Reno Hilton Resorts v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 7, 1999 Decided December 3, 1999

No. 98-1484

Reno Hilton Resorts,
Petitioner

v.

National Labor Relations Board,
Respondent

International Union, United Plant Guard
Workers of America,
Intervenor

On Petition for Review and Cross-Application
for Enforcement of an Order of the
National Labor Relations Board

Joseph E. Herman argued the cause and filed the briefs for
petitioner.

 Steven B. Goldstein, Attorney, National Labor Relations
Board, argued the cause for respondent. With him on the
brief were Linda Sher, Associate General Counsel, John D.
Burgoyne, Acting Deputy Associate General Counsel, and
David Habenstreit, Supervisory Attorney.

Scott A. Brooks argued the cause and filed the brief for
intervenor.

Before: Ginsburg, Rogers and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: Reno Hilton Resorts ("Reno Hil-
ton") appeals the decision and order of the National Labor
Relations Board ("Board") that it had violated ss 8(a)(1) and
(3) of the National Labor Relations Act ("Act"), 29 U.S.C.
ss 158(a)(1) and (3), by contracting out the work of its
recently unionized security service. See Reno Hilton Re-
sorts, 326 NLRB No. 154, 1998 WL 723981, at *1 (Sept. 30,
1998). Reno Hilton contends that the Board misstated and
misapplied the appropriate legal standard for determining
whether an employer's discharge of an employee constitutes
an unfair labor practice, and lacked substantial evidence to
support its finding of discriminatory intent. Finding these
contentions unpersuasive, we deny the petition for review and
grant the Board's cross-application for enforcement of the
order.

I.

When Reno Hilton began operating what was formerly a
Bally's hotel-restaurant-casino complex in 1992, it inherited
Bally's security staff, the members of which were not repre-
sented by any labor organization. Shortly thereafter, while
implementing a cost-savings plan, Reno Hilton considered and
rejected various proposals to contract out a number of securi-
ty positions, despite a projected annual savings ranging from
$24,000 to $96,000.

In June 1993, International Union, United Plant Guard
Workers of America ("Union") began a campaign to organize
Reno Hilton's security employees. After losing an election by

a vote of 51 to 34, the Union filed unfair labor practice
charges with the Board. While those charges were pending,1
the Union started another campaign in 1995 to organize Reno
Hilton's security employees, and an election was scheduled
for September 1995. Reno Hilton retained a labor consulting
firm, The Burk Group, to assist it in its opposition to the
union campaign, as it had done in the first campaign. Shortly
before the election, Gary Parillo, an "anti-union" security
employee, was called into the office of Reno Hilton's director
of security, Dave Bennett, to meet with a Burk Group official.
A color-coded chart in the office listed various security de-
partment employees and their position on the Union's orga-
nizing efforts. The Burk Group official asked Parillo to help
determine which security employees were pro- or anti-union,
advising Parillo that if the Union came in, the hotel would
contract out the security jobs and showing Parillo figures
purporting to represent the associated cost savings.

The Union won the election by a vote of 44 to 33 and was
certified by the Board on October 12, 1995, as the exclusive
collective-bargaining representative of the full-time and regu-
lar part-time security employees at the Reno Hilton. Shortly
before and after the election, Reno Hilton's management
indicated to rank-and-file employees that the presence of the
Union would mean that "things would get really rough."
Within two weeks of the Union's certification, the Hilton
Hotel's Vice President, Jim Anderson, met with Bennett
regarding contracting out Reno Hilton's security work. Ac-
cording to Lee Boekhout, a Reno Hilton security employee,
Bennett's impression after that meeting was that Reno Hilton
"may have lost the battle," but it had "won the war," and that
"they [i.e., the unit security employees] were gone." Bennett
reassured Boekhout, however, that his job was protected
because, Bennett claimed, he was able to save the jobs of the

__________
1 After finding in another proceeding that Reno Hilton had
violated sections 8(a)(3) and (1) of the Act, an administrative law
judge recommended that the 1993 election be set aside. See Reno
Hilton, Nos. 32-CA-13618, 32-RC-3777 (Aug. 18, 1994). The
Board substantially affirmed the decision of the ALJ. See Reno
Hilton Resorts, 320 NLRB 197, 197 n.4, 211 (1995).

ten or eleven employees who supported Reno Hilton's posi-
tion in the election campaign.

