Goethe House New York, German Cultural Center

GOETHE HOUSE NEW YORK 257 Goethe House New York, German Cultural Center and District 65, International Union, United Automobile, Aerospace and Agricultural Imple- ment Workers of America (UAW), AFL-CIO, Petitioner. Case 2-RC-19263 March 29, 1988 DECISION AND DIRECTION OF ELECTION BY CHAIRMAN STEPHENS AND MEMBER BABSON AND CRACRAFT Upon a petition for representation filed March 5, 1982, under Section 9(c) of the National Labor Re- lations Act, a hearing was held before Hearing Of- ficer Wendell Shepherd on various dates between March 29 and April 27, 1982. Following the hear- ing and pursuant to the Board's Rules and Regula- tions, and by direction of the Regional Director for Region 2, this proceeding was transfered to the Board for decision. Thereafter, briefs were filed by the Employer and the Petitioner. The Board has reviewed the hearing officer's rulings made at the hearing and finds that they are free from prejudicial error. The rulings are af- firmed. On the entire record' in this case, the Board makes the following findings. I. THE BOARD'S JURISDICTION The parties stipulated thal, the Employer, Goethe House New York, German Cultural Center, is one of 114 worldwide branches of the Goethe Institute located in Munich, Germany. The Goethe Institute is a nonprofit organization sponsored by the For- eign Office of the Federal Republic of Germany. Goethe House New York is a center for cultural, educational, and informational exchange. It per- forms these functions on behalf of the Federal Re- public of Germany pursuant to an agreement be- tween it and the Goethe Institute. The six branches of the Goethe Institute that operate in the United States, including Goethe House New York, have an annual aggregate budget in excess of $1 million, which is funded directly by the Federal Republic of Germany. The Employer contends that the Board is with- out jurisdiction in this proceeding because it is an The Employer has requested oral argument The request is denied as the record, exceptions, and briefs adequately present the issues and the positions of the parties. The Ambassador to the United States of the Federal Republic of Ger- many submitted directly to the Board an "advisory opinion" in this matter on behalf of the Federal Republic's Foreign Office. We further acknowledge receipt from the Employer of a decision by the New York Si ate Division of Human Rights declining to assert Jurisdiction over the Employer. 288 NLRB No. 29 agency of the Federal Republic of Germany en- gaged in traditional sovereign activities of a non- commercial nature and thus is exempt from our ju- risdiction under traditional international law princi- ples of sovereign immunity, particularly as codified in the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. § 1602 et seq. The Petitioner argues that the Employer is a private organization under German law and subject to the Board's jurisdiction. The Petitioner contends that such nongovernmen- tal organizations funded in whole or in part by for- eign governments are statutory employers because they do not fall within any of the exceptions con- tained in Section 2(2) of the Act. 2 The Petitioner relies on State Bank of India, 229 NLRB 838 (1977), 3 as followed in German School of Washing- I ton, D.C., 260 NLRB 1250 (1982). The Petitioner seeks to represent all employees not otherwise cov- ered by a collective-bargaining agreement with a German union4 or any other union. The Petitioner further contends, contrary to the Employer, that there are no issues here with "sensitive" interna- tional or diplomatic ramifications. For the reasons set forth below, we shall assert jurisdiction over the Employer's operations. A. The Nature of the Employer's Operations The record shows that Goethe House New York is one of six branches of the Goethe Institute locat- ed in the United States, Goethe House New York is not incorporated or licensed to do business in New York State. The Foreign Office of the Feder- al Republic of Germany has by contract 5 delegated to the Goethe Institute, a "registered society" under German law, and through it to Goethe House New York, several of its responsibilities in the area of German cultural foreign policy These include presenting and organizing cultural events abroad, providing information abroad on cultural life in the Federal Republic of Germany, and pro- moting the German language abroad. As stipulated, other nations perform analogous functions directly through their foreign offices. The Employer's di- rector testified that, while the Foreign Office re- 2 In defining the term "employer," Sec. 2(2) of the Act excludes, in relevant part, only the following governmental entities, "the United States or any wholly owned Government corporation . or any State or political subdivision thereof. . ." 