F.3d 475, 482 (3d Cir. 2016). We must accept the Board’s factual findings so

long as they are supported by substantial evidence. Id. (citing 29 U.S.C. § 160(f)). We

review the Board’s recusal decisions and its determinations whether to defer matters to

arbitration under an abuse-of-discretion standard. See 1621 Route 22 W. Operating Co.,

LLC v. NLRB, Nos. 15-2466 & 15-2586, 2016 WL 3146014, at *10 (3d Cir. June 6,

2016); NLRB v. Yellow Freight Sys., Inc., 930 F.2d 316, 322 (3d Cir. 1991).

III. Analysis

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 A. Regency’s Practices Following the Agreement’s Expiration

Regency claims that the Board erred because Regency was not required to comply

with the Agreement’s minimum-wage-rate standards or bargain over these terms for

employees hired after the expiration of the Agreement. The Board disagreed, and we

perceive no error in the Board’s conclusion. Section 8(a)(5) of the NLRA makes it

unlawful for an employer “to refuse to bargain collectively with the representatives of his

employees.” 29 U.S.C. § 158(a)(5). “An employer violates section 8(a)(5) . . . if a

material change in the conditions of employment is made without consulting with the

employees’ bargaining representative and providing a meaningful opportunity to

bargain.” Ciba-Geigy Pharm. Div. v. NLRB, 722 F.2d 1120, 1126 (3d Cir. 1983). This

requirement extends to situations where a collective bargaining agreement has expired

and negotiations on a new agreement have not been completed. Litton Fin. Printing Div.

v. NLRB, 501 U.S. 190, 198 (1991). Regency concedes that it paid employees hired after

the expiration of the Agreement less than the Agreement required—i.e., that it made a

material change with respect to the wages paid to these employees.

Regency argues, however, that, because those employees were hired after the

expiration of the Agreement, it was not required to maintain Agreement-level wages for

those employees. Board precedent, however, which Regency did not address, supports a

finding that employees hired after the expiration of a collective bargaining agreement are

covered by Section 8(a)(5)’s protections. See, e.g., Mack Trucks, 294 N.L.R.B. 864, 865

(1989); Chase Mfg., Inc., 200 N.L.R.B. 886, 886 (1972). As the Board noted in its

decision below, allowing unilateral changes to the conditions of employment for new

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hires would “eviscerate the Union’s status as exclusive bargaining representative.” See

App. at 13.

Regency urges, however, that the newly hired employees were akin to job

“applicants,” who were not covered by the expired Agreement. This characterization of

the newly hired employees as “applicants” is untenable. The cases cited by Regency

concern unhired applicants who could not be considered part of the “bargaining unit” of

the Union. As explained in Star Tribune, 295 N.L.R.B. 543, 546 (1989), which Regency

relies upon:

Applicants for employment do not fall within the ordinary meaning of an
employer’s “employees.” Applicants perform no services for the employer,
are paid no wages, and are under no restrictions as to other employment or
activities. And, unlike the intermittent employment situation that gives rise
to the need of employers and unions for hiring halls, there is no economic
relationship between the employer and an applicant, and the possibility that
such a relationship may arise is speculative. We further conclude that the
applicants could not properly be joined with the active employees in the
Guild unit because they do not share a community of interest broad enough
to justify their inclusion in the bargaining unit.

Here, unlike in Star Tribune, the employees were hired, were performing services for

Regency, and were, therefore, part of the same “bargaining unit” as the employees hired

before the expiration of the Agreement. We find no error in the Board’s conclusion.

B. Timeliness of the Board’s Enforcement Action

Regency next argues that the Union’s Charge was filed with the Board after the

six-month statute of limitations had expired. However, that six-month clock does not

begin until “an aggrieved party has ‘clear and unequivocal notice’ of a violation of the

NLRA.” NLRB v. Pub. Serv. Elec. & Gas Co., 157 F.3d 222, 227 (3d Cir. 1998). Either

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actual notice or constructive notice will trigger the six-month clock. See In Re M & M

Auto. Grp., Inc., 342 N.L.R.B. 1244, 1246 (2004). Thus, the question before the Board

was whether, at least six-months before the Charge was filed, the Union had knowledge

of the violations or, with reasonable diligence, should have had knowledge of the

violations. See id. Regency has the burden of proving the untimeliness of the Charge, and

we review the Board’s findings for substantial evidence. See Pub. Serv. Elec. & Gas Co.,

157 F.3d at 228.

Regency has provided no support for the notion that the Union had “clear and

unequivocal notice” of the violation of the NLRA before six months prior to its filing of

the Charge. Indeed, despite several requests from the Union, Regency repeatedly failed to

disclose the wages paid to these newly hired employees. Given this evidence of

Regency’s concealment, there is substantial evidence to support the Board’s findings with

regards to the statute of limitations. Cf. id. (“[T]he six-month limitations period is not

meant to punish a party who delays in filing due to the ambiguous conduct of another

party . . . .”).

