Anchorage Community Hospital, Inc.

ANCHORAGE COMMUNITY HOSPITAL 575 Anchorage Community Hospital , Inc. and Judith A. Hoersting International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local 959, State of Alaska and Judith A. Hoersting. Cases 19- CA-7857 and 19-CB-2472 June 30, 1976 DECISION AND ORDER On January 15, 1976, Administrative Law Judge David G. Heilbrun issued the attached Decision in this proceeding. Thereafter, the General Counsel filed exceptions and a supporting brief, and Respon- dent Employer filed an answering brief. The Board has considered the record and the at- tached Decision in light of the exceptions and briefs and has decided to affirm the rulings, findings, and conclusions of the Administrative Law Judge and to adopt his recommended Order. We agree with the Administrative Law Judge that the evidence does not establish an improper relation- ship between the Respondents herein. Unlike our dissenting colleague, we find no immediate danger of a conflict of interest based on Respondent Union's (1) role in the management of Respondent Employer and (2) financial involvement in the affairs of Re- spondent Employer. As to the first, Respondent Union's role is that of a minority representative on both the board of trustees and the executive committee appointed by the for- mer, with no evidence to indicate any attempt to abuse that role. Member Walther attempts to convert Respondent Union's minority membership on both bodies into that of a majority by adding William Padgett, the administrator of two Teamsters-Em- ployer trust funds, to the board of trustees, and Pad- gett and Dr. Vernon Cates, an officer of a Teamsters- Employer fund, to the executive committee. Howev- er, these individuals are in roles which require fidelity to the trusts themselves, not to either entity forming their joint establishment, and are not inherently sub- ject to the continuing influence of either. Cf. United Mine Workers of America Welfare and Retirement Fund, 192 NLRB 1022 (1971). We note further that our dissenting colleague appears to concede that there is no evidence that they have been or are likely to be influenced by Respondent Union in carrying out their duties on the board or the committee. As to the second, Respondent Union is financially involved with Respondent Employer in two respects: (1) the interim construction load extended to the hos- pital, and (2) the funds paid by the health and wel- fare trust fund to the hospital for medical services. As to (1), the loan is a fully secured interim construc- tion loan. It is in all respects, therefore, an arm's- length transaction and does not establish any danger of bargaining process abuse. H. P. Hood & Sons, Inc., 182 NLRB 194 (1970). As to (2), the funds paid by the trust to Respondent Employer represent only 5 percent of the trust's gross receipts and 10 percent of the Respondent Employer's total revenues. These percentages are not sufficiently large to present a danger that Respondent Union would subvert the bargaining rights of the unit employees. As our dissenting colleague concedes, there is no evidence to indicate that Respondent Union has sac- rificed the interests of Respondent Employer's em- ployees for the sake of protecting the hospital or the trust funds. On the contrary, the course of the rela- tionship between the parties, from inception of the Association through contract negotiations and subse- quent ratification, is free of any infirmity. We would, of course, not hesitate to find in a future proceeding that Respondent Union is disqualified should the parties act in such a way as to establish an innate danger of abuse of the collective-bargaining process at the expense of the unit employees. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Re- lations Board adopts as its Order the recommended Order of the Administrative Law Judge and hereby orders that the complaint be, and it hereby is, dis- missed in its entirety. MEMBER WALTHER, dissenting: I would reverse the Administrative Law Judge and find that Respondent International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local 959, State of Alaska, is disquali- fied from representing the employees of Respondent Anchorage Community Hospital, Inc. Respondent Union's active managerial role and financial involve- ment in the affairs of Respondent Employer create an immediate danger of a conflict of interest. Ac- cordingly, I would find the 8(a)(1) and (2) and 8(b)(1)(A) and (2) violations as alleged. Of the 15 trustees of the hospital, 7 are business representatives or officers of Respondent Union. The eighth, William D. Padgett, is administrator of the Alaska Teamsters-Employer health and welfare trust, and of the Alaska Teamsters-Employer pension trust. To compute, mechanically, that only 7 of the 15 trus- tees are directly affiliated with Respondent Union, and to conclude that therefore Respondent Union does not control the management of the hospital as does the Administrative Law Judge, is simply not a 225 NLRB No. 75 576 DECISIONS OF NATIONAL LABOR RELATIONS BOARD realistic analysis of the situation. Padgett's status as administrator of two funds operated for the benefit of members