Morton Development Corp.

MORTON DEVELOPMENT CORP 649 Morton Development Corporation and District 1199P, National Union of Hospital and Health Care Employees, AFL-CIO. Case 4-CA-15452 August 31, 1990 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS CRACRAFT AND DEVANEY On December 16, 1987, the Board issued a Deci- sion and Order' finding that the Respondent did not violate Section 8(a)(5) and (1) of the Act when it, after closing its facility, converting its operation from a rehabilitation facility for mentally retarded adults to a skilled nursing home and thereafter re- openmg, refused to recognize and bargain with the Union as the collective-bargaining representative of its service and maintenance employees Subsequent- ly, the Union filed a petition for review with the United States Court of Appeals for the Third Cir- cuit On January 4, 1989, the court remanded the case to the Board for further articulation of its reasons for finding that the Respondent, on reopening its facility, had no duty to bargain with the Union 2 The court, inter aim, questioned whether the Board had applied the successorship doctnne to decide this case and, if so, how it was applied, and wheth- er it should be applied in a case not involving a change of ownership in the employing entity The court concluded that the Board had failed to state what rule of law it had applied in this case and thus fuller consideration and a reasoned explanation were required On March 3, 1989, the Board notified the parties that it had decided to accept the court's remand and that the parties could file statements of posi- tion Statements have been filed by the General Counsel, the Respondent, and the Charging Party Union The General Counsel also filed a supple- mental statement of position The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel The Board has considered the court's decision in light of the statements of position and makes the following findings I BACKGROUND The facts of this case may be briefly summarized as follows From November 1979 until June 1985, the Respondent operated a facility (Praxis) to pro- 1 287 NLRB 385 (Member Cracraft dissenting) 'Remanded sub nom Hospital Employees District 1199P v NLRB, 864 F 2d 1096 (3d Or 1989) vide intermediate care for mentally retarded adults In June 1983, the Union was certified by the Board as the exclusive bargaining agent for a unit of the Respondent's service and maintenance employees 3 The unit, which at its peak had about 65 to 68 em- ployees, included living unit aides (who guided residents through training in daily living skills) as well as housekeepers, cooks, and maintenance em- ployees The Respondent and the Union entered into a collective-bargaining agreement, effective from March 30, 1984, to March 28, 1985 The contract was later extended to June 30, 1985 When, as de- scribed below, the Respondent undertook to close its facility, the parties bargained over the impact on employees of the closure From its inception, the Respondent's Praxis facil- ity encountered problems with state reimburse- ment Thus, in late 1983 or early 1984, the Re- spondent decided that it would cease providing mental retardation services It undertook to con- vert its Praxis facility to a skilled nursing home and at the same time began exploring the possibility of selling the facility upon its conversion The Re- spondent closed Praxis about June 27, 1985 The Respondent negotiated the sale of Praxis but ulti- mately, in August 1985, the proposed sale "fell through" Thereafter, the Respondent decided to reopen the facility and operate it as a skilled nurs- ing home On November 6, 1985, the Respondent reopened its facility as Praxis Nursing Home Upon reopening, Praxis Nursing employed 11 service and maintenance employees, all of whom had worked for Praxis 4 In February 1986, the Respondent em- ployed 28 service and maintenance employees, 20 of whom had worked for Praxis II DISCUSSION At issue in this case is whether the Respondent, after closing its intermediate care facility and there- after reopening as a nursing home, was legally jus- tified in refusing to recognize and bargain with the Union that had represented its bargaining unit em- ployees at the intermediate care facility Pursuant to the direction of the court of appeals, we have reexamined the earlier ruling in this case We hold, for reasons set forth below, that the temporary ces- 3 The appropriate unit was defined as All full-time and regular part-time service and maintenance employ- ees including living unit aides, therapeutic recreation aides, transpor- tation aides, occupational therapy aides, senior aides, pre-vocational aides, dietary employees, housekeeping employees, and office clerical employees, professional employees, registered nurses, licensed practi- cal nurses, pre-vocational instructors, watchmen, guards, and super- visors as defined in the Act * The Union demanded recognition on November 15, 1985 The Re- spondent refused to recognize and bargain with the Union 299 NLRB No 94 650 