Chester Ex Rel. NLRB v. Grane Healthcare Co.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

Nos. 11-2573 & 11-2978

_____________

ROBERT W. CHESTER,

Regional Director of the National Labor Relations Board for

Region Six,

for and on behalf of the National Labor Relations Board

v.

GRANE HEALTHCARE CO., and/or

EBENSBURG CARE CENTER, LLC, d/b/a CAMBRIA

CARE CENTER, Single Employer

Grane Healthcare Co., and/or Ebensburg Care Center,

LLC,d/b/a Cambria Care Center, Single Employer,

Appellant in No. 11-2573

Robert W. Chester,

Appellant in No. 11-2978

_____________

On Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. Civil Nos. 3-10-cv_00225 and 3:10-cv-00244)

District Judge: Hon. Kim R. Gibson

_____________

Argued September 21, 2011

Before: AMBRO, CHAGARES and VANASKIE, Circuit

Judges

(Filed: December 7, 2011)

Richard J. Antonelli, Esq. (Argued)

Rebecca J. Dick-Hurwitz, Esq.

John A. McCreary, Jr., Esq.

Babst, Calland, Clements & Zomnir

Two Gateway Center

6th Floor

Pittsburgh, PA 15222

Counsel for Appellants & Cross-Appellees

Grane Health Care and/or Ebensburg Care

Center, LLC

Judith I. Katz, Esq.

Steven L. Sokolow, Esq.

Laura T. Vazquez, Esq. (Argued)

National Labor Relations Board

Division of Advice, Injunction Litigation Branch

1099 14th Street, N.W.

Washington, D.C. 20570

Counsel for Appellee & Cross-Appellant Robert

W. Chester

_____________

2

OPINION

_____________

VANASKIE, Circuit Judge.

This matter comes before us on cross-appeals from the

District Court’s ruling on a petition for interim injunctive

relief sought by the National Labor Relations Board

(“NLRB”) pursuant to § 10(j) of the National Labor Relations

Act (“NLRA”), 29 U.S.C. § 160(j). For nearly forty years,

since Eisenberg ex rel. N.L.R.B. v. Hartz Mountain Corp.,

519 F.2d 138 (3d Cir. 1975), we have held that to award

interim injunctive relief under § 10(j) “a federal district court

must merely find ‘reasonable cause’ to believe an unfair labor

practice has occurred and must determine that the relief

sought is ‘just and proper.’” Kobell v. Suburban Lines, Inc.,

731 F.2d 1076, 1078 (3d Cir. 1984). The District Court in

this case, following a thoughtful discussion of pertinent

precedents, determined that our two-prong approach was

inconsistent with pronouncements of the Supreme Court

dating back nearly thirty years, to Weinberger v. Romero-

Barcelo, 456 U.S. 305 (1982). See Chester ex rel. N.L.R.B. v.

Grane Health Care Co., ___ F. Supp. 2d ____, 2011 WL

2517037, at *5-14 (W.D. Pa. June 2, 2011). Applying the

familiar four-factor test applicable to generic preliminary

injunction motions—likelihood of success on the merits;

imminent threat of irreparable harm; balance of equities

favoring interim injunctive relief; and the public interest

being served by the interim relief—the District Court granted

the requested interim bargaining order but denied the

requested interim hiring of several aggrieved individuals.

Having carefully considered the matter, we conclude that the

Supreme Court decisions upon which the District Court

3

relied, having arisen in completely different contexts and

involving statutory schemes unrelated to the NLRA, do not

warrant abrogation of our two-prong approach to § 10(j)

petitions. Furthermore, we will affirm the interim bargaining

order issued by the District Court, as plainly compelled under

the two-prong approach. As to the requested interim hiring

orders, however, we believe that the District Court should, in

the first instance, determine whether such relief is appropriate

under our two-prong approach.

I. Facts and Proceedings

Prior to January 1, 2010, Cambria County,

Pennsylvania owned and operated Laurel Crest Nursing and

Rehabilitation Center (“Laurel Crest”), a facility located in

Ebensburg, Pennsylvania. All of the employees of Laurel

Crest were employed by Cambria County, who as a public

employer was subject to the Pennsylvania State Public

Employee Relations Act (“PERA”), 43 P.S. § 1101.301(1).

Since its certification in 1971 by the Pennsylvania Labor

Relations Board, the Professional and Public Service

Employees of Cambria County a/w Laborers’ District Council

of Western Pennsylvania, Local 1305 (“Local 1305”) was the

collective-bargaining representative of a unit of non-

professional employees employed by Cambria County at

Laurel Crest. Cambria County recognized Local 1305 as the

exclusive bargaining representative of the unit, and entered

into a series of collective-bargaining agreements with Local

1305, the most recent of which ended in December, 2008.

In September, 2009, Appellant Grane Healthcare Co.

(“Grane”), a private entity that owns and manages several

Pennsylvania nursing facilities, entered into an asset purchase

4

agreement with Cambria County to purchase Laurel Crest.

On January 1, 2010, the purchase became final, and Grane

assumed operations of Laurel Crest. 1 In December, 2009,

Grane officials conducted the initial hiring, and retained most,

but not all, of the individuals who had been employed at

Laurel Crest by Cambria County and who applied to be hired

by Grane. Among the former Laurel Crest employees not

hired by Grane were several Local 1305 officers, including

Sherry Hagerich, who was the Local 1305 president, and

Mark Mulhearn, who was a business manager of Local 1305.

In December, 2009, in anticipation of the impending

sale, Local 1305 requested by email that Grane recognize

Local 1305 as the exclusive collective-bargaining

representative of the nonprofessional employees at Laurel

Crest. By letter dated January 11, 2010, Grane refused the

Local 1305 request. Local 1305 then filed an unfair labor

practice charge with the Board.

In May, 2010, following an investigation of the charge,

the Board’s General Counsel, through Robert W. Chester, the

Acting Regional Director of Region 6 (“Director”), issued a

complaint and notice of hearing against Grane, asserting

multiple unfair labor practices in violation of § 8(a)(1), (3),

and (5) of the NLRA, 29 U.S.C. § 158(a)(1), (3), and (5).