of Respondent Union makes his inde- pendence from Respondent Union questionable to say the least. There is no evidence that the unaffiliat- ed seven members of the board of trustees represent any well-defined group or interest such as Respon- dent Union. Under these circumstances, Respondent for all practical purposes has "working control" of this board of trustees. This being true, Respondent Union sits on both sides of the bargaining table. This the Board does not permit. Centerville Clinics, Incor- porated, 181 NLRB 135 (1970); Oregon Teamsters' Security Plan Office, 119 NLRB 207, 211 (1957). The danger of a conflict of interest does not evapo- rate merely because members of the board of Re- spondent Employer are uncompensated or because Respondent Employer is a nonprofit corporation. Li- abilities are imposed by law upon the directors of nonprofit corporations for nonfeasance or malfea- sance . Furthermore, the prestige of Respondent Union is at stake in view of its intimate involvement in the management and operation of Respondent Employer. It shares, presumably, the normal desire of any proprietor to secure the success of its enter- prise and avoid financial difficulties whatever the cause. The executive committee of the board of trustees of Respondent Employer consists of Chairman Jesse Carr, secretary of Respondent Union; Frank Yarnot, a business representative of Respondent Union; Ver- non Cates, secretary-treasurer of the Alaska Team- sters Trust; Padgett; and one practicing physician. Thus, four of the five members are affiliated either with Respondent Union or with funds set up for the benefit of Respondent Union's members. The executive committee is empowered to transact necessary business between the meetings of the board of trustees. Under the hospital's bylaws, the executive committee is authorized to conduct busi- ness whenever a quorum of at least one-half (i.e., three) of the members are present. While the bylaws do not specifically so state, presumably official ac- tion may be taken by majority vote-a minimum of two members. In the past, the activities of the executive commit- tee have included acceptance of the collective-bar- gaining agreement with the original Association of Employees which immediately thereafter affiliated with Respondent Union. When the contract was ac- cepted, only three of the five members of the execu- tive committee were present. Under the bylaws, therefore, it is entirely possible that only two mem- bers of the board of trustees-Carr and Yarnot, for example-can control the hospital's labor relations policies. This possibility is particularly acute given the fact that Carr is authorized to schedule and chair the executive committee meetings. Illustrative of the intimate connection between the Union and the board of the hospital is the fact that when the employees formed the Association, J. S. Streight, a business representative of Respondent Union, resigned as a member of the board. There- upon he assisted the Association as the experienced professional in bargaining with Respondent Employ- er. The Teamsters-Employer health and welfare trust paid the Respondent Employer $574,000 for medical services to trust participants in 1 year. This constitut- ed 5 percent of the trust's annual gross receipts and 10 percent of the hospital's gross revenue. The Team- sters-Employer pension trust made a construction loan commitment to the hospital in the amount of $20,800,000 of which approximately $10 million had been loaned at the time of the hearing. I believe that Medical Foundation of Bellaire, 193 NLRB 62 (1971), is controlling and that the Admin- istrative Law Judge's attempt to distinguish it misses the mark. The Administrative Law Judge concedes that Respondent Union is intimately involved in the operation of Respondent Employer, and it is clear that this is at the highest managerial level. In Bellaire, too, the union representatives constituted only a mi- nority of the foundation's board of trustees (at least at the time the complaint issued). The amount of money paid by that union to that foundation was $375,000 in a year-substantially less than here (al- though admittedly a higher percentage of the foundation's receipts). The test of when a union is disqualified to repre- sent employees because of a conflict of interest is not whether it has in fact failed to obtain the most favor- able terms and interpretations of the contract for its members, but whether there exists a serious tempta- tion to permit this to occur. The Board disqualifies unions for reasons much broader than, for example, ownership of a competing business as in Bausch & Lomb Optical Company, 108 NLRB 1555 (1954). The Board said there and repeated in other conflict cases: I "[A union] must approach the bargaining ta- ble . . . with a single-minded purpose of protecting and advancing the interests of employees who have selected it as their bargaining agent and there must be no ulterior purpose." While there is no evidence at this time that the Respondent Union has failed in any way to represent the employees, it is not necessary that the fire of con- 1 E g, Oregon Teamsters ' Security Plan Office, supra at 