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD sation of the Respondent's operation of a residen- tial care facility in Easton, its short-lived plans to sell the facility, and the differences between the Respondent's prehiatus and posthiatus operations are not so significant in their impact on employees as to justify the Respondent's refusal to bargain with the Union A Applicable Law We note at the outset that, since the question is not whether the Respondent is bound by an earlier collective-bargaimng agreement but merely wheth- er it must recognize the Union that represented the former work force from which a majority of its current employee complement is drawn, we need not accept the Respondent's invitation to decide this case under the principles applied in determin- ing whether one entity is the alter ego of another5 or those applied in determining whether a collec- tive-bargaining agreement continues in effect after a temporary shutdown in an employer's oper- ations 6 Rather, we agree with the General Coun- sel and the Charging Party that the most apposite precedent is Sterling Processing Corp ,7 decided sub- sequent to the initial decision in this case In Sterling, as here, the employer closed its oper- ation and terminated its employees for economic reasons and, after a significant hiatus, reopened as a different operation Upon reopening, the employer in Sterling, like the Respondent, hired an imtial complement of which a majority were its former bargaining unit employees, and refused to recog- nize and bargain with the umon that had previous- ly represented the unit employees 8 In determining whether Sterling had violated Section 8(a)(5) and (1) by that refusal, the Board rejected Sterlmg's contention that the law established in successorship cases—i e, determinations whether one employer is a successor to another, undisputably distinct, cor- porate entity for the purposes of establishing a con- tinuation of a bargaining obligation—fully applied when the putative successor is the same corporate entity 9 The Board recognized, however, the use- 9 When two entitles are found to be alter egos, the collective-bargain- mg agreement signed by one will be applied to the employees of the other See, e g , NLRB v Al Bryant, Inc. 711 F 2d 543 (3d Or 1983), Penntech Papers, Inc v NLRB, 706 F 2d 18, 24 (1st Cu 1983) By con- trast, an employer found merely to be a successor has only a bargaining obligation NLRB v Burns Security Services, 406 US 272, 281-291 (1972) 6 E g, El Tonto-La Fiesta Restaurants, 295 NLRB 493 (1989), Coastal Cargo Ca, 286 NLRB 200 (1987) '29i NLRB 208 (1988) 17 An additional Issue that was present in Sterling is not involved here, e, whether or not the employer had an obligation to bargain with the Union before It modified the preexisting wages and working conditions pnor to reopening its facility Id, 209-210 9 1d at 210 fn 10 fulness of the factors applied in making successor- ship determinations It therefore used similar fac- tors to guide its examination of the record, but noted that while the length of the hiatus between closing and reopening-19 months—might be enough to tip the balance against imposmg a bar- gaining obligation in an ordinary successorslup case,"it carned less weight where, as there, the employer before and after the hiatus was the same corporate entity The Board's use, in a different context, of factors also applicable to a successorship analysis, is rea- sonable given the differing interests to be balanced In a traditional successorship case, the Board is bal- ancing "the mterest of the successor [a distinct cor- porate entity] in its freedom to structure its busi- ness and the interest of employees in contmued representation by the union[,]"" the interest of sta- bility in collective-bargaining relationships," and the need for some assurance that the union is the choice of a majority in the unit 13 Weighing those interests and determining whether each is suffi- ciently accommodated will necessanly be some- what different when, as here, the "predecessor" and the "successor" employer of the employees are the same corporate entity A central inquiry in a successorship determma- non is "whether there is `substantial continuity' be- tween the enterprises " 14 The Supreme Court sum- marized Board precedent on the factors mvolved this inquiry as follows Under this approach, the Board examines a number of factors whether the business of both employers is essentially the same, wheth- er the employees of the new company are doing the same jobs in the same working con- ditions under the same supervisors, and wheth- er the new entity has the same products, and basically has the same body of customers 18 The Court made it clear, however, that it was nec- essary to consider these factors from the perspec- tive of the employees, i e, whether any differences m operations would likely affect the employees' perception of their "job situations " 16 The mere 70 Id at 210 The Supreme Court, in its most recent revisiting of successorslup law, has