Atrium of Princeton, LLC v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Submitted December 6, 2011 Decided June 29, 2012

No. 10-1352

ATRIUM OF PRINCETON, LLC, PAVILIONS AT FORRESTAL,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

Consolidated with 10-1408

On Petition for Review and Cross-Application

for Enforcement of an Order

of the National Labor Relations Board

David F. Jasinski was on the briefs for petitioner.

John H. Ferguson, Associate General Counsel, National

Labor Relations Board, Linda Dreeben, Deputy Associate

General Counsel, Robert J. Englehart, Supervisory Attorney,

and Steven B. Goldstein, Attorney were on the brief for

respondent.

Before: HENDERSON, Circuit Judge, and WILLIAMS and

GINSBURG, Senior Circuit Judges.

2

Opinion for the Court filed by Senior Circuit Judge

GINSBURG.

GINSBURG, Senior Circuit Judge: Atrium at Princeton

owns and operates the nursing home Pavilions at Forrestal.

The National Labor Relations Board held Atrium committed

various unfair labor practices in connection with its

negotiations for a new collective bargaining agreement (CBA)

with SEIU 1199 New Jersey Health Care Union. The Board

concluded Atrium did not bargain in good faith with the

Union because the parties were not at an impasse when

Atrium refused to bargain any further. We deny the

Employer’s petition for review and grant the Board’s cross-

application for enforcement.

I. Background

This is the last in a tetralogy* of related cases to come

before the court this term. Each case began with the Union

filing an unfair labor practice charge (refusal to bargain)

against a nursing home in New Jersey, and in each case the

employer defended itself on the ground that the parties had

reached an impasse in bargaining. Larry Alcoff was the

Union’s chief negotiator in all four cases and David Jasinski

was the chief negotiator for the employer in three of the four,

including this one. Jasinski has also served as appellate

counsel for the nursing home petitioners in each of the four

cases.

*

In Attic drama, a tetralogy was a series of four related plays —

three tragedies followed by a satyr-play. Like other modern

variants, such as Shakespeare’s Henriad, the present tetralogy does

not fit neatly into the classical taxonomy.

3

In each case the employer has argued the Union failed to

bargain in good faith because it patterned its bargaining

proposals in important respects after an agreement that had

been the basis for nearly identical CBAs the Union had

previously signed with some 20 other nursing homes in New

Jersey and it would not move meaningfully off the terms of

that agreement. The nursing homes all argued that, because

the pattern agreement contained a “most-favored nation”

clause, the Union directed its bargaining representatives not to

deviate from the terms of that agreement in making proposals

to other nursing homes in New Jersey. Accordingly, each

employer claimed it was justified in declaring an impasse,

refusing to bargain further with the Union, and implementing

its last, best offer.

In Wayneview Care Center v. NLRB, 664 F.3d 341, 348–

50 (D.C. Cir. 2011), and Monmouth Care Center v. NLRB,

672 F.3d 1085, 1091–92 (D.C. Cir. 2012), we held substantial

evidence supported the Board’s finding the parties had not

reached an impasse in bargaining because in each case the

Union had made substantial concessions departing from its

initial bargaining position based upon the pattern agreement.

In Laurel Bay Health & Rehabilitation Center v. NLRB, 666

F.3d 1365, 1376–77 (D.C. Cir. 2012), by contrast, we held the

Union’s professions of flexibility did not preclude the

employer’s declaring an impasse because the objective

evidence showed the Union maintained a fixed bargaining

position tied to the pattern agreement. In the present case, the

dispute turns not upon whether the parties reached an impasse

but upon whether later events broke any impasse they may

have reached.

Atrium’s predecessor in ownership of the nursing home

met and bargained with the Union on numerous occasions in

2005. By mid-year the parties had reached or neared

4

agreement on many subjects but were essentially deadlocked

over the rate at which the Employer would contribute to the

Greater New York Benefit Fund, an employee benefit fund

(EBF) that provided health benefits to the employees. Under

their prior CBA, the nursing home had contributed to the

Fund at the rate of about 13 percent of its gross payroll but the

Union proposed that the Employer increase the rate to 22.33

percent, as provided in the pattern agreement. The Employer

proposed keeping its contribution at roughly the rate it had

paid under the prior agreement. In August the Employer

made what it claimed was its “final, last and best offer,”

which included an increase in the proposed contribution to a

rate of 16 percent of its gross payroll. The Union, however,

continued to insist upon 22.33 percent.