C. Member Hirozawa’s Failure to Recuse Himself

Additionally, Regency claims that the Board erred because Board Member Kent

Hirozawa failed to recuse himself from the matter. We review Member Hirozawa’s

decision not to recuse himself under a deferential, abuse-of-discretion standard. See 1621

Route 22 W. Operating Co., 2016 WL 3146014, at *10. That is, we ask whether it was

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arbitrary or unreasonable for Member Hirozawa to conclude that his recusal was not

required. See id. (“We . . . do not . . . make the recusal decision anew; rather, we simply

review whether the decision was arbitrary or unreasonable.”).

Regency points to two ostensible connections that Member Hirozawa has with this

case. The first, and more direct, connection stems from his employment at the law firm

Gladstein, Reif & Meginniss LLP (“Gladstein”), which ended in 2010. Gladstein has

represented the Union for many years and represented the Union before the Board in this

case. However, there is no allegation that Hirozawa himself ever represented the Union,

and the present matter was not initiated until after he left the firm. Indeed, his

employment at Gladstein ended more than three years before this case was brought

before him. We conclude that it was neither arbitrary nor unreasonable for Member

Hirozawa to conclude that his former relationship with Gladstein did not require him to

recuse himself in this case. Cf. Draper v. Reynolds, 369 F.3d 1270, 1281 n.18 (11th Cir.

2004) (“[A]ssuming that a judge is no longer receiving financial payment from a former

law firm, a two-year recusal period is generally reasonable.”); see also 5

C.F.R.§ 2635.502(a) (providing that an executive-branch employee should not participate

in matters involving “[a]ny person for whom the employee has, within the last year,

served as . . . attorney.” (emphasis added)); Ethics Commitments by Executive Branch

Personnel, 74 Fed. Reg. 4,673 (Jan. 21, 2009) (providing that every presidential

appointee must pledge to not, “for a period of 2 years . . . participate in any particular

matter involving specific parties that is directly and substantially related to [the

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appointee’s] former employer or former clients, including regulations and contracts.”

(emphasis added)).

The second alleged connection concerns Member Hirozawa’s successor as chief

counsel to Chairman (then-Member) Mark Pearce. In 2010, Hirozawa left Gladstein to

serve as chief counsel to then-Member Pearce. He served in that position until 2013,

when he became a member of the Board. Chairman Pearce’s next chief counsel was Ellen

Dichner, who has previously represented the Union in this litigation. Chairman Pearce is

not participating in this case, however, and Ms. Dichner, since leaving Gladstein, is

likewise not involved in the case. We conclude that Member Hirozawa’s connection with

Ms. Dichner, who did not participate in this case, does not raise any inference that

Member Hirozawa was unable to be impartial. Cf. 1621 Route 22 W. Operating Co., 2016

WL 3146014, at *10 (rejecting argument that Chairman Pearce was required to recuse

himself from a case because his chief counsel, Ellen Dichner, who was screened from the

case, had previously represented a party in that same case before Chairman Pearce).

We therefore conclude that Member Hirozawa’s decision not to recuse himself

was not an abuse of his discretion.

D. Failure of the Board to Send this Action to Arbitration

Finally, Regency argues that the Board erred in not sending this case to arbitration.

We review the Board’s deferral decision for abuse of discretion. Yellow Freight, 930 F.2d

at 322. We agree with the Board that this case did not need to be sent to arbitration.

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 Regency argues that this matter is part of an ongoing arbitration. The Board found

otherwise, concluding that the current dispute was not encompassed in the ongoing

arbitration between the parties. Regency has not articulated any basis for us to reverse

that finding, and we ourselves perceive no fault in that finding. We also agree with the

Board that deferral to arbitration was not otherwise required. Arbitration clauses do not

survive the expiration of the contract unless the dispute arises under the contract. See

Litton, 501 U.S. at 199-201 (affirming the Board’s conclusion that “arbitration clauses

are excluded from the prohibition on unilateral changes”). Here, the dispute did not arise

under the contract itself, but rather under a statute prohibiting an employer from making

“a material change in the conditions of employment . . . without consulting with the

employees’ bargaining representative and providing a meaningful opportunity to

bargain.” See Ciba-Geigy, 722 F.2d at 1126.

III. Conclusion

For the foregoing reasons, we will grant the Board’s Application to enforce its

Order against Regency.

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