United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 21, 2011 Decided December 20, 2011
No. 11-1064
DEMING HOSPITAL CORPORATION, DOING BUSINESS AS
MIMBRES MEMORIAL HOSPITAL,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
Consolidated with 11-1095
On Petition for Review and Cross-Application for
Enforcement of an Order of the National Labor Relations
Board
Kaitlin Kaseta argued the cause for petitioner. On the
briefs was Bryan T. Carmody.
Milakshmi V. Rajapakse, Attorney, National Labor
Relations Board, argued the cause for respondent. With her
on the brief were John H. Ferguson, Associate General
Counsel, Linda Dreeben, Deputy Associate General Counsel,
and Robert J. Englehart, Supervisory Attorney. Julie B.
Broido, Supervisory Attorney, entered an appearance.
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Before: BROWN and GRIFFITH, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge BROWN.
BROWN, Circuit Judge: Deming Hospital Corporation
operates Mimbres Memorial Hospital (the “Hospital”) in New
Mexico. In 2004, the National Labor Relations Board found
the Hospital had acted unlawfully by unilaterally reducing the
hours of its full-time respiratory department employees from
40 per week to between 32 and 36 per week. The Board
ordered the Hospital to rescind the hours reduction, bargain
with the labor union representing the affected employees (the
“Union”), and “make whole any employee for any loss of
earnings and other benefits suffered.” Cmty. Health Servs.,
Inc., 342 N.L.R.B. 398, 404 (2004) (the “2004 Order”). The
Tenth Circuit enforced the 2004 Order in full. NLRB v. Cmty.
Health Servs., Inc., 483 F.3d 683, 684 (10th Cir. 2007).
An administrative law judge subsequently determined the
Hospital owed 13 current and former employees roughly
$105,000 in backpay to compensate them for the unlawful
hours reduction. In reaching this conclusion, the ALJ held,
among other things, that the backpay due each employee
should not be reduced by any interim earnings the employees
may have made from other employment during the backpay
period; that employees hired after the unlawful hours
reduction were entitled to a remedy under the 2004 Order; and
that the Hospital’s backpay liability should not be tolled as of
the date when it attempted to bargain with the Union, or when
the Union assertedly waived bargaining by failing to respond.
In 2011, the Board adopted the ALJ’s findings without
elaboration and ordered the Hospital to pay up. Cmty. Health
Servs., Inc., 356 N.L.R.B. No. 103 (2011) (the “2011 Order”).
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The Hospital now petitions for review of the 2011 Order,
while the Board cross-applies for enforcement. We grant in
part the Board’s cross-application for enforcement with
respect to all issues except the matter relating to interim
earnings. The Board did not err in applying a backpay
remedy to those employees hired into the bargaining unit after
the Hospital unlawfully reduced the employees’ hours; and
the Board correctly held the Union’s failure to communicate
with the Hospital did not toll the employer’s liability, because
the Hospital had not rescinded the unlawful unilateral
reduction in hours when it sought to negotiate with the Union.
However, the Board did not adequately explain its failure to
consider interim earnings when calculating the backpay
award. Therefore, we vacate the Board’s backpay
computation and remand the case so the Board may amplify
its position on interim earnings.
I
The narrow question before us is whether the Board
calculated backpay in the 2011 Order in accordance with the
2004 Order and relevant precedents. The Hospital contends
the answer is no because the Board erroneously: (1) deemed
interim earnings irrelevant to the backpay calculation; (2)
awarded backpay to employees hired after the unlawful hours
reduction; and (3) found the backpay period had not been
tolled by the Hospital’s unreciprocated efforts to bargain with
the Union. We address those arguments in turn.
A
The 2004 Order directs the Board to calculate backpay
“as prescribed in Ogle Protection Service, 183 NLRB 682
(1970).” Cmty. Health Servs., Inc., 342 N.L.R.B. at 404. In
the 2011 Order, the Board found Ogle barred its normal
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practice of reducing a backpay award to account for “interim
earnings”—amounts affected employees made from other
jobs during the backpay period. See Cmty. Health Servs., 356
N.L.R.B. No. 103, at *16. The Board’s explanation for that
ruling is a non sequitur.
First, a bit of history. Before 1950, the Board calculated
backpay by subtracting what an employee actually earned
during the entire backpay period from what she would have
earned during that period had the unlawful action not
occurred. See Bufco Corp. v. NLRB, 147 F.3d 964, 970 (D.C.