agreed with the Board that the existence of a hiatus between the shutdown of one employer's operation and the re- opening by the putative successor is a factor—but not the only factor—in determining whether there is "substantial continuity" between the em- ploying enterpnses so as to warrant imposing a bargaining obligation Fall River Dyeing Corp v NLRB, 482 U S 27, 45 (1987) 77 Fall River, supra, 482 U S at 41 12 Id at 38, 39 18 1d at 48-49 14 Id at 43 Ibid (citations omitted) 16 Ibid. quoting Golden State Bottling Co v NLRB, 414 U S 168, 184 (1973) MORTON DEVELOPMENT CORP 651 fact that there were some changes in product lines, marketing and sales, and a reduction in the size of the operation were not enough to balance other factors favoring a finding of continuity 17 In Sterling, the Board made a "continuity" analy- sis insofar as it found that the employer "had re- sumed production under the same ownership, cor- porate form, and management and was engaged in the same business" at the same location with basi- cally the same production process as prior to the shutdown" and that "substantially the same work force had been rehired 19 As noted, because the corporate identity of the prehiatus and posthiatus operations was the same, the Board found the lengthy hiatus insufficient to warrant a finding that the employees would have changed their desire for union representation and therefore insufficient to relieve the employer of a bargaining obligation, absent evidence that its refusal to bargain had been based on "objective factors furnishing a reasonably based doubt that the union continued to represent a majority 9220 For the reasons set forth below, we find, em- ploying the analysis used in Sterling Processing, that the differences between the Respondent's prehiatus and posthiatus operations at the Easton facility are insufficient to make it likely the employees no longer desired union representation and are there- fore insufficient to destroy the rebuttable presump- tion that the Union continued to enjoy majority status Accordingly, the Respondent's refusal to bargain with the Union on demand violated Sec- tion 8(a)(5) and (1) of the Act B Factual Analysis The Respondent argues that Praxis Nursing is an entirely different business from Praxis and that em- ployee sentiment regarding representation by the Umon must have changed The Respondent makes no argument that its refusal to recognize and bar- gain with the Union was based on "good faith doubt," other than that based on its changed oper- ation 17 1d at 46 fn 11 See aho Great Lakes Chemical Corp, 280 NLRB 1131, 1133 (1986), affd 862 F 2d 100 (6th Cir 1988) (expansion of prod- uct line and changes in personnel policy not sufficient to bar successor- ship finding), Lloyd Flanders, 280 NLRB 1216, 1218-1219 (1986) (reduc- tion of operation and different supervisors not sufficient to bar successor- ship finding) is The Board made the "same business" finding notwithstanding that Sterling had been a fully Integrated poultry producer and processor, pur- chasing the chickens on its own account and selling the processed poul- try through its own salesforce, whereas after the reopening, it processed the chickens of an unidentified contractor Furthermore, the new oper- ation abandoned saw-cutting of chickens (one-quarter of its former oper- ation) and Included a new "Cry-o-Vac" automated packaging process Id at 209 19 Id at 10 sl0 /bid In contending that it has significantly altered its business, the Respondent cites differences—be- tween Praxis and Praxis Nursing—in licensing, re- imbursement for services, patients, programs and activities, medical services, dietary requirements, housekeeping requirements, maintenance responsi- bilities, management and administration, and nurs- ing requirements Despite the numerous categories relied on by the Respondent, we find, for reasons set forth below, that the Respondent's business is sufficiently similar to its old business and that it was not relieved of its bargaining obligations The differences relied on by the Respondent do not establish that its business changed significant- ly—particularly when considered from the perspec- tive of the unit employees Rather, we find, as stated by Member Cracraft in her dissent to the ongmal Board Decision and Order (287 NLRB 385) In the end, the Respondent continued to pro- vide residential health care albeit under differ- ent governmental regulations and to a different type resident The service and maintenance employees perform basically the same functions for Praxis Nursing that they performed for Praxis Significantly, the Re- spondent, before reopening, offered employment to 75 percent of its former work force 21 This sug- gests that the employees' skills at their former jobs would meet the requirements of their new jobs The employees, upon reopening, received a mere 2 days of training, to be followed by on-the-job train- ing Clearly, an inference is warranted that the em- ployees'—from their point of view—jobs in the service and maintenance