1

When Grane Healthcare Co. acquired Laurel Crest, it

established a new entity, Ebensburg Care Center, LLC d/b/a

Cambria Care Center, to manage it. In the District Court, the

parties disputed whether the two qualified as a “single

employer” under the NLRA. Since the single employer

question is not at issue here, Appellants are referred to

collectively as “Grane.”

5

The complaint contended, inter alia, that: (1) Grane’s refusal

to recognize and bargain with Local 1305 as the collective-

bargaining representative of a bargaining unit of employees

was a violation of § 8(a)(1) and (5) of the Act; and (2)

Grane’s failure to hire certain applicants, including Mark

Mulhearn and Sherry Hagerich, was a violation of § 8(a)(1)

and (3) of the Act. 2 Grane denied all of the alleged violations

of the Act. 3 In July and August of 2010, Administrative Law

Judge David I. Goldman (“ALJ Goldman”) conducted

hearings on the unfair labor practice charges.

On August 26, 2010, the Director petitioned the

District Court for temporary injunctive relief pursuant to §

10(j) of the Act. The Director requested, in pertinent part,

that the judge order Grane to: (1) recognize and bargain in

good faith with Local 1305; and (2) reinstate Hagerich and

Mulhearn.

2

The complaint also alleged that Grane and Cambria

Care constituted a single employer under the Act, and listed

three applicants in addition to Mulhearn and Hagerich whom

Grane also allegedly refused to hire in violation of the Act.

Since neither the single employer issue nor the instatement of

the other three applicants is raised on appeal, we do not

address those issues here.

3

In January and April, 2010, SEIU Healthcare

Pennsylvania, CTW, CLC (“SEIU”) also filed unfair labor

practice charges against Grane. In July, 2010, the Director

filed a second complaint against Grane based on the SEIU

charges. The Director subsequently consolidated the two

complaints.

6

The District Court decided the petition on the basis of

the record developed by ALJ Goldman in the administrative

proceeding below—including the testimony and exhibits

produced at the hearings as well as the parties’ factual

stipulations—supplemented by testimony and arguments

adduced at an evidentiary hearing the District Court

conducted. In December, 2010, well before the Court ruled

on the § 10(j) petition, ALJ Goldman issued his decision in

the administrative proceedings. 4 The District Court observed

that it was “not bound to follow [ALJ] Goldman’s

conclusions,” and explained that “[t]his administrative record

and decision is, at best, characterized as persuasive.”

Chester, 2011 WL 2517037 at *16. Applying the four-factor

test governing preliminary injunction motions, the District

Court granted the interim bargaining order but denied the

interim instatement of Hagerich and Mulhearn.

Both parties now appeal. Grane appeals the temporary

bargaining order, contending that the District Court

committed error in concluding that the four-factor test was

satisfied. The Director cross-appeals on two grounds. First,

he contends that the District Court erred by rejecting our

established two-part test and applying the four-part test

instead. Second, he argues that the § 10(j) petition qualified

for injunctive relief under either the two-part or four-part test,

and that the District Court therefore erred by declining to

grant the interim instatement order.

4

ALJ Goldman held, inter alia, that Grane violated §

8(a)(1) and (5) of the Act by refusing to recognize and

bargain with Local 1305, and that it violated § 8(a)(1) and (3)

by refusing to hire Mulhearn and Hagerich.

7

II. Standard for §10 (j) Injunctive Relief

A.

We begin our analysis by addressing the threshold

issue of whether the District Court erred in concluding that

Supreme Court precedent vitiates our established two-part test

for § 10(j) relief. “The issue of whether a district court

applied the correct legal standard is a legal question, which

this Court reviews de novo.” Ahearn v. Jackson Hosp. Corp.,

351 F.3d 226, 234 (6th Cir. 2003).

B.

Congress vested primary jurisdiction over the

elaboration of labor policy and the adjudication of labor

disputes in the NLRB. See, e.g., N.L.R.B. v. Truck Drivers

Local Union No. 449, 353 U.S. 87, 96 (1957) (“The function

of striking [the] balance [between conflicting legitimate

interests] to effectuate national labor policy is often a difficult

and delicate responsibility, which the Congress committed

primarily to the National Labor Relations Board, subject to

limited judicial review.”); Phelps Dodge Corp. v. N.L.R.B.,

313 U.S. 177, 194 (1941) (“The exercise of the process [of

administering the Act] was committed to the Board, subject to

limited judicial review. Because the relation of remedy to

policy is peculiarly a matter for administrative competence,

courts must not enter the allowable area of the Board's

discretion and must guard against the danger of sliding

unconsciously from the narrow confines of law into the more

spacious domain of policy.”). The NLRA provides for the

adjudication of alleged unfair labor practices through an

administrative process that involves initial fact-finding and

8

determination of the charges by an ALJ, whose decision is

reviewable de novo by the Board. The Act vests Courts of

Appeals—and in certain circumstances the District Courts—

with judicial review of final Board decisions under a standard

that requires considerable deference to various Board

determinations. See 29 U.S.C. §§ 160(e), (f).

As originally enacted in 1935, the NLRA did not

include any provision authorizing the Board to seek to enjoin

alleged unfair labor practices pending adjudication of charges

by the Board. 5 Thus, unfair labor practices—by both unions

and employers—could persist while administrative processes

were pursued. Congress sought to remedy this problem in the

Taft-Hartley Act of 1947 by mandating that the Board seek

interim injunctive relief in an appropriate district court for

certain enumerated unfair labor practices by unions, such as

secondary boycotts, jurisdictional strikes and hot cargo

contracts, see 29 U.S.C. § 160(l), and by authorizing, but not

requiring, the Board to seek interim injunctive relief for other

unfair labor practices. See 29 U.S.C. § 160(j). Specifically §

10(j), added in 1947, provides:

The Board shall have power, upon issuance of a

complaint as provided in subsection (b) of this

5

The Board was only authorized to seek enforcement

of its final orders by petitioning the appropriate federal court

of appeals. See 29 U.S.C. § 160(e). The Board could seek

“appropriate temporary relief or restraining order,” and the

court could award such relief “as it deems just and proper.”