During contract negotiation sessions from November 1995
to early August 1996, Anderson continually proposed to the
Union that Reno Hilton would have the right to contract out
its security work. The Union presented counter proposals to
the subcontracting plans, which Reno Hilton rejected. Ac-
cording to the Union President, Anderson assured the Union
negotiators that Reno Hilton had no present intention to
contract out its security work. Be that as it may, in Febru-
ary 1996, Bennett sent a memorandum to Reno Hilton's
president advising that his investigation with two potential
subcontractors of the costs of bringing in an outside security
service indicated that Reno Hilton could save a considerable
amount of money. In April 1996, several high-ranking Hilton
Corporation and Reno Hilton officials discussed the econom-
ics of contracting out the security work. During this time the
administrative assistant to Reno Hilton's director of security,
and its director of human resources spoke to Boekhout about
changing the job titles of anti-Union employees to protect
their jobs from the imminent elimination in the wake of
contracting out.

Then, in June 1996, Reno Hilton presented the Union with
a proposed wage freeze and an unrestricted right to contract
out. When the Union rejected the proposal, Reno Hilton
responded with a proposal for a three-year contract with a
wage ceiling of $10.43 and a one-year bar on contracting out
security work. The Union rejected this proposal as well as a
third proposal for no wage adjustment and unrestricted rights
to contract out. The security employees went on strike. The
strike lasted from the end of July 1996 until mid-August 1996,
at which point Reno Hilton and the Union entered into a
collective bargaining agreement. The agreement froze
wages, prohibited discrimination against employees on the
basis of union or non-union status, and provided that Reno
Hilton had the right to "[c]ontract or subcontract any work."

In October 1996, Reno Hilton conducted a financial impact
analysis of contracting out that estimated savings of over $1.5

million over three years. On November 1, 1996, hotel offi-
cials met with a potential subcontractor, American Protective
Services, to discuss cost and quality issues. The same day,
Anderson wrote to the Union President requesting a meeting
to discuss the results of the hotel's inquiry into contracting
out. Prior to the meeting, Anderson informed the Union that
contracting out security work at the available base wage rate
of $7.50 per hour would save Reno Hilton $4.23 per hour per
employee. Also, prior to the meeting, hotel officials made the
decision to contract out its security work in January 1997,
unless the Union would agree to a wage cut equal to the
projected cost savings of contracting out.2 Reno Hilton's
financial statement purported to show a decline of $10,587,156
in net revenues in 1996 from the prior year.

Before the contracting out decision was implemented in
January 1997, Reno Hilton made two offers to the Union to
avoid subcontracting. At the meeting with the Union Presi-
dent in late November 1996, Anderson stated first, that Reno
Hilton would save over $500,000 annually by contracting out
the security work of rank-and-file employees; second that the
Union counter-proposals projecting over $400,000 annual sav-
ings were unacceptable; and third, that if the Union wanted
to avoid contracting out, it would have to agree to a base
wage rate for Reno Hilton's security staff of $7.75 per hour,
which included the $0.25 per hour profit margin it would have
to pay the subcontractor. In response to the Union's protest
that the proposed wage decrease was an attempt to drive it
out, inasmuch as Reno Hilton had not tried to lower wages in
this manner during the contract negotiations, Anderson
claimed that the cost saving benefits of contracting out had
only recently become apparent. The Union rejected this
avoidance offer.

__________
2 In January 1997, Reno Hilton discharged all of the security
bargaining unit employees and contracted out their work to Ameri-
can Protective Services, which has supplied Reno Hilton the same
number of full-time security officers as those utilized prior to the
contracting out. Approximately thirteen of Reno Hilton's former
security employees obtained employment with American Protective
Services.

 Another avoidance offer was made the following month. In
early December 1996, Reno Hilton informed the Union that
the hotel would contract out its security work in January
1997. On December 20, 1996, the Union filed unfair labor
practice charges on the ground that the company contracted
out its security work in retaliation for the employees' union
activity while protecting the jobs of "loyal" employees. At an
eleventh hour meeting before Reno Hilton contracted out,
Anderson reiterated the $7.75 offer, informing the Union that
no amount of cost savings proposed by the Union would
substitute for accepting that wage rate. Reno Hilton also
proposed to make severance pay contingent upon the employ-
ees' agreeing not to sue Reno Hilton. The Union rejected the
offer.