After that meeting, Jasinski declared the parties were at

an impasse and the Employer was therefore relieved of any

further obligation to meet and to bargain with the Union.

Subsequent events, however, complicated the situation. In

December 2005, Atrium at Princeton bought the nursing

home and retained Jasinski as the Employer’s chief

negotiator. Around that time the Union discovered the Fund

had cancelled the employees’ health benefits on December 1

because Atrium’s predecessor had been delinquent in its in

payments. In January 2006, the Union also learned Atrium

had implemented a replacement health care plan for its

employees without informing the Union. Alcoff then asked

for information about the new health plan and proposed to

meet with the Employer on any of several specific dates.

Jasinski did not respond to the Union’s request for

information and refused all but one of Alcoff’s numerous

requests for meetings on the ground the Union’s bargaining

position was “unyielding” and the parties were at an impasse.

(The two men did schedule one meeting in 2006, but Alcoff

cancelled it because he was busy with an internal Union

5

election, and Jasinski refused to agree to any additional

meeting.)

The Union filed charges with the Board alleging Atrium

and its predecessor had committed various unfair labor

practices, and in December 2006 the Board’s General Counsel

filed a complaint against both Atrium and its predecessor. An

Administrative Law Judge held a hearing and concluded both

Atrium and its predecessor had violated the National Labor

Relations Act, in Atrium’s case by refusing to meet and to

bargain with the Union, refusing to comply with the Union’s

requests for information relevant to bargaining, and making

various unilateral changes to the terms and conditions of

employment, including implementing a new health plan. The

ALJ rejected Atrium’s defense that the Fund had acted as the

Union’s agent in cancelling the employees’ health plan,

thereby allegedly justifying the Employer’s unilateral

implementation of a replacement plan. The ALJ also rejected

Atrium’s defense that the parties had reached an impasse in

bargaining. Although he found “all the elements of a genuine

impasse in bargaining were in place” as of December 2005,

Atrium at Princeton, LLC, 353 N.L.R.B. 540, 561 (2008)

(ALJ Op.), he held the Employer’s failure to comply with the

Union’s requests for relevant information precluded its

declaring an impasse.

The Board affirmed the ALJ’s decision but found it

“unnecessary to decide whether the parties had reached a

genuine impasse in their negotiations” because the Fund’s

“cancellation of the existing health insurance plan and the

necessity of [the Employer’s] obtaining alternate coverage

changed the backdrop of negotiations and created the

possibility of productive bargaining,” thereby breaking any

impasse that may have existed. Id. at 541 (Board Op.). Had

Atrium given the Union “notice and an opportunity to bargain

6

prior to implementing the new health insurance plan and/or”

responded to related information requests, “it may have led to

informed bargaining and an earlier offer by the Union to

consider alternate plans.” Id. Therefore, an “impasse, if any,

no longer existed on January 19, 2006, when the Union

requested information and demanded bargaining concerning

the new plan.” Id. *

II. Analysis

Atrium petitions for review of the Board’s order holding

it violated §§ 8(a)(1) and (5) of the NLRA, 29 U.S.C. §§

158(a)(1) & (5). Rather than seriously contesting the factual

underpinnings for the prima facie case against it, however, the

Employer primarily relies upon two affirmative legal

defenses. First, it contends the Union caused the Fund to

cancel the health plan in order to force the Employer to

accede to the Union’s bargaining demands, thereby justifying

the Employer’s unilaterally implementing a replacement

healthcare plan. Second, it argues the Board erred in finding

any impasse in bargaining had been broken, and the

continuing impasse relieved it of the duty to bargain with the

Union and to provide the Union with information regarding

the new healthcare plan.

*

After the Supreme Court held a decision by a two-member panel

of the Board is invalid, New Process Steel, L.P. v. NLRB, 130 S. Ct.

2635 (2010), we vacated the Board’s order and remanded this case

for further proceedings before a lawfully constituted panel, Atrium

at Princeton, LLC v. NLRB, Nos. 08-1399 & 09-1043, 2010 WL

6428501 (D.C. Cir. Sept. 20, 2010). A three-member panel of the

Board then issued a new decision, substantially incorporating the

decision previously adopted by the two members. Atrium at

Princeton, 356 N.L.R.B. No. 6, 2010 WL 4318370 (Oct. 22, 2010).

7

A. Was the Fund acting as the Union’s agent?

The Employer contends the Board lacked substantial

evidence for its conclusion the Union was not responsible for

the Fund’s cancellation of the Employer’s health benefits plan

because the Union dominated the Fund and caused the Fund

to cancel the employees’ health benefits in the hope of forcing

the Employer to accept the Union’s bargaining demands. The

Board responds the Employer provided insufficient evidence

to show the Fund acted as the Union’s agent.