Id. Similarly, when an aggrieved party sought review of a

final Board order in an appropriate court of appeals, the court

could “grant to the Board such temporary relief or restraining

order as it deems just and proper . . . .” 29 U.S.C. § 160(f).

9

section charging that any person has engaged in

or is engaging in an unfair labor practice, to

petition any United States district court, within

any district wherein the unfair labor practice in

question is alleged to have occurred or wherein

such person resides or transacts business, for

appropriate temporary relief or restraining

order. Upon the filing of any such petition the

court shall cause notice thereof to be served

upon such person, and thereupon shall have

jurisdiction to grant to the Board such

temporary relief or restraining order as it deems

just and proper.

29 U.S.C. § 160(j). The Senate Report on the bill that

became §10(j) explains the purposes of this section and the

concerns that motivated it as follows:

[T]he committee is convinced that

additional procedures must be made available

under the National Labor Relations Act in order

adequately to protect the public welfare . . .

Time is usually of the essence in [§ 10(j) cases],

and consequently the relatively slow procedure

of the Board hearing and order, followed many

months later by an enforcing decree of the

circuit court of appeals, falls short of achieving

the desired objectives of the free flow of

commerce and encouragement of the practice

and procedure of free private collective

bargaining. Hence we have provided that the

Board, acting in the public interest and not in

vindication of purely private rights, may seek

injunctive relief in the case of all types of unfair

10

labor practices . . . . Experience under the

National Labor Relations Act has demonstrated

that by reason of lengthy hearing and litigation

enforcing its order, the Board had not been able

in some instances to correct unfair labor

practices until after some substantial injury has

been done . . . . [I]t has sometimes been

possible for persons violating the act to

accomplish their unlawful objective before

being placed under any legal restraint and

thereby to make it impossible or not feasible to

restore or preserve the status quo pending

litigation.

S. Rep. No. 105, at 8, 27 (1947).

In addressing “for the first time the proper application

of Section 10(j)” in Hartz Mountain Corp., 519 F.2d at 140,

we found guidance in Schauffler v. Highway Truck Drivers &

Helpers, Local 107, 230 F.2d 7 (3d Cir. 1956). In Schauffler,

we held that to warrant § 10(l) relief, a district court must

“find that there is reasonable cause to believe that a violation

of the [NLRA] as charged has been committed,” id. at 9, and

that “a proper exercise of judicial discretion” warrants interim

injunctive relief. Id. In Hartz Mountain, we adopted the

same two part approach for § 10(j) petitions—“reasonable

cause” to believe that the alleged unfair labor practice was

committed and relief that is “just and proper,” stressing that

deciding what relief, if any, was “just and proper” would be

of “critical importance when relief is sought under Section

10(j) . . . .” Hartz Mountain, 519 F.2d at 141.

Since Hartz Mountain, we have consistently adhered

to the two-prong standard, see, e.g., Eisenberg ex rel.

11

N.L.R.B. v. Wellington Hall Nursing Home, Inc., 651 F.2d

902, 905 (3d Cir. 1981); Hirsch v. Dorsey Trailers, Inc., 147

F.3d 243, 247 (3d Cir. 1998), elaborating on the “reasonable

cause” prong in Suburban Lines, 731 F.2d at 1083-84, and the

“just and proper” prong in Pascarell ex rel. N.L.R.B. v. Vibra

Screw Inc., 904 F.2d 874, 878-79 (3d Cir. 1990). We are

joined by the Fifth, Sixth, Tenth and Eleventh Circuits in

applying this two-part test to § 10(j) petitions. See Overstreet

v. El Paso Disposal, L.P., 625 F.3d 844, 850 (5th Cir. 2010)

(upholding its “sequential, two-part[] inquiry” for § 10(j)

injunctive relief); Ahearn, 351 F.3d at 237 (“The prevailing

standard district courts in the Sixth Circuit employ when

considering a § 10(j) petition is the ‘reasonable cause/just and

proper’ standard.”); Sharp ex rel. N.L.R.B. v. Webco

Industries, Inc., 225 F.3d 1130, 1133 (10th Cir. 2000)

(recognizing the two-part test as the standard for district

courts in that circuit to apply to grant § 10(j) relief); Arlook ex

rel. N.L.R.B. v. S. Lichtenberg & Co., 952 F.2d 367, 371

(11th Cir. 1992) (same).

Other courts of appeals, including the Fourth, Seventh,

Eighth, and Ninth, have rejected the two-part approach, and

interpret § 10(j)’s just and proper clause as requiring the

traditional four-factor equitable framework that courts apply

to grant preliminary injunctions pursuant to Federal Rule of

Civil Procedure 65(a). See, e.g., Muffley ex rel. N.L.R.B. v.

Spartan Mining Co., 570 F.3d 534, 542 (4th Cir. 2009);

Kinney v. Pioneer Press, 881 F.2d 485, 490, n.3 (7th Cir.

1989); Sharp v. Parents in Cmty. Action, Inc., 172 F.3d 1034,

1037 (8th Cir. 1999); Miller v. California Pac. Med. Ctr., 19

F.3d 449, 456 (9th Cir. 1994) (en banc). The First and

Second Circuits apply a hybrid standard: they apply the two-

prong, “reasonable cause/just and proper” test, but expressly

12

incorporate the four equitable criteria into the “just and

proper” prong. See, e.g., Pye ex rel. N.L.R.B. v. Sullivan

Bros. Printers, Inc., 38 F.3d 58, 63 (1st Cir. 1994) (When

deciding whether “injunctive relief is just and proper . . . the

district court must apply the familiar, four-part test for

granting preliminary relief.”) 6; Hoffman v. Inn Credible

Caterers, Ltd., 247 F.3d 360, 368 (2d Cir. 2001) (“In this

Circuit, injunctive relief under § 10(j) is just and proper when

it is necessary to prevent irreparable harm or to preserve the

status quo. While this standard preserves the traditional

equitable principles governing injunctive relief, we are

mindful to apply them in the context of federal labor laws.”)

(citations omitted).

C.