In response to the Union's December 1996 charges, the
ALJ ruled that Reno Hilton had violated ss 8(a)(3) and (1) of
the Act by contracting out its security employees' work and
dismissing all of its security employees, and recommended
immediate and full reinstatement of the employees with back
pay and benefits. The Board affirmed substantially all of the
ALJ's rulings, findings, and conclusions, and expanded the
remedies to include a broader cease-and-desist order,3 rescis-
sion of the subcontract with American Protective Services,
and restoration of the status quo ante by ordering Hilton to
re-establish an in-house security force. Reno Hilton peti-
tioned the court for review under 29 U.S.C. s 160(f), and the
Board cross-petitioned for enforcement of its order under
s 160(e).

II.

Under s 8(a)(3) of the Act, it is an unfair labor practice for
an employer "to encourage or discourage membership in any
labor organization," "by discrimination in regard to hire or

__________
3 The amended order provided for the expungement from the
employment records of the terminated security employees all refer-
ences to the unlawful discharge, and required Reno Hilton to
produce employment records necessary to calculate back pay due to
the terminated employees.

tenure of employment or any term or condition of employ-
ment." 29 U.S.C. s 158(a)(3). Such conduct also would
violate s 8(a)(1) because it "interfere[s] with, restrain[s], or
coerce[s] employees in the exercise of" their labor rights. 29
U.S.C. s 158(a)(1); see Power Inc. v. NLRB, 40 F.3d 409, 417
n.3 (D.C. Cir. 1994). An employer violates ss 8(a)(3) and (1)
if it takes adverse action against an employee because of the
protected union activity. See 29 U.S.C. ss 158(a)(3), (1);
LCF, Inc. v. NLRB, 129 F.3d 1276, 1281 (D.C. Cir. 1997).

At the outset, Reno Hilton maintains that the General
Counsel's decision not to pursue a s 8(a)(5) charge against
the hotel for bad faith in bargaining for the contracting out
clause precludes an unfair labor practice claim under
s 8(a)(3) for exercising its rights under that clause. We
disagree. A decision not to prosecute is made for many
reasons, sometimes for reasons unrelated to the merits of the
charge. See, e.g., Heckler v. Chaney, 470 U.S. 821, 831, 105
S. Ct. 1649, 1655-56, 84 L.Ed.2d 714 (1985). Reno Hilton
offers nothing to show that the General Counsel's decision
was based on an affirmative finding of good faith by Reno
Hilton in all its actions under the parties' agreement. Even
assuming the General Counsel's exercise of its prosecutorial
discretion could support an inference that the hotel had
bargained for the contracting out clause in good faith, Reno
Hilton proffers no persuasive authority for the proposition
that such an inference precludes a s 8(a)(3) violation for
discrimination in the exercise of rights under the bargained-
for contracting out provision.

In contending that its exercise of its contracting out rights
under the parties' agreement cannot be deemed a s 8(a)(3)
violation, Reno Hilton relies on the Sixth Circuit's decision in
"Automatic" Sprinkler Corp. of America v. NLRB, 120 F.3d
612, 620 (6th Cir. 1997), cert. denied, 118 S. Ct. 1675, 140
L.Ed.2d 813 (1998). In that case, the court held that the
employer's exercise of its contractual right to subcontract did
not constitute a violation of s 8(a)(3). But as the dissenting
judge noted, the majority did not address the findings of the
ALJ as adopted by the Board that the employer's conduct
was motivated by anti-union animus. See id. at 622 (Ryan, J.,