211, Welfare and Pension Funds, 178 NLRB 14 (1969) ANCHORAGE COMMUNITY HOSPITAL 577 flict of interest be blazing. It is enough that the wood is gathered, the kindling sprinkled , and the matches available. In Welfare and Pension Funds, supra, the Board disqualified a separate local of the Carpenters Union from representing employees of the Carpen- ters employer-union welfare and pension funds even though the local was made semiautonomous because the Carpenters International had the power to re- move officers and conduct the affairs of its local whenever the local's affairs were conducted in a manner detrimental to the welfare of the Internation- al. The disqualification was imposed even though this power had never been exercised or threatened. The existence of this power was in itself sufficient to disqualify a local of the Carpenters Union as bar- gaining representative. In the same manner, there is no evidence in this case that the Respondent Union has sacrificed the interests of Respondent Employer's employees for the sake of protecting the hospital or the trust funds. Nevertheless , the temptations and opportunities to do so are too great to permit Respondent Union to represent these employees. Respondent Union's health and welfare fund is responsible to obtain the best medical services for its beneficiaries at the lowest cost to the funds. Doing this requires keeping payment for services to Re- spondent Hospital as low as possible . Conversely, Respondent Union's responsibility as bargaining rep- resentative of the hospital 's employees is to obtain the best wages and benefits and most favorable con- tract interpretations possible , which in turn increases the expense of the health and welfare trust. Respon- dent Union should not be in a position where anyone can speculate as to which responsibility it is or should be fulfilling at the expense of the other. For the foregoing reasons, I would reverse the Ad- ministrative Law Judge and find that through their conduct, Respondent Hospital violated Section 8(a)(1) and (2) and Respondent Union violated Sec- tion 8(b)(1)(A) and (2). DECISION STATEMENT OF THE CASE DAVID G . HEILBRUN , Administrative Law Judge: This matter was heard at Anchorage, Alaska, on November 4, 1975,' based on charges filed during July and a consolidat- ed complaint issued August 29 alleging that Anchorage Community Hospital, Inc., herein called Respondent Em- ployer, violated Section 8(a)(1) and (2) of the Act and that International Brotherhood of Teamsters, Chauffeurs, 1 All dates and named months hereafter are in 1975 unless indicated otherwise Warehousemen and Helpers of America , Local 959, State of Alaska, herein called Respondent Union , violated Sec- tion 8(b)(1)(A) and (2). These allegations are premised on "extensive financial assistance" running from Respondent Union to Respondent Employer, occupancy of employer board of trustees positions by business representatives or union officers in a manner assertedly creating potential or actual control of Respondent Employer's day-to-day oper- ations and labor relations by Respondent Union , and exis- tence (including background circumstances) of a certain collective-bargaining agreement . Upon the entire record and consideration of posthearing briefs, I make the follow- ing: FINDINGS OF FACT 1. THE EMPLOYER AND LABOR ORGANIZATIONS INVOLVED Respondent Employer , a nonprofit corporation , operates a hospital facility in Anchorage, Alaska, annually deriving gross revenue in excess of $250,000 and annually purchas- ing goods and services valued in excess of $50,000 from outside the State of Alaska. I find it is an employer en- gaged in commerce within the meaning of Section 2(6) and (7) of the Act. Respondent Union and Alaska Hospital and Medical Employees Association, herein called the Associa- tion, are labor organizations within the meaning of Section 2(5) of the Act. II. THE ALLEGED UNFAIR LABOR PRACTICES Facts and Discussion The hospital's governing body is an uncompensated 15- member board of trustees . The executive committee is a standing committee of such board, expressly empowered by corporate bylaws to transact regular business between board meetings . Seven members of the hospital's board of trustees are officers or business representatives of Respon- dent Union. One of these, Jesse Carr , is board president and also secretary-treasurer of Respondent Union . The re- maining eight trustees are physicians, businessmen, bank- ers, and other community leaders. Among this remaining group is William D. Padgett, board secretary-treasurer, who also functions occupationally as administrator of both the Alaska Teamsters-employer health and welfare trust and the Alaska Teamsters -employer pension trust. Shortly after hospital employees formed the Association in August 1974, an attorney wrote the hospital to demand bargaining recognition covering all employees except su- pervisors and guards . This eventuated in a card check and written determination dated October 10, 1974, that the As- sociation represented a majority of the hospital's employ- ees and, alternately, of certain nursing groups. On October 18, 1974, the Association's executive board wrote