Under our Internal Operating Procedures, a panel of

this Court cannot overrule an earlier binding panel decision;

only the entire court sitting en banc can do so. See Third

Circuit I.O.P. 9.1. 7 However, “a panel of our Court may

decline to follow a prior decision of our Court without the

6

Contrary to the District Court’s suggestion, the First

Circuit in Sullivan Bros. did not drop its “reasonable cause”

prong. Although noting that this inquiry is of “questionable

utility,” the First Circuit declined to address its applicability

because the parties did not challenge it. Sullivan Bros., 38

F.3d at 64 n.7.

7

“It is the tradition of this court that the holding of a

panel in a precedential opinion is binding on subsequent

panels. Thus, no subsequent panel overrules the holding in a

precedential opinion of a previous panel. Court en banc

consideration is required to do so.” Third Circuit I.O.P 9.1.

13

necessity of an en banc decision when the prior decision

conflicts with a Supreme Court decision.” United States v.

Tann, 577 F.3d 533, 541 (3d Cir. 2009). See also United

States v. Singletary, 268 F.3d 196, 202 (3d Cir. 2001) (“[O]ur

respect for the uniformity of decisions within this Court

yields when a prior panel’s holding conflicts with a holding

of the Supreme Court.”); Planned Parenthood of S.E. Pa. v.

Casey, 947 F.2d 682, 698 (3d Cir. 1991), aff'd in part, rev'd

in part, 505 U.S. 833 (1992) (“[A] change [by the Supreme

Court] in the legal test or standard governing a particular area

is a change binding on lower courts that makes results

reached under a repudiated legal standard no longer

binding.”); Reich v. D.M. Sabia Co., 90 F.3d 854, 858 (3d

Cir. 1996); Cox v. Dravo Corp., 517 F.2d 620, 627 (3d Cir.

1975) (“We should not countenance the continued application

in this circuit of a rule, even of our own devising, which is

patently inconsistent with the Supreme Court's

pronouncements.”).

The District Court concluded that the Supreme Court’s

decisions in Romero-Barcelo and Winter v. Natural

Resources Defense Council, Inc., 555 U.S. 7 (2008), require

application of the traditional four-part equitable test. In

Romero-Barcelo, the Governor of Puerto Rico and residents

of the island sought to enjoin the Navy’s use of an island off

the Puerto Rican coast for weapons training exercises,

claiming that the occasional discharge of weapons harmed the

water quality, and that because the Navy had not obtained a

permit, its conduct violated the permit requirements of the

Federal Water Pollution Control Act (“FWPCA”), 33 U.S.C.

§ 1251, et seq. See 456 U.S. at 307. The First Circuit held

that the FWPCA requires a district court to immediately

enjoin conduct in violation of the permit requirements and

14

thereby preclude the exercise of traditional equitable

discretion. Id. In reversing this decision, the Court

emphasized that the judicial authority to grant injunctive

relief is fundamentally rooted in principles of equity: “The

Court has repeatedly held that the basis for injunctive relief in

the federal courts has always been irreparable injury and the

inadequacy of legal remedies.” Id. at 312. The Court

confirmed the four-factor test, which incorporates these

equitable considerations, as the applicable standard for

injunctive relief. Id. at 312-13. In this regard, it described

the high standard for overcoming the presumption that the

four-factor test applies: “Unless a statute, in so many words,

or by a necessary and inescapable inference, restricts the

court’s jurisdiction in equity, the full scope of that jurisdiction

is to be recognized and applied.” Id. at 313 (quoting Porter v.

Warner Holding Co., 328 U.S. 395, 398 (1946)).

The Court reiterated this point in Winter. In that case,

environmental groups sought to enjoin the Navy from

conducting sonar training exercises off the coast of southern

California on the ground that the sonar devices harmed

marine mammals. 555 U.S. at 12-14. Despite the absence of

any evidence that marine mammals had been harmed by the

Navy’s training exercises, id. at 12, the district court granted

the injunction and the Ninth Circuit affirmed based on a

“possibility of irreparable injury.” 518 F.3d 658, 696 (9th

Cir. 2008). In overturning the injunction, the Court

reaffirmed the four-factor equitable requirements, asserting

that plaintiffs “must” satisfy them to qualify for injunctive

relief. 555 U.S. at 20. In this respect, the Court rejected the

Ninth Circuit’s standard as “too lenient,” holding that

irreparable injury must be “likely in the absence of an

injunction,” because a lower standard of a mere possibility “is

15

inconsistent with our characterization of injunctive relief as

an extraordinary remedy that may only be awarded upon a

clear showing that the plaintiff is entitled to such relief.” Id.

at 22.

The District Court in the present matter opined that

these two cases “suggest a clear and consistent message to the

lower courts: courts are to apply the traditional four-factor

test in the absence of a ‘necessary and inescapable’

congressional intent to depart from traditional equitable

standards. § 10(j) lacks such intent.” Chester, 2011 WL

2517037 at *4 (citing Romero-Barcelo, 456 U.S. at 313). In

our view, neither Romero-Barcelo nor Winter present a

conflict with our § 10(j) rulings sufficient to enable us to

reverse nearly forty years of precedent.

First, neither Romero-Barcelo nor Winter involved

statutory schemes analogous to the NLRA. Notwithstanding

the broad language endorsing the primacy of the four-factor

test, the Court rendered its decisions in those cases on facts

that presented the standard scenario for courts granting

injunctive relief. In both cases, plaintiffs sought injunctions

from district courts that also had full jurisdiction to decide the

merits of the alleged statutory violations. See Romero-

Barcelo, 456 U.S. at 307-308; Winter, 555 U.S. at 16-17. In

the context of such generic circumstances, where the courts’

jurisdiction over the merits was not otherwise restricted, the

Court had no occasion to qualify or condition its broad

affirmation of the full scope of equity discretion.