dissenting). Further, the decision in Automatic Sprinkler,
which has not yet been cited with approval outside of the
Sixth Circuit, is at odds with the general principle that a
party cannot exercise its contractual rights in violation of the
law. Thus, the Tenth Circuit in Capitol Steel & Iron Co. v.
NLRB, 89 F.3d 692, 696-97 (10th Cir. 1996), declined to
countenance the calculated use of waiver clauses in a contract
to undermine the collective bargaining process, affirming the
Board's finding of a s 8(a)(5) violation where the employer
had announced wage increases "in such a way and at such a
time as to sway the employees who would immediately there-
after vote on [the employer's] 'last and final offer.' " Similar-
ly, the Third Circuit in NLRB v. Joy Technologies, Inc., 990
F.2d 104, 111 n.7 (3d Cir. 1993), noting that "contract lan-
guage does not exempt the Employer from its obligation to
act lawfully under the NLRA," affirmed the Board's finding
that the employer had unlawfully abused the superseniority
clause in the parties' contract by transferring a position so as
to "ensure that Beightol would remain union committeeman
and obtain the higher-paying position." So too, in Gannett
Rochester Newspapers v. NLRB, 988 F.2d 198, 203 (D.C. Cir.
1993), this circuit observed that "[u]nder the clear-and-
unmistakable standard [for waiver], courts may 'not infer
from a general contractual provision that the parties intended
to waive a statutorily protected right unless the undertaking
is explicitly stated.' " Id. (quoting Metropolitan Edison Co.
v. NLRB, 460 U.S. 693, 708 (1983) (internal quotation omit-
ted)). Even when the waiver is explicit, moreover, the waiver
is not read broadly. See id. Because the record is devoid of
evidence to infer, much less show, that the Union waived its
s 8(a)(3) rights by entering into the agreement with Reno
Hilton, there is no basis for adopting either Reno Hilton's
contention or the Sixth Circuit's analysis in Automatic Sprin-
kler.

III.

Consequently, the heart of Reno Hilton's appeal turns out
to be its contention that the Board lacked substantial evi-
dence of anti-union animus to find a violation of ss 8(a)(3) and

(1). First, it maintains that the General Counsel did not
establish a violation of the Act under Wright Line,4 because
the ALJ misstated the test, gave controlling weight to evi-
dence outside the s 10(b) period, failed to consider changed
circumstances prompting the contracting out decision, and
made inappropriate comparisons between Reno Hilton and
other Hilton hotels. Second, Reno Hilton maintains that it
rebutted any evidence of anti-union animus by establishing
that its decision to contract out was driven by economic
considerations, and that the ALJ erred by not considering
such evidence and by drawing negative inferences from Reno
Hilton's failure to call certain witnesses. Neither contention
is persuasive.

The court will affirm the findings of the Board unless they
are "unsupported by substantial evidence in the record con-
sidered as a whole," General Elec. Co. v. NLRB, 117 F.3d
627, 630 (D.C. Cir. 1997), or unless the Board "acted arbitrari-
ly or otherwise erred in applying established law to the facts."
Allegheny Ludlum Corp. v. NLRB, 104 F.3d 1354, 1358 (D.C.
Cir. 1997) (quotation and citation omitted). The court must
"take account of anything in the record that 'fairly detracts'
from the weight of the evidence supporting the Board's
conclusion." General Elec., 117 F.3d at 630 (quoting Univer-
sal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S. Ct. 456,
464-65, 95 L.Ed. 456 (1951)). Even if the court might have
reached a different conclusion had the court considered the
issue de novo, the court will uphold the Board's decision if it
is supported by substantial evidence in the record. See
Synergy Gas Corp. v. NLRB, 19 F.3d 649, 651 (D.C. Cir.
1994). The court gives even greater deference to the Board's
determination of questions of motive, see Laro Maintenance

__________
4 251 N.L.R.B. 1083, enf'd, 662 F.2d 899 (1st Cir. 1981), cert.
denied, 455 U.S. 989, 102 S. Ct. 1612, 71 L.Ed.2d 848 (1982), which
was upheld in NLRB v. Transportation Management Corp., 462
U.S. 393, 399-403, 103 S. Ct. 2469, 2473-75, 76 L.Ed.2d 667 (1983),
overruled in part on other grounds by Director, Office of Workers'
Compensation Programs, Dep't of Labor v. Greenwich Collieries,
512 U.S. 267, 276-78, 114 S. Ct. 2251, 2257-58, 129 L.Ed.2d 221
(1994).

