Amicus Curiae Brief — Alta Bates Corp. v. National Labor Relations Board

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No. 97-0465

ALTA BATES CORPORATION,

ALTA BATES MEDICAL CENTER, and

PATHOLOGY INSTITUTE, INC.,

Petitioners,

vs.

NATIONAL LABOR RELATIONS BOARD,

Respondent.

and

OFFICE AND PROFESSIONAL EMPLOYEES

INTERNATIONAL UNION, LOCAL 29, AFL-CIO

Intervenor.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF OF AMICUS CURIAE

OF EMPLOYERS GROUP

IN SUPPORT OF PETITIONERS

LEE T. PATERSON

Counsel of Record

SONNENSCHEIN NATH & ROSENTHAL

601 South Figueroa Street, Suite 1500

Los Angeles, California 90017

(213) 623-9300

Attorneys for Amicus Curiae

Lawyers Brief Service + Appellate Brief Printers * (213) 613-1013 * (714) 720-1510 J

No. 97-0465

Supreme Court of the United States

OCTOBER TERM, 1997

ALTA BATES CORPORATION,

ALTA BATES MEDICAL CENTER, and

PATHOLOGY INSTITUTE, INC..,

Petitioners,

VS.

NATIONAL LABOR RELATIONS BOARD,

Respondent.

and

OFFICE AND PROFESSIONAL EMPLOYEES

INTERNATIONAL UNION, LOCAL 29, AFL-CIO

Intervenor.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF OF AMICUS CURIAE

OF EMPLOYERS GROUP

IN SUPPORT OF PETITIONERS

LEE T. PATERSON

Counsel of Record

SONNENSCHEIN NATH & ROSENTHAL

601 South Figueroa Street, Suite 1500

Los Angeles, California 90017

(213) 623-9300

Attorneys for Amicus Curiae

5 AEN MOE a ME,

ts

TABLE OF CONTENTS

TABLE OF AUTHORITIES............. ii

&. I ]

Il. INTEREST OF AMICUS CURIAE..... . 1

Ill. SUMMARY OF ARGUMENT........ 2

le ye i 3

A. Employers and Unions Have

Relied for Thirty Years on the

Decisions of the Circuit Courts

of Appeals and the National

Labor Relations Board Holding

That an Entity was Not Part of

a Single Employer Unless it

Exercised Actual Control Over

the Labor Relations of a Related

Me 3

B. This Decision Destabilizes Labor

Relations in Bargaining Unit

Determination, Unfair Practice

Liability and Economic Action

Such as Picketing, Boycotts and

ie a 6

C. This Decision Impacts Other

Employment Laws Which Rely

MN Ws 7

V. I 9

+ oes

TABLE OF AUTHORITIES

Cases

Alta Bates Corp. v. NLRB,

116 F.36 462 Gm Ce. 19971). 6 6 ee es

Bachman Machinery Co. v. NLRB,

200 F.26 So (6th Ce. 155s 2 6 ee ss

Boich Mining Company v. NLRB,

OSS Foe 631. (6th Cie, 1992)... 6 see eS

Drivers, Chauffeurs and Helpers Local No. 639

(Poole’s Warehousing),

158 N.1GR. LSBU EOG) 6 eee ee

Emsing’s Supermarket, Inc.,

204 NLRB. Se CPST). ce es

Fedco Freight Lines, Inc.,

213 MLR Fee Fe Os

Fike v. Gold Kist, Inc..,

514 F. Supp. 722 (1981 N.D. Ala.).....

J.G. Roy & Sons Company v. NLRB,

$i F.26 777i Cit CR. Toe) 8 es vies

Jackson v. NFL,

1996 E35. Te. TAR GOS. 6 Se a

Leisure World Sales Corp. Inc.,

1635 WE. Oe Chet ee REE

Page

eee ee

- iii -

Limbach v. Sheet Metal Workers

International Assn.,

949 F.2d 1241 (3rd Cir. cata, EE ere

NLRB vy. Transcontinentai Theaters, Inc.,

568 F.2d 125 (9th Cir. 1977).......

Radio & Television Broadcast Technicians

Local Union 1264 v. Broadcast Services,

380 U.S. 255, 85 S.Ct. 876 eee vs

Retail Store Employees Union, Local

1001 v. NLRB,

627 F.2d 1133 (D.C. Cir. 1979),

rev'd on other grounds,

447 U.S. 607, 100 S.Ct. 2372 (1980). ..

Sheet Metal Workers International Assn. v.