to Carr requesting affiliation with Respondent Union for collec- tive-bargaining purposes . Contract negotiations ensued during November and December 1974 with J . Streight, business agent of Respondent Union, chiefly representing the Association, and Ernest Webb, hospital administrator, 578 DECISIONS OF NATIONAL LABOR RELATIONS BOARD chiefly representing Respondent Employer? In January, agreement was reached on a labor contract with duration through December 31, 1978. The hospital's executive com- mittee met on January 17, with Carr, Padgett, and Dr. Ver- non Cates the three members present, and formally ap- proved the contract.3 Simultaneously the Association held membership meetings wherein both this contract and an affiliation with Respondent Union were ratified. The affili- ation agreement was ultimately executed in April as a four- page "contract," effective January 16, whereunder Respon- dent Union was appointed the Association's exclusive rep- resentative and agent "for the purposes of collective bargaining and the administration of collective bargaining contracts between the Association and any employer .. . whose employees have designated the Association as their collective bargaining representative." The duration of such affiliation was made coextensive with "the present collec- tive bargaining contract" between the Association and Re- spondent Employer. During fiscal year ending June 30, the health and wel- fare trust paid the hospital $574,536 for medical services to trust participants. Such amount was approximately 5 per- cent of this trust's annual gross receipts and 10 percent of the hospital's annual gross revent,e. In 1974 an interim construction loan was extended to the hospital from the pension trust. Its advancing limit is $20,800,000, secured by a deed of trust executed for the hospital (as "trustor"-bor- rower) by Padgett in his capacity of corporate secretary- treasurer. The loan bears 10-percent interest, was granted after normal studies were conducted by consultants to the trust, and must be replaced by long-term financing from another source upon completion of the new building. General Counsel's theory is that extensive influence on the hospital board of trustees, plus financial involvement between the parties, causes a conflict of interest rendering Respondent Union incompetent to represent these employ- ees. Medical Foundation of Bellaire, 193 NLRB 62 (1971), is the chief authority for this contention. I find Bellaire significantly distinguishable and otherwise see no basis to uphold allegations of the complaint. Here it is obvious that Respondent Union has intimate involvement with hospital operations. However, 7 of 15 trustees is a minority and there is no basis to believe any remaining trustee fronts for Respondent Union. As to Padgett, his position as fund ad- minstrator is a role requiring fidelity to the trusts them- selves, not to either entity forming their joint estab- lishment. In United Mine Workers Retirement Fund, 192 NLRB 1022 (1971), the Board expressly held that a third, jointly selected fund trustee could not be presumed "inher- ently subject to the continuing influence" of the participat- ing labor organization. Thus, the hospital's basic governing body here is not controlled by Respondent Union and no evidence is present to show default in ordinary workings of 2 Streight had been a hospital board of trustees member, but resigned that position on or before the first bargaining session 3 The executive committee fully consists of five members Dr Cates is hospital vice president and otherwise described in the complaint as "secre- tary-treasurer for the Alaska Teamsters Trust " The remaining two mem- bers, Frank Yarnot and Dr William Ivy, are a business representative of Respondent Union and a practicing physician, respectively Hospital by- laws expressly authorize executive committee action by a quorum of at least one-half the members policy or administrative matters .4 Further significance is found in the complete absence of involvement by Respon- dent Employer in organizing the Association, obtaining majority representation among employees or perfecting af- filiation with Respondent Union.5 The course of negotia- tions, notable largely because the Association's principal bargainer was a representative of Respondent Union, shows no infirmity.6 The chief oddity in the case is ap- pointment of Respondent Union as "exclusive representa- tive and agent" for the Association. Since this appointment was ratified by the Association's membership, yet the affili- ation contract itself terminates coextensively with the col- lective-bargaining agreement, a temporary form of authori- zation has in actuality been bestowed by the involved employees on Respondent Union. The uniqueness of this arrangement does not in any manner connote impropne- ty.7 At the core of this matter is the question whether Re- spondent Union has disqualified itself from competently representing employees in the sense that self-dealing would be involved. I reject this contention, believing instead that the course of this relationship, from inception of the Asso- ciation through formal ratification of the negotiated