Corp. v. NLRB, 56 F.3d 224, 229 (D.C. Cir. 1995), and
"accept[s] the ALJ's credibility determinations that are
adopted by the Board 'unless they are patently unsupport-
able.' " Schaeff Inc. v. NLRB, 113 F.3d 264, 266 (D.C. Cir.
1997) (quoting NLRB v. Creative Food Design Ltd., 852 F.2d
1295, 1297 (D.C. Cir. 1988)); see also Capital Cleaning Con-
tractors, Inc. v. NLRB, 147 F.3d 999, 1004 (D.C. Cir. 1998).

When examining an allegation of a s 8(a)(3) violation, the
Board applies the two-stage test first articulated in Wright
Line, under which the Board's General Counsel has the
burden of persuasion to show that union activity was a
substantial or motivating factor in the employer's decision to
contract out. See Wright Line, 251 N.L.R.B. at 1089; South-
west Merchandising Corp. v. NLRB, 53 F.3d 1334, 1339-40
(D.C. Cir. 1995); see also Laro Maintenance Corp., 56 F.3d
at 228. The employer, in turn, may rebut the inference by
showing by a preponderance of the evidence that it would
have taken the same action absent the union activity and the
employer's anti-union motivation. See Wright Line, 251
N.L.R.B. at 1089.

Reno Hilton maintains that the ALJ misstated and misap-
plied the Wright Line test by referring to the General
Counsel's initial burden as a "prima facie showing," and by
failing to consider Reno Hilton's proffered economic justifica-
tion or evidence of its cost savings matching offers as part of
the threshold determination whether the General Counsel
met its initial burden. Any misstatement or misapplication of
the Wright Line test is immaterial, however, so long as there
is substantial evidence supporting the Board's determinations
that anti-union animus was a motivating factor in the employ-
er's decision to contract out its unit security work and that
Reno Hilton failed to carry its burden of proof that it would
have made the same decision regardless of such animus. Cf.
NLRB v. GATX Logistics, Inc., 160 F.3d 353, 357 (7th Cir.
1998).

The Board relied primarily on the following factual findings
by the ALJ in concluding that the General Counsel carried
his burden of persuasion showing that Reno Hilton was

motivated by anti-union animus when deciding to contract out
its security work. First, there was the matter of timing.
The contracting out decision came on the heels of heavy union
activity, most notably following the strike preceding negotia-
tion of the collective bargaining agreement. The timing of
the decision to contract out is suspect in view of evidence that
Reno Hilton knew long before the Union's certification that
contracting out its security work could save a significant
amount of money given Reno Hilton's above-market wages
for its security employees. As the court pointed out in Meco
Corp. v. NLRB, 986 F.2d 1434, 1437 (D.C. Cir. 1993), timing
is a telling consideration in determining whether employer
action is motivated by anti-union animus. See also General
Elec., 117 F.3d at 638 (citing Parsippany Hotel Management
Co. v. NLRB, 99 F.3d 413, 422 (D.C. Cir. 1996)).

Second, reasonable inferences of anti-union motivation were
virtually compelled by the statements of Reno Hilton officials
during the Union campaign to the effect that the hotel would
strongly consider contracting out security jobs if the Union
prevailed in the election.5 Particularly compelling is the
evidence of comments by security director Bennett to Boekh-
out regarding his post-unionization efforts to contract out the
security work while preserving the jobs of the anti-union
employees.6 There was evidence as well of other discussions

__________
5 Contrary to Reno Hilton's contention, the Board could prop-
erly consider evidence outside of the s 10(b) six-month-limitations
period for purposes of illuminating the events taking place within
the period. See Sheet Metal Workers' Int'l Ass'n. AFL-CIO, 989
F.2d 515, 519 (D.C. Cir.1993). The evidence of the hotel's unfair
labor practices during the election was not so remote in time as to
be unrelated to the hotel's decision to contract out, see Meco Corp.,
986 F.2d at 1437, particularly where, as here, the formulation of
that decision began two weeks after the certification of the Union.