unit remained much the same at Praxis Nursing as they had been at Praxis As originally detailed by Member Cracraft in her dissent, there were minor changes in the way the service and maintenance employees performed their jobs Cooks and dietary aides now prepare more specialized foods and trays for the elderly residents, the housekeeping aides work around medical eqtupment and may work around residents who cannot be moved, and the laundry aides actu- ally launder washables rather than showing resi- dents how to perform laundry duties Employees who were formerly living unit aides became nurses aides and have increased nursing responsibilities Nevertheless, they, along with activities aides, basi- 91 Indeed, according to the Respondent's vice president, the other 25 percent of the Praxis employees were not offered employment because the Respondent learned that they had been employed elsewhere Thus, there is no evidence that any employee was not offered reemployment because the employee did not have the skills for a position at Praxis Nursing 652 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD cally remain responsible for assisting residents in their daily routine The current residents are, how- ever, more frail and less mobile than the former residents and can spend only a small part of their time in programmed activities Maintenance em- ployees now encounter fewer problems with equip- ment and furniture that has been damaged by resi- dents Nonetheless, upon the Respondent's reopen- ing, as the judge originally observed, cooks still cooked, maintenance persons still repaired, and aides still aided residents Also, the Respondent, before reopening, made some physical changes in its facility The Respond- ent sold certain equipment used for mentally re- tarded patients (e g, occupational therapy equip- ment, specialized exercise equipment, etc ) and pur- chased geriatric equipment (e g, wheel chairs, oxygen therapy equipment, etc ) and furniture Fur- ther, handrails and call bells were installed, therapy rooms were redesigned and enlarged, and changes were made to the sprinkler system and ventilation system In all, the Respondent spent about $130,000 to make the changes in its facility Again, however, these changes did not significantly change the work of the service and maintenance employees We appreciate the Respondent's arguments re- garding the different missions—because of the dif- ferent residents—of a rehabilitation facility for mentally retarded adults and a skilled nursing home However, these differences pnmanly affect the roles of the Respondent's administrative, pro- fessional, and supervisory employees—not the serv- ice and maintenance unit employees For example, changes m licensing and reimbursement might modify the jobs of the Respondent's management staff but would not have a significant impact on the daily responsibilities of unit employees Similarly, the changes in the residents' dietary needs affected the role of the Respondent's supervisory and pro- fessional staff much more than that of the cooks or dietary aides 22 The Respondent's mcreased medi- cal services led to a substantial increase in its com- plement of registered nurses and licensed practical nurses (nonumt positions), but had a lesser effect on the nurses aides e, the former living unit aides) Based on the foregoing evidence, we conclude that the Respondent's operation--particularly when viewed from the perspective of the service and maintenance employees—was basically the same after the hiatus as it was before 23 Thus, we 22 At both Praxis and Praxis Nursing, a director of dietary services was employed However, because of the greater care needed in planning the diets of residents of a skilled nursing home, Praxis Nursing also hired a dietician (a nonumt professional employee) 23 The 4-month hiatus in tins case provides little support for relieving the Respondent of its bargaining obligation Tins short hiatus was far less than the I9-month hiatus in Sterling Proce-ssusg, supra The hiatus here cannot conclude that there was an essential change in the Respondent's business that would alter the employees' legitimate expectations regarding union representation The Respondent resumed operating at the same location, in the same building, under the same ownership, and with much of the same supervisory, managerial, and professional staff that had worked at the former operation 24 As de- scnbed, the functions of the service and mainte- nance employees had changed only in minor re- spects Further, as previously noted, the Respond- ent offers no basis other than the change in its op- eration to justify its refusal to recognize and bar- gain with the Union Stated otherwise, the Re- spondent sets forth no objective considerations es- tablishmg a basis for a good-faith doubt that the Union represented its service and maintenance em- ployees Accordingly, by failing and refusing to bargain with the Union after the Union's Novem- ber 15, 1985 bargaining demand, the Respondent violated Section 