Cir. 1998). The Board came to realize, however, that
computing backpay in that manner encouraged employers to
delay reinstating wrongfully terminated employees: if the
employer waited long enough, the employee could start
earning more at her new job than she would have earned at
her old job, decreasing the employer’s total backpay liability.
See id. To eliminate this perverse incentive, the Board
announced a new approach in F.W. Woolworth, 90 N.L.R.B.
289 (1950), under which it subtracted what an employee
actually made from what she would have made on a quarterly
basis, with the condition that “[e]arnings in one particular
quarter . . . ha[d] no effect upon the back-pay liability for any
other quarter.” Id. at 293. Thanks to the Woolworth
approach, an employer no longer benefitted if a wrongfully
terminated employee eventually started making more money
at her new job than she would have made at her old job—
those additional earnings did not offset what the employer
owed in backpay for any previous quarters.
In Ogle, the Board carved out an exception to the
Woolworth approach. Quarterly computation of backpay was
deemed “unnecessary and unwarranted” when backpay
liability “result[ed] from [an employer’s] repudiation and
failure to apply the terms of a collective-bargaining
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agreement, a violation of the [National Labor Relations] Act
which does not involve cessation of employment status or
interim earnings that would in the course of time reduce
backpay.” 183 N.L.R.B. at 683. The Board appeared to
assume that an employee who had not been terminated would
not seek another job (and thus would not generate interim
earnings). And if the employee did not generate any interim
earnings, an employer would have no incentive to delay
taking corrective action.
We have noted that Woolworth and Ogle, taken together,
establish a clear framework for the calculation of backpay
awards: “In the event unit employees were laid off or
terminated [Woolworth applies]. . . . In the event that unit
employees . . . were neither laid off nor terminated [Ogle
applies].” Bufco, 147 F.3d at 970. Here, the Board followed
that framework in the 2004 Order by ordering backpay
calculated in accordance with Ogle. But in the subsequent
proceeding to calculate backpay, the Hospital submitted an
offer of proof that—contrary to the Board’s assumption in
Ogle—two of the affected employees had in fact taken on
additional work at other hospitals to offset the unlawful hours
reduction. As a result, the Board had to decide how to
calculate backpay under Ogle when affected employees had
generated interim earnings.
In the 2011 Order, the Board chose to ignore interim
earnings. It based its decision on the “clear language” of
Ogle, and its concern that accounting for interim earnings
“would have the effect of imposing a duty on employee
victims . . . to moonlight in order to minimize the impact of
the unlawful conduct for the benefit of the wrongdoer.”
Cmty. Health Servs., 356 N.L.R.B. No. 103, at *16. Neither
rationale withstands our scrutiny.
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The “clear language” of Ogle does not address the current
situation. Ogle simply states that if the employer’s unlawful
action “does not involve . . . interim earnings,” then the Board
should not calculate backpay on a quarterly basis. 183
N.L.R.B. at 683. Ogle does not state the converse
proposition—that if the Board cannot calculate backpay on a
quarterly basis, then it should not consider interim earnings—
and the Board’s inference of that proposition from Ogle is a
logical fallacy. See Nat’l Treasury Emp. Union v. United
States, 101 F.3d 1423, 1428 n.1 (D.C. Cir. 1996) (noting the
converse of a proposition is not necessarily true).
Nor are we swayed by the Board’s fear of imposing a
“duty to moonlight.” The Board’s position seems to conflate,
and thus confuse, an employee’s duty to mitigate with rules
governing when backpay should be reduced by interim
earnings. Employees who have been unlawfully discharged
or laid off from their jobs have a duty to mitigate. See NLRB
v. Madison Courier, Inc., 472 F.2d 1307, 1323 (D.C. Cir.
1972) (noting that an employee who has been “improperly
deprived” of his position must at least make reasonable efforts
to find new employment which is substantially equivalent to
the position he has lost). Victims of unfair labor practices
who have not lost their jobs have no such duty. See 88
Transit Lines, Inc., 314 N.L.R.B. 324, 325 (1994) (holding
the duty to mitigate “makes sense only with respect to
employees who have been unlawfully discharged”), enforced,
55 F.3d 823 (3d Cir. 1995). Neither the Board nor the
Hospital suggest otherwise. But even when there is no duty to
mitigate, the Board might in some circumstances be obliged
to consider interim earnings to ensure that employees who did
choose to find other work do not receive windfalls. See
Grondorf, Field, Black & Co. v. NLRB, 107 F.3d 882, 888
(D.C. Cir. 1997) (remanding to allow employers to
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demonstrate how their contributions to a union benefit fund
had to be reduced to avoid improper windfall to the fund).