Nothing in these cases suggests that the Court

contemplated the relatively unusual scenario of interim

injunctive relief in the context of a pending unfair labor

practice proceeding. In light of the purposes behind this

16

provision and the Act, we believe that the holdings in

Romero-Barcelo and Winter do not extend to the § 10(j)

context. Indeed, the NLRA erects a unique statutory scheme:

it authorizes district courts to grant interim injunctive relief in

labor dispute cases, an entire category over which they have

no jurisdiction to decide the merits. Instead, Congress

designated the NLRB as the entity with the requisite expertise

in unfair labor practices, and the merits of those claims are

adjudicated through an administrative process that is largely

independent of the courts.

This specialized scheme distinguishes § 10(j)

injunctive relief from the generic context, where district

courts determine whether to grant relief in cases over which

they possess both the jurisdiction and competence to decide

the merits. Congress’ clear purpose in creating § 10(j) was

not to limit the scope of the Board’s authority to decide

violations, but to preserve its powers to do so by giving the

NLRB an opportunity to seek an injunction of alleged

violations before an injury becomes permanent or the Board’s

remedial purpose becomes meaningless.

Moreover, the Board does not seek interim equitable

relief to vindicate private rights, but acts instead in the public

interest. 8 See Vibra Screw, 904 F.2d at 876. This factor also

8

The Board’s decision to initiate § 10(j) proceedings

follows a multi-step investigation and evaluation process. See

Office of the Gen. Counsel, U.S. Nat’l Labor Relations Bd.,

Electronic Redacted Section 10(j) Manual Users Guide 11-14

(2002). The local region of the Board first conducts an

investigation and evaluation of the unfair labor practice

charge that mirror the two-part inquiry. In its investigation,

the Board determines “whether there is evidence establishing

17

distinguishes § 10(j) petitions from ordinary preliminary

injunction motions. Section 10(j) does not so expand the

scope of the district court’s role in labor disputes as to permit

it to intrude upon the Board’s exclusive authority to decide

the merits of the cases. The legislative scheme is therefore

inconsistent with a full grant of equity jurisdiction to the

district courts, which would permit them to exercise their own

discretion in evaluating the likelihood of success on the

merits, thereby infringing on the province of the Board. We

do not believe the Court intended its decisions in Romero-

Barcelo or Winter to extend to the context of such a distinct

statutory scheme. We therefore conclude that those cases are

not conflicting authorities that require us to reverse our

established precedent.

Notably, three of our sister circuits have retained the

two-part test in spite of Romero-Barcelo and Winter. In

Overstreet, the Fifth Circuit rejected arguments advanced in

the respondent’s briefs that Romero-Barcelo required the

four-part test. 625 F.3d at 851; Brief of Appellant at 36,

Overstreet v. El Paso Disposal, L.P., 625 F.3d 844 (5th Cir.

2010) (No. 09-51006). The Court distinguished § 10(j) from

a violation of the Act” and also “whether a Board order in due

course will be inadequate to protect statutory rights.” Id. at

10. After its investigation, the Board decides “whether 10(j)

proceedings are appropriate” by considering the evidence,

threat of remedial failure, and “just and proper” theories and

evidence. Id. at 11. The region may then submit a

recommendation for § 10(j) proceedings to the Board’s

General Counsel, who reviews the evidence and may submit a

request for 10(j) injunctive relief to the Board, which makes

the final decision authorizing or denying a § 10 (j) petition.

Id. at 12-14.

18

other injunctive relief when it observed that the “‘traditional

rules of equity may not control the proper scope of § 10 (j)

relief,’” and explained: “A requirement…to make the NLRB

show ‘irreparable harm’ and ‘likelihood of success’ for §

10(j) relief would raise the factual threshold that the NLRB

must reach. Nothing in…our case law[] supports replacing

the [two-part] test we currently use with” a test that

incorporates the “traditional four-part test for equitable

relief.” 625 F.3d at 851 (quoting Boire v. Pilot Freight

Carriers, Inc., 515 F.2d 1185, 1192-93 (5th Cir. 1975). See

also Ahearn, 351 F.3d at 235 (“If the current 10(j) standard

were in clear contravention of Supreme Court precedent, it

seems unlikely that this or any other circuit would have

continued to adhere to it for two decades without concern.”);

Webco, 225 F.3d at 1137 (“[W]e will not reconsider this

circuit’s longstanding Angle two-part test in favor of a

traditional equitable analysis.”).

Indeed, even those courts of appeals that have viewed

Romero-Barcelo and Winter as requiring the four-part

equitable test for § 10(j) relief have made modifications to the

four-part test to accommodate the purposes and goals of the

NLRA. For example, the Ninth Circuit has explained that

courts must consider the four equitable criteria “through the

prism of the underlying purpose of § 10(j), which is to protect

the integrity of the collective bargaining process and to

preserve the Board’s remedial power while it processes the

charge.” Miller, 19 F.3d at 459-60. The Miller Court also

observed that it is “necessary to factor in the district court’s

lack of jurisdiction over unfair labor practices, and the

deference accorded to NLRB determinations by the courts of

appeals.” Id. at 460. Accordingly, that Court holds that “the

Board can make a threshold showing of likelihood of success

19

by producing some evidence to support the unfair labor

practice charge, together with an arguable legal theory.” Id.

The Fourth Circuit, holding that Romero-Barcelo

required it to apply the four-part test to § 10(j), was careful to

note: “But, of course, district courts should apply this test in

light of the underlying purpose of § 10(j): preserving the

Board’s remedial power pending the outcome of its

administrative proceedings.” Spartan Mining, 570 F.3d at

543. See also Bloedorn v. Francisco Foods, Inc., 276 F.3d

270, 287 (7th Cir. 2001) (“But, in evaluating the likelihood of

success, it is not the district court's responsibility, nor is it

ours, to rule on the merits of the Director's complaint; that is

the Board's province. The court's inquiry is confined to the

probability that the Director will prevail.”). Similarly, the

Second Circuit, which applies a hybrid test, follows the same

considerations when applying the four-part test under its “just

and proper” prong. See, e.g., Hoffman, 247 F.3d at 368.

Thus, even the courts that follow Romero-Barcelo

account for the relatively unique context and purposes of §

10(j), and none interprets the Court’s precedent as permitting

the district courts to have full equity jurisdiction in this

context. If even the courts of appeals that apply the

traditional four factors for preliminary injunctions to this

context do not do so strictly, we comfortably conclude that

the Supreme Court rulings do not so clearly conflict with our

precedent as to mandate our abrogation of that precedent.