3 Hereinafter referred to as State Bank of India I. Subsequent to the transfer of this proceeding to the Board, the Board relied on Slate of Bank I in deciding State Bank of India, 273 NLRB 264 (1984), and 273 NLRB 267 (1984), enftl. 808 F.2d 526 (7th Cif 1986). We shall refer to the two latter cases as State Bank of India II. 4 The employees of the Employer who are German nationals are rep- resented for collective-bargaining purposes by a German union under German law. 5 The current contract, or "Framework Agreement," was executed in 1976 for "an unspecified length of time." It may be terminated by either party "at the end of a year with twelve months notice." 258 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD tains responsibility for establishing and formulating cultural foreign policy, implementation of that policy has been delegated in part to the Goethe In- stitute. Each specific program proposed by Goethe House New York, for example, must first be sub- mitted to the Federal Republic's New York Con- sulate, which has the authority to veto it. Further, essentially all funding for the Goethe Institute and its branches is derived from the Federal Republic of Germany. Goethe House New York engages in no fund raising activities in the United States and performs no services on behalf of any entity other than the Federal Republic of Germany. Prior to the late 1960's the Foreign Office direct- ly operated cultural centers in the United States. Since that time all such centers have been absorbed into the Goethe Institute. The Foreign Office, al- though retaining the authority to do so, has essen- tially ceased performing cultural functions not only in the United States but throughout the world. Senior officials of the Foreign Office and the Min- istry of Finance are ex officio members of Goethe Institute's board of directors. Board decisions on who should be officers of the Institute and on poli- -cies viewed by the Foreign Office as impacting on German cultural foreign policy are subject to veto by the Foreign Office's representative. To fulfill its mission, Goethe House of New York maintains a language department, cultural programs department, and a library. The building in which these facilities are located is owned by the Federal Republic and Goethe House New York pays no rent. The mission of the language de- partment is to provide information on teaching methods and materials and curriculum guidance to teachers of German. The cultural affairs depart- ment sponsors a wide ranging series of film show- ings, lectures, exhibitions, symposia, and similar events, many of which are cosponsored with American cultural organizations. 8 All Goethe House New York services and events, provided solely by it, including use of the 16,000 volume li- brary, are available to the pulbic free of charge.7 As set forth in the description of the stipulated unit in section III of this Decision and Direction of Election, the Petitioner seeks to represent essential- ly a residual unit of otherwise unrepresented em- 6 For example, Goethe House New York provided a grant of $5000 to a Seattle, Washington nonprofit theater group for its production of a German play Also, Goethe House New York supported an exhibition by the International Center of Photography 7 Goethe House New York solicits a voluntary contribution of $1 from each filmgoer to defray costs fo the film program The money taken in through this effort amounts to approximately $1000 per year or less than 2 percent of the Employer's approximately $600,000-per-year budget for the New York operation ployees.8 Because, as noted at footnote 4 above, all employees who are German nationals are currently represented for collective-bargaining purposes by a German labor organization, the Petitioner's interest is only in employees who are either American citi- zens or third country nationals. B. The Board's Statutory Jurisdiction 1. Monetary measures of the impact on commerce At the hearing the parties entered into the fol- lowing stipulation concerning the Employer's com- merce statement: Goethe House New York, German Cultural Center, one of 114 branches of the Munich- based Goethe Institute for Promoting German Language Study Abroad and International Cultural Cooperation, is an non-profit organi- zation sponsored by the Foreign Office of the Federal Republic of Germany. Goethe House New York operates a center for cultural ex- change and educational purposes and informa- tion. Goethe House New York performs these functions on behalf of the German govern- ment, pursuant to an agreement between the Goethe Institute and the Federal Republic of Germany. The six branches of Goethe Insti- tute, including Goethe House New York, which operate in the United States, have an annual aggregates budget in excess of $1 mil- lion, all of which is derived from sources out- side the State of New York, namely the Feder- al Republic of Germany. These stipulated facts are sufficient to warrant our finding that the Employer is engaged in com- merce within the meaning of Section 2(6) and (7) of the Act. The Employer's operations in the United States generally and at its New York, New York facility in particular are like those of a library and also similar to a foundation or educational in- stitution contributing to the cultural and education- al values of the community. 