Moreover, the Board can consider interim earnings
without imposing a duty to seek additional employment.
Under that approach, a non-terminated employee who seeks
out interim earnings after an unlawful hours or wage
reduction would have his backpay award reduced by those
earnings, but would have the potential to earn more money
overall. Meanwhile, a non-terminated employee who chooses
not to seek interim earnings would receive his full backpay
award (because he had no duty to find additional work), but
would forego the potential to make even more money through
additional employment. Both outcomes are consonant with
the Board’s obligations “to ensure that its remedies are
compensatory and not punitive, and to guard against windfall
awards that bear no reasonable relation to the injury
sustained.” Oil Capitol Sheet Metal, Inc., 349 N.L.R.B. No.
118, at *8 (2007).
The Board’s concern about imposing a duty to mitigate is
also belied by its willingness to account for interim earnings
in other cases involving relatively small reductions in hours or
wages. The Board has ordered make-whole relief “less any
net interim earnings” when employees suffered an unlawful
30- to 45-cent decrease in hourly wages, Atlantis Health Care
Grp., 356 N.L.R.B. No. 26, at *1 (2010), and when they
suffered an unlawful reduction in work hours from 40 to 32
per week, Amerigas Propane L.P., 1997 WL 33315927 (Feb.
12, 1997). In neither case did the Board fret about imposing a
“duty to moonlight” on employees who had not been
terminated.
The Board now claims its refusal to consider interim
earnings is “consistent with well-established precedent,”
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Respondent’s Br. 19, and cites 88 Transit Lines, where it
chose not to consider interim earnings in a case “involving a
violation other than discharge from employment.” 314
N.L.R.B. at 325. But in its decision enforcing the Board’s
order in that case, the Third Circuit included the caveat that it
did “not read the [order] to mean that reduction for interim
earnings is never appropriate in a nondischarge case,” and
limited its “holding to approval of the Board’s rejection of the
need to reduce backpay by interim earnings in this case,
where the employees continued to work for the same
company and there was no showing that they would not have
absorbed the hours stipulated to have been lost by the unfair
labor practice.” 88 Transit Lines, 55 F.3d at 827 n.2. That
narrow holding does not support the Board’s ruling here.
To be clear, we do not hold the Board must consider
interim earnings in this case. And because interim earnings
“are earnings from employment that is a substitute for
employment taken away as a result of unlawful conduct,” we
do not mean to suggest the Board should consider earnings
that did not stem from an employer’s unlawful labor practice.
88 Transit Lines, 314 N.LR.B. at 325. Our holding regarding
interim earnings is limited and simple: the Board’s
explanation for its refusal to consider interim earnings is
inadequate, therefore we remand for a more thorough analysis
of the issue. See Bufco, 147 F.3d at 971 (“vacat[ing] the
Board’s back pay computation and remand[ing] the case for
reconsideration and a more adequate explanation” when the
Board’s rationale for its decision was unpersuasive). Should
the Board choose to consider interim earnings on remand, we
also leave to it the task of deciding how to accommodate the
various commands of Ogle, Woolworth, and their progeny.
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B
The Hospital next claims the Board exceeded its
authority by awarding backpay to employees hired into the
respiratory department after the unlawful hours reduction took
effect. We disagree.
In the 2011 Order, the Board found the “standard
remedial action required in cases of this kind applies to
individuals employed in the affected unit until Respondent
rescinds its unlawful change and bargains with the Union
about any future changes.” Cmty. Health Servs., 356
N.L.R.B. No. 103, at *14. Because the Hospital still had not
rescinded the unlawful hours reduction, the “reimbursement
remedy continue[d] to apply to each subsequently-hired
employee.” Id.
The Hospital argues this case is akin to NLRB v.
Dodson’s Market, Inc., 553 F.2d 617 (9th Cir. 1977), and
Chauffeurs Local Union No. 171 v. NLRB, 425 F.2d 157 (4th
Cir. 1970), in which the courts rejected backpay for
subsequently hired employees. But those cases are
distinguishable. In Dodson’s Market, the employer
improperly reduced the work hours of two employees in
retaliation for their decision to sign union representation
cards. 553 F.2d at 618. The Ninth Circuit found the Board
erred in awarding backpay to a third employee, who was hired
for part-time work ten months after the retaliatory action,
because there was no evidence the employer offered the new
employee part-time employment instead of full-time
employment for reasons relating to the prior unlawful act. Id.
at 619–20. Similarly, in Local Union No. 171, a successor
company repudiated the collective bargaining agreement the
preceding company had in place with its employees. 425 F.2d
at 158. The Board found that conduct improper because
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employees were entitled to “some protection . . . from a
sudden change in the employment relationship.” Id. at 159.