con- tract, has been influenced by sparingly applied expertise of persons associated with Respondent Union. Such conduct Trustees, individually or collectively, did not adopt any policy or issue any order relating to either recognition of the Association or the ensuing course of negotiations Hospital bylaws define the chief administrative offi- cer (administrator) as the trustees' "direct executive representative in the management of the hospital" with "authority and responsibility to operate the hospital in all its activities and departments " including "development and maintenance of personnel policies and practices" Contract ratification on January 17 was done by an executive committee quorum that did not involve a majority of persons affiliated directly with Respondent Union and the full composition of this important committee is similarly divided This conclusion is based on the disassociation apphcabla to both Padgett and Cates 5 The instant case is distinguished from Bellaire in two principal regards There the charged union (UMWA) had a majority of its representatives on the governing body at a point in time when soliciting to unseat a rival of the UMWA itself began and the soliciting activity , spanning approximately 4 months, was performed under "direction and supervision " of a UMWA trustee 6 This conclusion is based on a presumption of regularity , traceable to the number of meetings held, stipulated fact of mediation assistance , and for- malities attendant on effectuating the contract No weight is accorded the stipulated absence of "any charges which would indicate that Local 959 failed to represent the Association and its members with the single- minded purpose of advancing the interests of the employees," as the com- plaint actually in litigation alleges breach of fair representation duty in violation of Sec 8(b)(1)(A) r Unusual relationships , as such , do not permit "hypothesis and specula- tion" or mere "conjecture" when the issue relates to whether proper bar- gaining objectives might "become susceptible to extrinsic factors" through a demonstrably "present danger " Cf National Food Stores of Louisiana, 186 NLRB 127 (1970), A Paladin,, Inc, 168 NLRB 952 (1967) The essential flaw in General Counsel's argument is that Respondent Union does not have controlling authority respecting operation of the hospital nor has "proximate danger of infection of the bargaining process" been shown This is true both for the board of trustees and executive committee, and while I recognize the latent authority of these bodies over Webb there is no showing he was influenced to do other than engage in expectable employer-sided collective bargaining The complaint (as amended) coupled with General Counsel's opening statement at the hearing carries the implication that Padgett's and Cates' relationship to the trust funds are germane to the con- flict of interest issue merely by virtue of holding the described offices Such implication was not developed in General Counsel's brief and is patently erroneous, or at least immaterial , under the rationale of Bellaire and Center- ville Clinics, Inc, 181 NLRB 135 (1970) ANCHORAGE COMMUNITY HOSPITAL 579 has not, however, drawn the hospital into any acts of assis- tance toward the charged labor organization nor has Re- spondent Union offended Section 8(b)(1)(A) or (2). Reve- nue income from Respondent Union, in the minor portions shown, and an arm's-length construction loan are not mat- ters which should vary this basic conclusion. Financial in- terrelationships here are not of a nature constituting an "added significant factor" within the reasoning of Bellaire. The benefits payment flow and loan proceeds do not im- pair the hospital's ability to deal free of undue influence with an organization that both represents employees and constitutes the source of such moneys. Cf. H. P. Hood & Sons, 182 NLRB 194 (1970), in which an "ordinary secured debt" failed to show "proximate" or "clear and present" danger of bargaining process abuse.8 8 The hospital argues further that issues relating to the construction loan are best deferred in view of pending legal implementations under the "Em- ployee Retirement Income Security Act of 1974," P L 93-406 (ERISA). The Accordingly, I render a conclusion of law that neither Respondent has violated the Act as alleged and issue the following recommended: ORDERS The consolidated complaint is dismissed in its entirety. Board has previously expressed "concern" about such investments and spo- ken of desirable exploration into guidelines and safeguards See David But- trick Co, 167 NLRB 438 (1967) With sufficient grounds for decision al- ready present, and considering the record made on the point, this case does not warrant analysis tied to the "vast" field of pension fund investment 9 In the event no exceptions are filed as provided by Sec 102 46 of the Rules and Regulations of the National Labor Relations Board, the findings, conclusions, and recommended Order herein shall, as provided in Sec 102 48 of the Rules and Regulations, be adopted by the Board and become its findings, conclusions, and Order, and all objections thereto shall be deemed waived for all purposes