8 Although the record does not establish any precise figures on direct or indirect inflow or outflow of goods or services, the receipt by Goethe Institute in the United States of more than $1 million directly from the Federal Re- public of Germany meets the Section 2(6) test of The Petitioner described the positions as the following the book- keeper, assistant librarian, administrative assistant in the Program Depart- ment, secretary in the Program Department, messenger, custodian, and maintenance person. 9 In this regard, in German School, supra, 260 NLRB at 1252, the Board stated that it is not precluded from asserting jurisdiction over a nonprofit educational institution despite the fact that such institutions do not engage in purely commercial activities. GOETHE HOUSE NEW YORK 259 I commerce between "any foreign country and any State."" This demonstrates a substantial effect on commerce and establishes the required statutory ju- risdiction of the Board. Further, because the stipu- lated receipt by the Employer of $1 million from the Federal Republic of Germany meets the Board's standard for assertion of jurisdiction re- gardless of which discretionary test is used, we find it unnecessary to decide which test is controlling. 2. Congressional intent respecting coverage of foreign instrumentalities as employers The Employer contends that its status as a for- eign instrumentality somehow excludes it from the coverage of the Act. We reject this contention. It is clear that the Employer does not come within any express statutory exclusion (see fn. 2, above, and State Bank of India I, 229 NLRB at 840.) The Employer argues, however, that given the record evidence that Goethe House New York, as a branch of the Goethe Institute, operates essential- ly as an administrative arm of the Federal Republic under the overall supervision of the Foreign Office the Employer is engaged in diplomatic activities of a sort that take it outside the reach of the Act as intended by Congress. In particular, the Employer relies on a series of cases dealing with foreign flag- ships, notably Benz v. Compania Naviera Hidalgo, 353 U.S. 138 (1957); and McCulloch v. Sociedad Na- cional de Marineros, 372 U.S. 10 (1963), in which the Supreme Court declined to read the Act as ex- tending to certain maritime operations of foreign flagships because, in the absence of an affirmative indication of congressional intent, it could not assume that Congress would have meant to author- ize Board inquiries that would, of necessity, in- volve the "internal discipline and order" of a for- eign vessel. McCulloch, supra, 372 U.S. at 19. For the reasons set out below, we find that the Benz- McCulloch rule does not apply here. As the Board stated in State Bank of India I, dis- cussed more fully below, the Board recognizes the canon of statutory construction that the Act is to be construed as "applying generally only to con- duct taking place within, or having effect within, the territory of the United States." 229 NLRB 838, 841. It went on to state that "[w]ithin these bound- aries, there is no basis for believing that the Act was intended to exclude any employees in our country whose employer in this country is an 'em- ployer' engaged in 'commerce' within the meaning of the Act." Id. Thus, the Supreme Court in Benz and McCulloch declined to construe the Act as ex- 1 ° As indicated above, the record shows that Goethe House New York's annual budget is approximately $600,000 tending to the internal operations of foreign flag- ships employing alien seamen only temporarily lo- cated in the United States. The court of appeals, in enforcing State Bank of India II, pointed out (supra, 808 F.2d at 533-534) that the Supreme Court itself has narrowly construed the Benz- McCulloch rule in another case regarding the Board's jurisdiction over a foreign flagship, Long- shoremen ILA Local 1416 v. Ariadne Shipping Co., 397 U.S. 195 (1970). In that case the Court limited Benz and McCulloch to their facts in holding that a dispute centering on American longshoremen on American docks was outside the internal operations of the ship, and accordingly was within the Board's jurisdiction. Ariadne lends further support to our decisions in State Bank of India I and II and to our holding in this case, where the activities of the