The NLRA does not provide much guidance on the

application of agency law. Section 2(13) of the NLRA simply

provides: “In determining whether any person is acting as an

‘agent’ of another person so as to make such other person

responsible for his acts, the question of whether the specific

acts performed were actually authorized or subsequently

ratified shall not be controlling.” 29 U.S.C. § 152(13). This

provision incorporates into the NLRA the “ordinary common

law rules of agency.” Int’l Longshoremen’s Ass’n, AFL-CIO

v. NLRB, 56 F.3d 205, 212 (D.C. Cir. 1995) (internal

quotation marks and citation omitted). Because the Congress

“did not delegate to the Board the power to interpret [this]

section,” Overnite Transp. Co. v. NLRB, 140 F.3d 259, 265

(D.C. Cir. 1998), we do not defer to the Board’s application

of agency principles, though we would give “due weight to

the Board’s judgment to the extent that it made a choice

between two fairly conflicting views,” Int’l Longshoremen’s

Ass’n, 56 F.3d at 212 (internal quotation marks and citation

omitted). And, of course, to the extent “an agency

relationship is a factual matter,” we must uphold the Board’s

finding if it is supported by substantial evidence on the record

considered as a whole. Garvey Marine, Inc. v. NLRB, 245

F.3d 819, 824 (D.C. Cir. 2001) (internal quotation marks and

citation omitted).

8

Ordinarily “an agency relationship arises only where the

principal ‘has the right to control the conduct of the agent

with respect to matters entrusted to [the agent],’” Int’l

Longshoremen’s Ass’n, 56 F.3d at 213 (quoting

RESTATEMENT (SECOND) OF AGENCY § 14 (1958)). The same

rule applies when determining whether a trustee is an agent.

RESTATEMENT (THIRD) OF AGENCY § 1.04(10) (2006)

(denominating “a trustee subject to the control of the settlor or

of one or more beneficiaries” an “agent-trustee”). Moreover,

“[t]he party asserting that a relationship of agency exists

generally has the burden in litigation of establishing its

existence”). RESTATEMENT (THIRD) OF AGENCY § 1.02 cmt. d

(2006). In applying these principles we must, however, be

“sensitiv[e] to the particular circumstances of industrial labor

relations.” Local 1814, Int’l Longshoremen’s Ass’n v. NLRB,

735 F.2d 1384, 1394 (D.C. Cir. 1984). No case in this Circuit

has considered whether an EBF acted as an agent either of an

employer or of a union.

In rejecting Atrium’s defense that the Fund acted as the

Union’s agent, the ALJ distinguished Service Employees

Local 1-J, see 353 N.L.R.B. at 563 (citing 273 N.L.R.B. 929

(1984)), in which the Board said it would attribute to the

union an act of the trustees of an EBF if that act was “directed

by union officials” or “undertaken in their capacities as union

officials rather than as trustees,” or if the CBA limited the

trustees’ “discretion to administer the funds solely for the

benefit of the employees,” 273 N.L.R.B. at 931 (incorporating

standard from Griffith Co. v. NLRB, 660 F.2d 406, 410 (9th

Cir. 1981)). To the extent that case held a finding of control

was a sufficient condition to establish an agency relationship

between a union and an EBF, however, it is in tension with

the Supreme Court’s decision in NLRB v. Amax Coal Co., 453

U.S. 322, 334 (1981): “[A]n employee benefit fund trustee is

9

a fiduciary whose duty to the trust beneficiaries must

overcome any loyalty to the interest of the party that

appointed him.” As the Second Circuit reads this case, and

we agree, EBF “trustees acting within their authority cannot,

as a matter of law, be considered union agents”; the trustees

are agents of the union only if they are “violating their

fiduciary duty as Fund trustees, and doing so to further the

collective bargaining aims of the Union.” NLRB v. Local 449,

Int’l Bhd. of Teamsters, 728 F.2d 80, 87 (2d Cir. 1984); cf.

also Hearn v. McKay, 603 F.3d 897, 902 (11th Cir. 2010)

(“The Supreme Court has been explicit about the undivided

nature of an ERISA trustee’s role and duties”); NLRB v.