8(a)(5) and (1) of the Act CONCLUSION OF LAW By refusing on and after November 15, 1985, to recognize and bargain with District 1199P, Nation- al Umon of Hospital and Health Care Employees, AFL-CIO, as the exclusive collective-bargaining representative of the employees in the appropnate unit, the Respondent has engaged in unfair labor practices affecting commerce within the meaning of Section 8(a)(5) and (1) and Section 2(6) and (7) of the Act THE REMEDY Having found that the Respondent has violated Section 8(a)(5) and (1) of the Act, we shall order it to cease and desist, to bargain collectively with the Union as the representative of the employees in the appropriate umt, 25 and, if an understanding is reached, to embody the understanding in a signed agreement ORDER The National Labor Relations Board orders that the Respondent, Morton Development Corpora- was always Intended to be temporary, i e, until the facility could be con- verted and possibly sold Further, some bargaining unit employees were hired to work during the hiatus They performed paperwork tasks related to the closing of the facility as well as maintenance tasks 24 Upon reopening, the Respondent employed nine supervisory, mana- gerial, and professional employees, five of whom had worked for Praxis, including the housekeeping and maintenance supervisors 25 The appropriate unit, at both Praxis and Praxis Nursing, consists of the Respondent's service and maintenance employees In our Order, we shall define the unit to include those positions and job classifications used by Praxis Nursing MORTON DEVELOPMENT CORP 653 non, Easton, Pennsylvania, its officers, agents, suc- cessors, and assigns, shall 1 Cease and desist from (a) Refusing to recognize and bargain collective- ly with District 1199P, National Union of Hospital and Health Care Employees, AFL-CIO, as the ex- clusive bargaining representative of the employees in the appropnate unit (b) In any like or related manner interfering with, restraining, or coercing employees in the ex- ercise of the nghts guaranteed them by Section 7 of the Act 2 Take the following affirmative action neces- sary to effectuate the policies of the Act (a) On request, recognize and bargain with the Union as the exclusive representative of the em- ployees in the following appropriate unit concern- ing terms and conditions of employment and, if an understanding is reached, embody the understand- ing in a signed agreement All full-time and regular partAime service and maintenance employees includmg dietary aides, cooks, housekeeping aides, laundry aides, activities aides, nurses' aides and mainte- nance employees of the Employer at the Easton, Pennsylvania facility, excluding all other employees, office clerical employees, professional employees, registered nurses, li- censed practical nurses, pre-vocational mstruc- tors, watchmen, guards, and supervisors as de- fined m the Act (b) Post at its facility in Easton, Pennsylvania, copies of the attached notice marked "Appen- dix "26 Copies of the notice, on forms provided by the Regional Director for Region 4, after being signed by the Respondent's authonzed representa- tive, shall be posted by the Respondent immediate- ly upon receipt and maintained for 60 consecutive days in conspicuous places mcludmg all places where notices to employees are customarily posted Reasonable steps shall be taken by the Respondent to ensure that the notices are not altered, defaced, or covered by any other material 26 If this Order is enforced by a judgment of a United States court of appeals, the words in the notice reading "Posted By Order of The Na- tional Labor Relations Board" shall read "Posted Pursuant To a Judg- ment of The United States Court of Appeals Enforcmg an Order of The National Labor Relations Board" (c) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Respondent has taken to comply APPENDIX NOTICE TO EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has ordered us to post and abide by this notice WE WILL NOT refuse to recognize and bargain with District 1199P, National Union of Hospital and Health Care Employees, AFL-CIO, as the ex- clusive bargaining representative of the employees in the bargaining unit WE WILL NOT in any like or related manner mterfere with, restrain, or coerce you in the exer- cise of the rights guaranteed you by Section 7 of the Act WE WILL, on request, bargain with your repre- sentative and put in writing and sign any agree- ment reached on terms and conditions of employ- ment for our employees in the bargaining unit All full-time and regular part-time service and maintenance employees including dietary aides, cooks, housekeeping aides, laundry aides, activities aides, nurses' aides and mainte- nance employees of the Employer at the Easton, Pennsylvania facility, excluding all other employees, office clerical employees, professional employees, registered nurses, li- censed practical nurses, pre-vocational instruc- tors, watchmen, guards, and supervisors as de- fined in the Act MORTON DEVELOPMENT CORPORATION