Em- ployer over which we have been requested to assert jurisdiction occur solely within the territory of the United States. C. The Board's Exercise of Discretionary Jurisdiction Having decided that the Board has jurisdiction under Section 2(2), (6), and (7) of the Act, we turn to the Employer's argument that the assertion of jurisdiction would nevertheless be wholly incon- sistent with longstanding international law concepts of sovereign immunity and, in particular, contrary to the intent of the Foreign Sovereign Immunities Act (FSIA). This argument goes to whether, in our discretion, we should decline to exercise jurisdic- tion that we possess under the Act (i.e., the NLRA). In State Bank of India I, the Board con- sidered both the policy of the Act and public policy with respect to foreign sovereign immunity and found no justification to decline jurisdiction over an employer which is an "instrumentality" of a foreign state in cases "affecting employees in our own country whose employer engages in commer- cial activity which meets the Board's jurisdictional standards for such enterprises." 229 NLRB at 842. For the reasons set forth below we find that State Bank of India I is controlling here. Although the argument has been made that all acts of foreign states and their agents be accorded sovereign immunity, Congress has explicitly reject- ed this absolute immunity doctrine. The legislative history of the FSIA indicates that the Act was in- troduced in accordance with the recommendations of the Departments of State and Justice, that it ex- haustively considered the competing foreign policy concerns, and that it intended that sovereign immu- nity be granted only to the public acts of a foreign 260 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD state. 11 Although the FSIA was written to apply only to judicial proceedings, we see no basis for our substituting a contrary judgment on sovereign immunity claims made during the course of admin- istrative proceedings before this Agency, particu- larly where such proceedings ultimately are subject to court view by the Federal courts of appeals, in which the FSIA is fully applicable. Accordingly, we shall continue to follow the principles established in State Bank of India I for resolving sovereign immunity claims where the em- ployer is otherwise engaged in commerce within the meaning of Section 2(2) and (6) of the Act. Thus, although we do not dispute the Employer's claim that it is an agency or instrumentality of the Federal Republic of Germany, and thus within the meaning of a "foreign state" as defined by the FSIA," this alone is not sufficient to establish an unrestricted entitlement to sovereign immunity. In relevant part, the FSIA states that a foreign state shall not be immune in any case in which "the action is based on a commercial activity carried on in the United States by the foreign state."" The FSIA defines a "commercial activity" as meaning "either a regular course of commercial conduct or a particular commercial transaction or act. The commercial character of an activity shall be deter- mined by reference to (its) nature . . . rather than . . . its purpose." 14 (Emphasis added.) The legislative history of the FSIA provides fur- ther guidance to the proper meaning of "commer- cial activity" and indicates that the statute was in- tended to deny sovereign immunity to certain labor disputes involving foreign government employers. First, the House Report on the FSIA. 15 states that the "employment or engagement of laborers, cleri- cal staff or public relations or marketing agents" by a foreign government is an activity included within the definition of "commercial activity." An even stronger indication is the following statement in the House Report: "Also public or governmental and " H.R. Rep No. 94-1487, 94th Cong , 2d Sess. 7 (1976), reprinted in 1976 U S. Code Cong. and Ad News 6604-6605. Because there was no conference committee report and the House bill was passed in lieu of the Senate bill, subsequent references will be to the House Report 12 Under Sec. 1603 (b) of the FSIA, an "agency or instrumentality" is any entity which is a "separate legal person, corporate or otherwise," an "organ of a foreign state," and not incorporated m a State of the United States or "created under the laws of any third country." Goethe House New York, as a private society under German law which is not incorpo- rated in any State of the United States and which acts as the exclusive contractual agent of the German government to carry out activities in conformity with the German government's cultural foreign policy meets all of these tests. 