Constr. & Gen. Laborers’ Union Local 1140, 887 F.2d 868,

871 (8th Cir. 1989) (“Amax Coal relieves [respondent] of any

obligation as a Fund Trustee to the Union that appointed

him”); NLRB v. Driver Salesmen Local 582, 670 F.2d 855,

858 (9th Cir. 1982) (“[T]rustees ... [must] be independent

[both] of the union [and of] the employer”). But see Griffith

Co., 660 F.2d at 410–11 (attributing act of trustees to union

based upon either factual or legal control over trust without

considering whether trustees violated fiduciary duty to

beneficiaries).

Taken together, these cases suggest a two-step analysis:

In order to show an EBF acted as an agent of the union, the

employer (or the Board, as the case may be) must establish:

(1) the union exercised control over the fund, and (2) the

trustees of the fund served the interests of the union in breach

of their fiduciary duty to the employee beneficiaries. The

proponent may prove control either generally or with regard

to a specific material act. Control may arise from the union

pressuring the employer-nominated trustees, see Teamsters,

728 F.2d at 88, or out of a contract, for example, where the

CBA denies the trustees “the discretion to administer the

10

funds solely for the benefit of the employees,” Griffith, 660

F.2d at 410.

Applying this test, we conclude the Board did not err in

finding the Fund was not, as Atrium contends, an agent of the

Union when it cancelled the employees’ health benefits; the

evidence the Employer offers is not nearly sufficient to meet

its burden at either step in the analysis. As to control, Atrium

first points to what it says is the undisputed testimony of its

chief negotiator and appellate counsel that there were more

union trustees than employer trustees of the Fund. In fact,

however, his testimony was directly contradicted by that of

Odette Machado, a former official of the Union, as well as by

the ALJ’s finding “[o]ne half of trustees are designated by the

Employers and one half are designated by the Union,” 353

N.L.R.B. at 556; see also Laurel Bay, 666 F.3d at 1368 n.3.

The other evidence Atrium offers fails even to suggest

the Union controlled the Fund. For example, that none of the

employer-nominated trustees was nominated by an employer

located in New Jersey speaks not at all to the Union’s control

of the Fund. That the president of the Union is also a trustee

of the Fund is neither surprising nor troubling in a system

where the unions that establish a fund and the employers that

contribute to it each pick half the trustees. See Atrium at

Princeton, 353 N.L.R.B. at 556. Finally, that several

employees of the Fund worked for a time in the offices of the

Union hardly evidences the Union’s control of the Fund

because, as the ALJ found, the Fund was then merely renting

office space from the Union. Id. at 562.

As to the interest the Fund served, there is likewise little

evidence to suggest the Fund pursued the Union’s interests

rather than those of the employee beneficiaries. The Union’s

direction to its staff to contact Atrium whenever it was behind

11

in its payments to the Fund may show the Union and the Fund

had a common interest in employers keeping their employees’

benefits fully funded, but there is no legal significance to such

a confluence of interests so long as the Fund does not disserve

the interests of the beneficiaries. The Employer also argues

the Fund was acting for the Union because the Fund cancelled

the employees’ health benefits even though its predecessor

had liquidated all of its delinquency by making a payment of

$240,100 in September 2005. The ALJ, however, found, and

the Employer conceded, it was $350,000 in arrears at the time

of that payment, 353 N.L.R.B. at 549–50; so far as the record

shows, therefore, the Employer was still $109,900 behind in

its payments when the Fund cancelled the employees’ health

benefits. In short, the Fund had a legitimate reason to cancel

the benefits and, in any event, the Employer has not proven

the Union caused the cancellation.

B. Did the lapse in health coverage break any impasse?

Atrium maintains the parties had reached an impasse that

persisted throughout the period during which it refused to

bargain with the Union. Therefore, it suggests the Board

erred in concluding Atrium violated the NLRA by refusing to

meet and to bargain with the Union, by refusing to provide the

Union with relevant information, and by making various

changes to the terms and conditions of employment.

The parties to an expired collective bargaining agreement

have a duty to bargain in good faith for a new agreement but

they are not required to reach an agreement; “when good faith

negotiations have exhausted the prospects of concluding an

agreement,” the parties have reached an impasse, TruServ

Corp. v. NLRB, 254 F.3d 1105, 1114 (D.C. Cir. 2001)

(internal quotation marks and citation omitted), which

“temporarily suspends the duty to bargain,” Serramonte

12

Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 232 (D.C. Cir. 1996).

An impasse therefore relieves “the employer[] [of its]

statutory duty to maintain the status quo during postcontract

negotiations .... The employer then may make unilateral

changes that are reasonably comprehended within [its]

preimpasse proposals.” Mail Contractors of America v.