Even assuming arguendo that the Court’s decisions

apply to § 10(j) relief, we do not believe that our two-part

standard is necessarily incompatible with the requirements of

the traditional four-part test. The District Court opined that

our two-prong approach to § 10(j) petitions fails to

20

encompass the quartet of considerations ordinarily governing

preliminary injunction motions. The Court explicated: “The

Third Circuit’s § 10(j) standard does not even require a

showing of a ‘possibility’ of harm; only a showing of

‘reasonable cause’ that a labor violation occurred.” Chester,

2011 WL 2517037 at *9. It also asserted that the two-part

test does not take into account the public interest or a

balancing of harms: “The Third Circuit standard, other than

references to ‘just and proper’ remedies, does not explicitly

countenance these two crucial equitable factors.” Id. It

further claimed, “[u]nder the Third Circuit’s precedents, no

showing of harm is required,” id. at 12, and “merely a

showing of ‘reasonable cause’ that a labor violation occurred

is sufficient to issue an injunction, if said relief is ‘just and

proper.’” Id.

The District Court’s conclusions about the test

misapprehend our guidance with respect to district court

consideration of § 10(j) petitions. In this regard, it is simply

not true that the two-part test only requires “reasonable

cause” to believe the Director will prevail before the Board.

Quite to the contrary, the test incorporates various

considerations that correspond to each of the Winter factors.

As an initial matter, it bears explaining that the

“reasonable cause” analysis is not the deferential rubber

stamp that the District Court and Grane characterize it to be.

To establish reasonable cause in the Third Circuit, “there

must be a substantial, non-frivolous, legal theory, implicit or

explicit, in the Board’s argument, and second, taking the facts

favorably to the Board, there must be sufficient evidence to

support that theory.” Vibra Screw, 904 F.2d at 882.

Significantly, the circuits that apply the four-part test use a

21

substantially similar standard. See, e.g., Miller, 19 F.3d at

460.

Moreover, “[t]he Chancellor does not abdicate his

powers merely upon a showing that the Regional Director's

theories surpass frivolity. He maintains some power to do

equity and mold each decree to the necessities of the case.”

Pilot Freight Carriers, 515 F.2d at 1192-93 (citation

omitted). In other words, the § 10(j) inquiry “necessarily

subsumes equitable considerations.” Webco, 225 F.3d at

1137, n.3.

The standard we use to determine whether injunctive

relief would be just and proper is “informed by the policies

underlying § 10(j),” Dorsey Trailers, 147 F.3d at 247, looking

in particular to “the general communication the law-making

bodies were attempting to send to the courts and the public in

passing the relevant act.” Suburban Lines, 731 F.2d at 1090.

“In fashioning this provision, Congress sought to ensure that

the Board would be able to exercise effectively its ultimate

remedial power.” Eisenberg ex rel. N.L.R.B. v. Lenape

Products, Inc., 781 F.2d 999, 1003 (3d Cir. 1986). “[T]he

focus in a § 10(j) determination is on the public interest, and

‘the unusual likelihood . . . of ultimate remedial failure’ by

the NLRB.” Dorsey Trailers, 147 F.3d at 247 (citation

omitted) (quoting Suburban Lines, 731 F.2d at 1091 n.26).

See also Vibra Screw, 904 F.2d at 879 (“[T]he critical

determination is whether, absent an injunction, the Board’s

ability to facilitate peaceful management-labor negotiation

will be impaired.”); Lenape Products, 781 F.2d at 1003

(“[T]he district court must find that the issuance of an

injunction is ‘just and proper,’ i.e., that it is in the public

interest to grant the injunction, so as to effectuate the policies

22

of the National Labor Relations Act or to fulfill the remedial

function of the Board.”) (citing Wellington Hall, 651 F.2d at

906-07).

Therefore, the goal of preserving the Board’s ultimate

remedial power guides the courts to focus on whether the

ongoing practices would create “irreparable” harms, i.e.,

injuries that could not be remedied by the Board’s final

decision. In conducting this inquiry, the courts weigh the

same kinds of harms that factor into the traditional equitable

test. They consider the “likelihood of harm to the bargaining

process,” Dorsey Trailers, 147 F.3d at 247 (citation omitted),

and the overall public interest in “the promot[ion] of

wholesome and mutually acceptable labor relations and the

settlement of labor disputes through collective bargaining

between employees and their employer.” Vibra Screw, 904

F.2d at 876 (citation omitted). In evaluating the net benefits

of injunctive relief, the courts also weigh the relative harms it

may prevent against the harms it may produce. Id. at 878-79

(evaluating how “the chilling effect of management

retaliation may outlast the curative effects of any remedial

action the Board might take . . . .”). The Courts do not only

weigh the harms to the Board, but also the harms injunctive

relief poses to the employer. See, e.g., Wellington Hall, 651

F.2d at 907.

Indeed, we have denied injunctive relief where we

found insufficient evidence of irreparable harm, making

interim equitable relief not “just and proper.” See, e.g.,

Suburban Lines, 731 F.2d at 1095; Hartz Mountain, 519 F.2d

at 143. For instance, we affirmed the denial of § 10 (j) relief

in Suburban Lines because “failure to grant interim

reinstatement relief could not produce irreparable injury” and

23

“erroneously granted interim relief would irreparably injure”

certain employees and the respondent in that case. 731 F.2d

at 1092. In Lenape Products, 781 F.2d at 1003-04, we held

that § 10 (j) relief was not warranted because “there was no

evidence that union activity would be ‘chilled’” and because

“the size and intimacy of the group of the employees who

walked out was such that if the Board ultimately orders

reinstatement, its organizational efforts could be resumed.”