13 Sec 1604 14 Sec 1603 For the purpose of construing the meaning of "commer- cial activity" within the meaning of the FSIA in order to give proper effect to sovereign immunity claima under that Act, we note that this term need not be identical in meaning of the terms "commerce" and "af- fecting commerce" under Sec 2(6) and (7) of our Act. 15 HR Rep No 94-1487, supra at 16 (1976). not commercial in nature, would be the employ- ment of diplomatic, civil service, or military per- sonnel, but not the employment of American citi- zens or third country nationals by the foreign state in the United States." 1 6 As set forth elsewhere in this Decision and Di- rection of Election, 17 the employees for whom the Petitioner had filed a representation petition fit almost exactly within these examples of nonexempt "commercial activity" under the FSIA. The Peti- tioner specifically does not seek to represent those employees of Goethe House New York who are German nationals, some of whom carry diplomatic passports, and are subject to German labor laws covering union representation and collective bar- gaining. The unit petitioned for covers only those employees, most of whom are in clerical or mainte- nance positions, who are either "American citizens or third country nationals." Thus, under the facts of this case, we find that Congress intended that the Federal Republic of Germany not be entitled to sovereign immunity for the "commercial activity" of employing the employees at issue in this case. We do not question the Employer's claim that its overall purpose in directly providing cultural serv- ice and of subsidizing the cultural programs of American employers is to implement certain for- eign policy objectives of the Federal Republic. Further, we agree that the employees whom we now hold are entitled to the protection of the Act provide services in support of those diplomatic aims. However, entitlement to sovereign immunity depends on the nature, not the purpose of the ac- tivities in question. 28 U.S.C. § 1603(b). The records shows that Goethe House New York car- ries out its functions by, in addition to employing the employees discussed above, purchasing office supplies, books, and periodicals for its library and language department. It enters into contracts, or "letters of agreement," with American cultural in- stitutions such as museums, theaters, film societies, and universities to provide financial support for specific programs which it cosponsors. In all these activities Goethe House New York acts as a com- mercial entity, not as a sovereign." We conclude that our determination of the Em- ployer's sovereign immunity claim, made in con- formance with the FSIA, effectuates the policies of both the Act and the FSIA. Thus, in asserting ju- 16 Id 17 See secs. I,A and III 18 The House Report indicates that "the fact that goods or services to be procured through a contract are to be used for a public purpose is irrelevant, it is the essentially commercial nature of an activity or transac- tion that is critical. . Such contracts should be considered to be com- mercial contracts, even if their ultimate object is to further a public func- tion." H R. Rep. No. 94-1487, supra at 16. GOETHE HOUSE NEW YORK 261 risdiction over the Employer, we reject the Em- ployer's claim that we are acting contrary to the "intent" of the FSIA. Rather, we act in accordance with the principles of sovereign immunity codified in the FSIA.19 H. THE LABOR ORGANIZATION District 65, International Union, United Automo- bile, Aerospace and Agricultural Implement Work- ers of America (UAW), AFL-CIO is a labor orga- 19 Because the Federal Republic of Germany is not an exempt entity within the meaning of Sec. 2(2) of the Act and because it is not entitled in this case to sovereign immunity under the FSIA, we find it unneces- sary to determine whether assertion of jurisdiction is appropriate under the doctrine relating to exempt entities set forth in National Transporta- tion Service, 240 NLRB 565 (1979) In Res-Care, Inc. 280 NLRB 670 (1986), we clarified the principles of that case and reaffirmed its basic test for determining when assertion of jurisdiction over an employer provid- ing services to an "exempt" entity is appropriate We therefore also find it unnecessary to rely on the National Transportation analysis in German School of Washington, D. C, 260 NLRB 1250 (1982) nization within the meaning of Section 2(5) of the Act. III. THE APPROPRIATE BARGAINING UNIT At the hearing the parties stipulated, and accord- ingly we find, that the following employees consti- tute a unit appropriate for the purpose of collective bargaining within the meaning of the Act: All employees employed by Goethe House New York, German Cultural Center, exclud- ing those employees covered by collective bar- gaining agreements with a German union or any other union, managerial employees, profes- sionals, confidential employees, guards, and su- pervisors as defined in the Act. [Direction of Election omitted from publication.]