NLRB, 514 F.3d 27, 31–32 (D.C. Cir. 2008) (internal

quotation marks, citations, and alteration omitted).

An impasse lasts until there are “changed circumstances

sufficient to suggest that future bargaining would be fruitful.”

Serramonte, 86 F.3d at 233 (emphasis omitted). The changed

circumstance may be brought about by a party’s change of

mind, Charles D. Bonanno Linen Service, Inc. v. NLRB, 454

U.S. 404, 412 (1982), by the application of economic force,

such as a strike or the employer’s unilateral implementation

of its final offer, see id.; Mail Contractors of America, 514

F.3d at 31–32, or by any other event that “alter[s] the

economic calculus of one of the sides,” NLRB v. McClatchy

Newspapers, Inc., 964 F.2d 1153, 1173 (D.C. Cir. 1992)

(Edwards, J., concurring).

Atrium, citing Serramonte, 86 F.3d at 233, first contends

the Board erred in finding any impasse in this case was

broken because the Union merely professed its flexibility

without making a new, concrete proposal. The Board,

however, did not find the impasse had been broken because

the Union changed its mind. Rather, the Board reasoned the

Fund’s “cancellation of the existing health insurance plan and

the necessity of obtaining alternate coverage changed the

backdrop of negotiations and created the possibility of

productive bargaining.” * 353 N.L.R.B. at 541.

*

The Board also argues in its brief that any impasse was broken by

the change in the ownership of the nursing home in December

13

We conclude the Board reasonably determined the

cancellation of the health plan broke any impasse. Atrium’s

non-payment and the resulting cancellation “alter[ed] the

economic calculus” of the Union, McClatchy Newspapers,

964 F.2d at 1173, by signaling a dramatically reduced

likelihood the Union could convince the Employer to

contribute significantly more to the Fund than it had offered,

much less the 22.33 percent the Union had repeatedly

demanded. Indeed, the cancellation led the Union to ask for

information about the replacement health plan Atrium had

implemented and eventually to tell the Employer it was

willing to consider plans other than the one offered by the

Fund. Because the principal issue in dispute between the

parties was the rate at which the Employer would contribute

to the Fund, the changed circumstance that led the Union to

consider other health plans was sufficient “to suggest that

future bargaining would be fruitful” and thereby to break any

impasse. The Employer, therefore, is left with no defense to

the Board’s conclusions it violated the NLRA by refusing to

meet and to bargain with the Union, by refusing to provide

2005. A majority of the Board, however, purposefully declined to

adopt that rationale, the Board’s only mention of which was to say

“Member Becker would also [unlike the majority, that is] find that

any impasse was broken by the imposition of a duty to bargain on a

new employer ....” Atrium at Princeton, 356 N.L.R.B. No. 6, 2010

WL 4318370, at *1 n.3. This argument, as counsel for the Board

surely knows, is foreclosed by the principle established in SEC v.

Chenery Corp., 318 U.S. 80, 88 (1943) (because “an order [of an

agency] is valid only as a determination of policy or judgment

which the agency alone is authorized to make and which it has not

made, a judicial judgment cannot be made to do service for an

administrative judgment”).

14

relevant information to the Union, and by unilaterally

implementing the replacement health plan. *

III. Conclusion

We conclude substantial evidence supports the Board’s

findings that the Union was not responsible for the Fund’s

cancellation of the employees’ health benefits and that the

cancellation broke any impasse in bargaining. For that

reason, and because the other defenses Atrium offers lack

merit, we hold Atrium violated §§ 8(a)(1) and (5) of the

NLRA by refusing to meet and to bargain with the Union,

refusing to comply with the Union’s information requests, and

making various unilateral changes to the terms and conditions

of employment. We therefore deny Atrium’s petition for

review and grant the Board’s cross-application for

enforcement of its order.

So ordered.

*

We reject Atrium’s last-ditch argument that even the Fund’s

cancellation of the health plan would not have led to productive

bargaining, had the Employer sought renewed negotiations, because

the cancellation was caused by the Union having acted in bad faith,

i.e., to pressure the Employer. As we have explained above, the

Employer failed to establish its premise that the Union is

responsible for the cancellation. The Employer’s arguments that it

did not violate the Act by cancelling an incentive pay program for

certain nurses and by limiting the Union’s right of access to nursing

home facilities do not warrant treatment in a published opinion.

Finally, insofar as Atrium seeks review of the Board’s holding that

its predecessor violated the Act by dealing directly with employees,

the issue is not properly before the court because the predecessor

did not petition for review.