In summary, the two-part test does incorporate

equitable factors into its analysis that other circuits consider

when applying the four-part test to § 10(j) relief. The

reasonable cause prong has substantial overlap with the

likelihood-of-success inquiry. Likewise, the “just and

proper” prong collapses the other three equitable factors into

one comprehensive analysis. Under this inquiry, the court

determines whether an injunction is necessary to preserve the

Board’s remedial powers, which incorporates a weighing of

relative harms to the bargaining process, employees’ rights,

and the likelihood of restoring the status quo absent injunctive

relief, along with the public interests implicated by the labor

disputes. In light of these substantial similarities, we think

that even if the Court’s decisions in Romero-Barcelo and

Winter apply to the context of § 10(j) relief, our two-part test

substantially complies with the requirements insofar as it does

analyze each of the equitable factors.

The primary difference is that the two-part test

accommodates the purposes of § 10(j) by granting a sufficient

measure of deference to the Board to prevent the district court

from overstepping its bounds and deciding the merits of

alleged unfair labor practices. As this Court has explained,

the “just and proper” standard in § 10(j) is intended to limit

24

the district court’s role: “the phrase ‘just and proper’ [is] a

method of cabining the otherwise unfettered discretion of the

district court to fashion labor law under section 10(j) wholly

according to its own notions of fairness and efficiency.”

Suburban Lines, 731 F.2d at 1089. See also Ahearn, 351 F.3d

at 237 (“A district court also must be mindful that

‘[p]roceedings pursuant to § 10(j) are subordinate to the

unfair labor practice proceedings to be heard before the

Board.’. . . Consequently, it is not the job of the district court,

in considering a § 10(j) petition, ‘to adjudicate the merits of

the unfair labor practice case.’”) (citation omitted) (quoting

Fleischut v. Nixon Detroit Diesel, Inc., 859 F.2d 26, 28 (6th

Cir. 1988)). Accordingly, the District Court erred in rejecting

our two-prong test for § 10(j) petitions.

III. Merits of § 10(j) Petition

A. Interim Bargaining Order

Having concluded that the district court applied the

incorrect legal standard to the Director’s § 10(j) petition, we

turn now to consider whether the court erred in granting the

interim bargaining order. Although the district court applied

the incorrect four-part standard in evaluating the Director’s §

10(j) petition, we find it unnecessary to remand this issue for

analysis under the two-part test, which involves analysis of

similar factors under a less strict standard. 9 We think the

9

See, e.g., Vibra Screw, 904 F.2d at 878, 879, 882

(where the district court based its “just and proper” analysis

on the wrong standard, and did not address the “reasonable

cause” prong, the Third Circuit declined to remand, and

instead made the “exceedingly simple” reasonable cause

determination itself, found that the injunction was “just and

25

undisputed facts on the record show that the interim

bargaining order is plainly warranted under the two-part test.

1. Reasonable Cause

To establish reasonable cause to believe that the

Director is likely to prevail on his claim, we must find that

this claim is based on a legal theory that is “substantial and

not frivolous” and that the facts, when taken in a favorable

light to the Board, are sufficient to support that theory. Vibra

Screw, 904 F.2d at 882. In evaluating reasonable cause, we

are mindful that it is not our role to adjudicate the merits of

the underlying claim.

Under § 8(a)(5) of the Act, an employer has a duty to

“bargain collectively with the representatives of his

employees, subject to the provisions of [section 9(a)] of this

title.” 29 U.S.C. §§ 158(a)(5). A new employer has a duty

under § 8(a)(5) to bargain with the incumbent union that

represented the predecessor’s employees when there is a

“substantial continuity” between the predecessor and

successor enterprises. Fall River Dyeing & Finishing Corp.

v. N.L.R.B., 482 U.S. 27, 43 (1987). 10 This includes such

proper,” and remanded the case with directions to grant

injunction); Frye ex rel. N.L.R.B. v. Specialty Envelope, Inc.,

10 F.3d 1221, 1225 (6th Cir. 1993) (where the district court

did not apply the correct standard for § 10(j) relief, the Sixth

Circuit declined to remand and decided the question itself).

10

Other factors reflective of continuity include

similarity between, inter alia, the business operations,

services provided, customers, jobs performed by employees,

and working conditions. Fall River, 482 U.S. at 43.

26

continuity of the workforce that the new employer “would

confront the same union representing most of the same

employees in the same unit.” N.L.R.B. v. Burns Int’l Sec.

Servs., Inc., 406 U.S. 272, 280 n.4 (1972). The question of

whether there is reasonable cause to believe that Grane’s

conduct constitutes an unfair labor practice depends on

whether there is reasonable cause to believe that the Director

will prevail on his claim that Grane is a legal successor to

Cambria County, and therefore had a duty to recognize and

bargain with Local 1305.

Grane does not dispute that the facts on the record

satisfy the standard for substantial continuity: it did hire a

majority of the Laurel Crest employees and continues the

operations of Laurel Crest as a nursing home. However,

notwithstanding that it qualifies as a successor employer

under the substantial continuity test, Grane contends that

successorship principles do not apply in the context of a

transition from a public to private employer. In this respect,

Grane observes that because Cambria County was a “public

employer” under the terms of state labor law, PERA, 43 P.S.

§ 1101.301(1), and was expressly excluded from coverage

under the NLRA, Grane therefore cannot be a “predecessor

employer” under the Act. Likewise, it argues that because

Local 1305 was certified under state labor laws rather than

the Act, it too cannot qualify as an “incumbent Union” within

the terms of the Act.

The gravamen of Grane’s arguments is that the

successorship principle has no application in the context of a

transition from public to private employers. In this regard, it

explains that Local 1305 is not a “labor organization” within

the terms of section 9(a) of the Act because it “has never been

27

‘selected’ by ‘employees’ of an ‘employer’ under Section

9(a).” (Grane’s Br. at 25.) 11 As a result, Grane observes that

neither Local 1305 nor Cambria County “had any status under

the Act before January 1, 2010,” and that Grane therefore

“has been placed into the metaphysical quandary of being the

successor employer to a non-existent predecessor.” (Id. at

26).

It is not our task to decide the merits of Grane’s

arguments that successorship principles should be applied in

the context of public to private transitions. Rather, our

“reasonable cause” inquiry directs us to examine whether the

Director’s legal theory is “substantial and non-frivolous.” We

have little difficulty concluding that standard is met, and there

is reasonable cause to believe that the Director will prevail in

establishing that Grane is a successor employer.