Accordingly, the Fourth Circuit affirmed the denial of
backpay to employees hired after the takeover because they
had not experienced any “sudden change in the employment
relationship.” Id.
By contrast, the Hospital’s “permanent, department-wide
reduction in the hours of work each week” limited the work
(and pay) of those hired into the department after the
reduction took effect. Cmty. Health Servs., 356 N.L.R.B. No.
103, at *15. In that regard, this case more closely resembles
88 Transit Lines. There, the employer improperly reduced the
number of transit runs available to employees in a certain
department. 55 F.3d at 825. Because the employees hired
into that department after the unlawful schedule change
“suffered the same disadvantage of not being able to bid on
[the transit runs] as did the other unit employees,” 88 Transit
Lines, 314 N.L.R.B. at 325, the Third Circuit approved the
Board’s award of backpay to those subsequently hired
employees. 55 F.3d at 826. That logic applies here: because
the Hospital’s hours reduction denied newly hired employees
a full work schedule, those employees suffered a “loss of
earnings . . . as a result of [the Hospital’s] unlawful actions,”
and deserve backpay under the 2004 Order. Cmty. Health
Servs., 342 N.L.R.B. at 404.
C
During the administrative hearing, the Hospital submitted
an offer of proof claiming it had attempted to negotiate with
the Union about the unlawful hours reduction, but the Union
had failed to respond. The Hospital argued its backpay
liability should be tolled as of August 28, 2007, the date on
which it had “complied with its duty to bargain with the
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Union” through its unreciprocated attempts to negotiate.
Hospital’s Br. 28. The Board held the Union only had an
obligation to negotiate if the Hospital had “restored the status
quo ante.” Cmty. Health Servs., 356 N.L.R.B. No. 103, at *5.
The Board thus found that, because the Hospital had not
rescinded its unlawful action before it attempted to negotiate,
the Union had no duty to bargain. Id. The Hospital now
takes issue with the Board’s ruling, but we find the Board’s
reasoning to be sound.
Employers must rescind their unlawful actions before
attempting bargaining so they cannot “tak[e] advantage of
[their] wrongdoing to the detriment of the employees.” U.S.
Marine Corp. v. NLRB, 944 F.2d 1305, 1322 (7th Cir. 1991).
Employers cannot force unions to come to the bargaining
table in a position of weakness. That is why, “in cases
involving unlawful unilateral changes, the Board’s normal
remedy is to order restoration of the status quo ante as a
means to ensure meaningful bargaining,” a policy that “has
been approved by the Supreme Court.” Porta-King Bldg.
Sys., 310 N.L.R.B. 539, 539 (1993) (citing Fibreboard Paper
Prods. Corp. v. NLRB, 379 U.S. 203, 216 (1964)), enforced,
14 F.3d 1258 (8th Cir. 1994). Accordingly, an employer’s
attempt to negotiate without first rescinding the unlawful
action “does not toll . . . backpay liability.” Porta-King Bldg.
Sys., 310 N.L.R.B. at 540.
The Hospital asserts its situation is different because the
Union “has decided to eschew the entire collective bargaining
process,” and “backpay [should] not continue to run into
eternity.” Hospital’s Reply Br. 9–10. The Hospital has not
provided any evidence the Union has abandoned collective
bargaining. And even if the Union has done so, the Hospital
can simply rescind the hours reduction, and when its
subsequent attempts to negotiate with the Union fail, it can
12
toll its backpay obligation by showing the bargaining process
has reached a “lawful impasse.” NLRB v. Cauthorne, 691
F.2d 1023, 1026 (D.C. Cir. 1982).
Finally, the Hospital cannot claim its backpay obligation
has been tolled because the Union has waived its right to
negotiate. The Board found such a waiver in American
Diamond Tool, Inc., 306 N.L.R.B. 570 (1992), but there, the
union had met with the employer shortly after the layoffs in
question, had not requested bargaining about that issue, and
had “expressly signaled its willingness to permit such conduct
in the future” by proposing a process for laying off additional
employees. Id. at 570–71. The Union’s conduct here does
not approach that level of acquiescence.
II
Because the Board did not adequately explain its refusal
to consider interim earnings when calculating the backpay
award, we grant the Hospital’s petition in relation to that
issue, grant the Board’s cross-application for enforcement in
all other respects, and remand for further consideration of the
interim earnings question.
So ordered.