6 Boekhout's unrebutted affidavit stated in pertinent part:

On or about October 25 or 26, [1995], about a month or so after
the election, I was in the security office when Director of
Security Dave Bennett returned from a meeting upstairs....
He told me that they had made a presentation to Jim Anderson

of job protection for anti-union employees, including a sugges-
tion by the head of human resources at Reno Hilton that job
titles could be manipulated to avoid termination of employer-
allied employees due to the contracting out of all security
work. Although Bennett ultimately was unable to protect
jobs as he promised, the various statements by hotel officials
strongly support the inference that the security employees'
union activity was a substantial and motivating factor in Reno
Hilton's decision to contract out its security work.

That evidence notwithstanding, Reno Hilton contends that
the Board erred by failing to consider evidence at each step
of analysis under Wright Line. Reno Hilton points to the
evidence that on two occasions it offered to refrain from
contracting out its security work if the Union would match
the subcontractor's wages. The ALJ did not refer to these
two avoidance offers in his decision. On a different evidentia-
ry record, the Board might view evidence of two avoidance
offers as successfully rebutting the evidence of anti-union
animus. Here, however, there was evidence that Reno Hilton
was engaged in a pervasive, continuing effort to undermine
union organizing efforts prior to certification and afterwards,
when it limited the Union's knowledge of the contracting out
plans and frustrated the Union's efforts by offering an unrea-
sonable $7.75 wage rate, which not only was below the

__________
and the others (he didn't name who) at the meeting concerning
going to contract security and they had bought it. He said that
they had told them that they could save more than $500,000.
He told me that they had said do it. He then told me that they
may have lost the battle but that they had won the war. He
said that they were gone. I believe I said oh, s[* * *].
Bennett told me not to worry about it, that my job was
protected, that he had managed to save the 10 or 11 of us.
Bennett did not actually say the word subcontracting [i.e.,
contracting out], but I knew what he meant. When he said
"they were gone" I knew he meant the [employees in the]
Union. When he referred to the 10 to 11 of us he meant those
security officers who supported the Company and not the
Union.

prevailing average wage rate in the area, but represented a
severe wage cut for most Reno Hilton security employees.7
Under the circumstances, the two avoidance offers could
hardly rebut the pervasive and stark evidence of anti-union
animus. Because the evidence was legally irrelevant, the
ALJ's failure to address it is of no moment. The relevant
comparison, in analyzing the s 8(a)(3) charge that Reno Hil-
ton discriminated against its security employees because of
their protected union activity, is between the unionized secu-
rity employees and their non-union predecessors. It follows,
therefore, that the General Counsel satisfied the first step of
the Wright Line test: there is substantial evidence in the
record to support the Board's finding that Reno Hilton was
motivated by anti-union animus when it decided to contract
out its security work.

As to the second step of Wright Line, Reno Hilton con-
tends that its financial statement for 1996 and other evidence
established that it would have contracted out its security
work absent anti-union animus. Specifically, Reno Hilton
relies on evidence that the decision to subcontract was being
considered prior to its security employees' union activity as
part of an ongoing cost reduction plan, and was prompted, in
1996, primarily by falling revenues and profits. Reno Hilton
produced evidence that it and its sister hotel, the Flamingo
Hilton-Reno, had been engaged in cost-cutting programs,
including closing, combining, or consolidating certain opera-
tions and laying off employees.8 The ALJ concluded, and the

__________
7 A 1995 Reno Hilton wage survey indicated that Reno Hilton's
maximum wage rate of $12.62 per hour for security employees was
almost three dollars higher than the $9.64 average maximum wage
rate paid by nine competing hotels. Seventy percent of Reno
Hilton's security employees were paid at or near the top rate.

8 No other Hilton Hotel casino has a unionized security staff,
nor has any Hilton Hotel casino contracted out the work of its
security force. Reno Hilton relies on evidence that it engaged in
joint cost-cutting measures with the Flamingo Hilton-Reno, yet
maintains that consideration of the Flamingo Hilton-Reno's com-
parative treatment of its security employees is irrelevant. We
decline, in any event, to draw any inference from the fact that the
Flamingo Hilton-Reno, which is in the same wage market as the