The Director’s successorship theory is hardly a novel

legal position. In several cases, the courts and the Board have

applied successorship principles in the context of the public to

private transition. In Dean Transp., Inc., 350 NLRB 48

(2007), enf’d, 551 F.3d 1055 (D.C. Cir. 2009), the Board held

that a union certified by a state agency was a labor

organization under the Act, and the fact that the predecessor

was a public employer did not prevent the court from

imposing a successorship obligation on the private employer.

11

Section 9(a) states: “Representatives designated or

selected for the purposes of collective bargaining by the

majority of the employees in a unit appropriate for such

purposes, shall be the exclusive representatives of all the

employees in such unit for the purposes of collective

bargaining.” 29 U.S.C. § 159(a).

28

Id. at 50-51. In applying the Fall River “substantial

continuity” test, the Board noted that it “has applied this test

even where, as here, the predecessor is a public entity.” 350

NLRB at 58. See also Cmty Hospitals of Cent. Cal. v.

N.L.R.B., 335 F.3d 1079, 1084 (D.C. Cir. 2003) (“The change

from public to private ownership of the hospital does not

undermine the Board’s finding that Community was a

successor.”); Lineback v. Irving Ready-Mix, Inc., 653 F.3d

566, 573 (7th Cir. 2011) (noting “[t]he solid line of cases . . .

support[ing] the district court’s conclusion that the Director is

likely to succeed on the merits” of his successorship claim in

the context of a public to private transition); Van Lear Equip.,

Inc., 336 NLRB 1059, 1064 (2001) (“[T]he successorship

doctrine continues to apply even though the predecessor . . . is

a public employer.”); Lincoln Park Zoological Soc., 322

NLRB 263, 364-65 (1996), enf’d 116 F.3d 216, 220 (7th Cir.

1997) (applying the successorship principle in the context of a

public to private transition).

In light of this case law it is evident that there is

reasonable cause for the charge that Grane’s refusal to

recognize and bargain with the incumbent union, Local 1305,

is a violation of the Act.

2. Just and Proper

To determine whether injunctive relief is “just and

proper,” we consider the “policies underlying § 10(j),”

Dorsey Trailers, 147 F.3d at 247, including the public interest

in “the settlement of labor disputes through collective

bargaining,” Vibra Screw, 904 F.2d at 876 (quoting Hartz

Mountain, 519 F.2d at 142), and “whether the failure to grant

interim injunctive relief would be likely to prevent the Board,

acting with reasonable expedition, from effectively exercising

29

its ultimate remedial powers.” Suburban Lines, 731 F.2d at

1091-92. The Director argues that the interim bargaining

order is just and proper because Grane’s current refusal to

recognize or bargain with Local 1305 is depriving employees

of the benefits of collective bargaining and causing

irreparable erosion of Union support. The Director argues

that this damage will render the Board’s ultimate remedial

order ineffective. Grane contends that the Director’s

evidence is inadequate to substantiate these claims, disputing

several factual claims made by the Director and arguing that

the lack of adequate evidence to establish a threat to the

Board’s remedial authority forecloses a finding that the

bargaining order is just and proper.

To establish the chilling effect that Grane’s conduct

has had on the employees, the Director cites testimony

adduced at the ALJ hearings from current and former Laurel

Crest employees and Local 1305 officers. Their testimony

cited conversations with five identified employees, who had

reportedly said that they felt that they were being watched by

Grane officials; were scared to support the Union; were

constantly reminded that there was no union; and expressed

concerns about the Union’s status and future. The testimony

also establishes that other public Union activities, including

regular meetings and pre-takeover picketing, have ceased

since Grane’s refusal to recognize Local 1305. Grane

contends that this evidence is insufficient to prove that the

Union’s loss of support will cause irreparable harm, and

argues that Union support was tepid to begin with. In this

respect, Grane cites the attendance records of the Union

meetings. Because the parties dispute the total number of

Local 1305 members, the parties also dispute the relevance of

these records as a measure of Union support.

30

It is well-recognized that when a successor employer

refuses to recognize an incumbent union, it “inflicts a

particularly potent wound on the union and its members.”

Bloedorn, 276 F.3d at 298. Indeed, “[g]iven the uncertainties

that both the union and its members face during the

transition,” a successor’s denial of recognition “disrupts the

employees' morale, deters their organizational activities, and

discourages their membership in unions.” Id. (quoting Fall

River, 482 U.S. at 49-50). An ultimate Board order that

Grane recognize the Union may be ineffective if the Union

has lost significant support.

Moreover, a bargaining order is also necessary to

preserve the “fruits of the collective bargaining process that

otherwise would have been available” to the employees prior

to such an order. Suburban Lines, 731 F.2d at 1093. The

courts have recognized this harm as a basis for injunctive

relief even under the stringent four-factor test. See, e.g.,

Bloedorn, 276 F.3d at 299 (“Meanwhile, the RSI employees

whom FFI did hire are working without the advocacy of their

chosen representative. Assuming that the Board ultimately

orders FFI to bargain with the Union, such a forward-looking

order cannot fully compensate the employees of FFI for the

variety of benefits that good-faith collective bargaining with

the Union might otherwise have secured for them in the

present.”). For these reasons, we find that the interim

bargaining order is necessary to preserve the Board’s

remedial powers, and therefore is “just and proper.”

B. Interim Instatement Order

Finally, we turn to the district court’s denial of the

interim instatement order for Hagerich and Mulhearn. The

District Court denied this order under the more demanding

31

standard of the four-part test. Unlike the interim bargaining

order, however, we do not think there are sufficient

undisputed facts on the record for this Court to evaluate

whether the order should be granted under the two-part test.

We therefore remand this aspect of the Director’s petition to

the District Court to conduct an analysis of the facts under the

two-part test.

IV. Conclusion

For the reasons stated above, we affirm the District

Court’s grant of the interim bargaining order, but remand the

Director’s request for an interim instatement order to the

District Court to determine whether relief is appropriate under

the two-part test.

32