Board agreed, that the evidence supporting Reno Hilton's
contention that it was motivated by lawful business consider-
ations "is sorely wanting, as not one individual who was
instrumental in making such a decision was called by [Reno
Hilton] as a witness in this proceeding." The Board correctly
noted that the ALJ had improperly drawn adverse inferences
from Reno Hilton's failure to produce testimony from rele-
vant witnesses who were no longer in its employ at the time
of the hearing. See Reno Hilton Resorts, 326 NLRB No. 154,
1998 WL 723981, *2 n.1 (citing Irwin Industries, Inc., 325
NLRB No. 149, 1998 WL 261141, *35 n.12 (May 19, 1998);
Goldsmith Motors Corp., 310 NLRB 1279, 1280 n.1 (1993));
see also Property Resources Corp., 285 NLRB 1105, 1105 n.2
(1987), enf'd 863 F.2d 964 (D.C. Cir. 1988). But, the record
also contained potentially damaging evidence from Bennett,
who remained Reno Hilton's director of security and had
written a crucial memorandum in February 1996 on contract-
ing out, the only remaining copy of which was missing a key
portion.9 The absence of Bennett's testimony, therefore,
represents a glaring omission in Reno Hilton's case, especially
as it relates to Bennett's partially-recovered memorandum.10

__________
Reno Hilton, has not reduced the wage rates of its security staff as
Reno Hilton proposed to the Union as an alternative to subcontract-
ing because there is insufficient information in the record about
Flamingo Hilton-Reno's financial condition during the relevant
period.

9 The omitted portion of Bennett's memorandum was relevant
to whether Reno Hilton had a legitimate business justification for
contracting out its security service; it purported to set forth
Bennett's "ideas as to why a contract security company can better
service us than in-house security." Memorandum of February 26,
1996, from Bennett to the president of Reno Hilton.

10 Reno Hilton's challenge to the ALJ's refusal to reopen the
administrative record is meritless. Reno Hilton sought to admit
evidence that, nearly three weeks after the hearing, Reno Hilton
contracted out one of its restaurant operations, resulting in the
termination of 132 non-union employees. Although the ALJ did not
elaborate on his ruling denying the motion to reopen the record, the
court will not find an abuse of discretion unless it "clearly appear[s]

 No more availing is Reno Hilton's contention that its
economic defense rebutted the evidence of anti-union motiva-
tion. In LCF, Inc. v. NLRB, 129 F.3d 1276 (D.C. Cir. 1997),
on which Reno Hilton relies, the employer presented over-
whelming evidence of its grim economic situation that out-
weighed the inference arising from the otherwise suspect
timing of its decision to contract out. See id. at 1282-83. By
contrast, the persuasive force of Reno Hilton's evidence that
falling revenues and profits in 1996 were the impetus for the
contracting out decision is severely weakened by the evidence
that it proposed contracting out two weeks after the Union's
certification. This occurred despite the claim of Hilton's Vice
President when bargaining began that it had no present
intentions to contract out Reno Hilton's security work. Nor
did Reno Hilton present any evidence to explain why it chose
to contract out all of its security service in response to the
revenue decline. It presented no testimony from any deci-
sion maker linking the decision to contract out to the revenue
decline. It presented no testimony even as to when the
revenue decline became apparent to management; the only
testimony on the revenue decline is from Mike Caryl, who by
his own testimony, was not a decision maker. Given the
totality of the circumstances, the Board could find that evi-
dence of changed circumstances in the form of a financial
statement suggesting a decline in earnings fails to demon-
strate that the decision to contract out was prompted by that
decline.

Accordingly, because there is substantial evidence in the
record to support the Board's finding of anti-union animus
and its rejection of Reno Hilton's defense that the contracting
out of the entire security service would have occurred for
economic reasons absent anti-union animus, we deny the

__________
that the new evidence would compel or persuade to a contrary
result." Cooley v. FERC, 843 F.2d 1464, 1473 (D.C. Cir. 1988)
(alteration in original) (quotation and citation omitted). The prof-
fered evidence does not meet this standard, and hence we find no
abuse of discretion. See Thomas-Davis Medical Ctrs. v. NLRB,
157 F.3d 909, 912 (D.C. Cir. 1998) (citing Road Sprinkler Fitters
Local Union No. 669 v. NLRB, 789 F.2d 9, 14 (D.C. Cir. 1986)).

petition for review and grant the Board's petition for enforce-
ment of its order.