Atlas Sheet Metal Company,

384 F.2d 101 (Sth Cir. 1967)... ... .

Tatum vy. Everhart,

954 F. Supp. 225 (D.C. Kan. 1997) . . .

Webb v. American Red Cross,

652 F. Supp. 917 (D.C. Neb. 1986) . . .

Statutes

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BRIEF OF AMICUS CURIAE

OF EMPLOYERS GROUP

IN SUPPORT OF PETITIONERS

I.

INTRODUCTION

This brief is submitted, with the consent of all parties,

by Employers Group to request that the Court accept for

Certiorari the case of Alta Bates Corp. v. NLRB, 116

F.3d 482 (9th Cir. 1997).?

IT.

INTEREST OF AMICUS CURIAE

Employers Group is one of the nation’s largest human

resources management associations, representing nearly

5,000 companies of all sizes in every industry, which

collectively employ approximately 2.5 million em-

ployees. The Employers Group, formerly known as

Merchants & Manufacturers Association and _ the

Federated Employers, is integrally involved in important

employment related issues. In that role, it frequently

1 This brief was authored solely by Lee T. Paterson, Esq. and

Sonnenschein Nath & Rosenthal, counsel for amicus curiae,

Employers Group. Employers Group is affiliated with only one

wholly-owned subsidiary, Employers Group Service Corp. No

person or entity other than the amicus curiae, its members or its

counsel has made any monetary contribution to the preparation or

submission of this brief.

.

participates as Amicus in many significant labor and

employment cases.

Il.

SUMMARY OF ARGUMENT

Employers Group urges the Court to accept the case

of Alta Bates Corp. v. NLRB, supra, 116 F.3d 482 for

certiorari to resolve the conflict between this case and

prior cases in this Court and the First, Third, Fifth,

Sixth, Eighth and the District of Columbia Circuit

Courts of Appeals. Employers and unions have relied

for thirty years on the rule that affiliated employers who

did not exercise actual control over the labor relations of

another company could not be joined as a single em-

ployer in bargaining units, unfair labor practices or

economic action such as picketing, boycotts, and strikes.

Radio & Television Broadcast Technicians Local Union

1264 v. Broadcast Services, 380 U.S. 255, 256, 85 S.Ct.

876, 877 (1965). The Alta Bates decision overturns

thirty years of precedent. Parent companies, subsidiary

companies, partners and joint venturers, who are not

involved in the labor relations of another company are

subject to being dragged into labor relations conflicts

which were not of their making and over which they

exercised no control. The effect of this decision is to

destabilize employer-employee relations throughout the

United States.

ne

IV.

ARGUMENT

A. Employers and Unions Have Relied

for Thirty Years on the Decisions of

the Circuit Courts of Appeals and

the National Labor Relations Board

Holding That an Entity was Not

Part of a Single Employer Unless

it Exercised Actual Control Over

the Labor Relations of a Related

Company.

In Radio & Television Broadcast Technicians Local

Union 1264 v. Broadcast Services, 380 U.S. 435, .85

S.Ct. 876 (1965) (“Radio Union”), this Court approved

the “integrated enterprise” test to determine employer

Status. The most important but not controlling prong of

that test is “centralized control of labor relations.” Since

the decision is Radio Union, until this case, the NLRB

and the First, Third, Fifth Sixth, Eighth, Ninth and the

District of Columbia Circuit Courts of Appeals have

required that an entity must exert actual control rather

than potential control to meet the test.

In 1966 the NLRB followed this Court’s decision in

Radio Union, supra, and held in Drivers, Chauffeurs and

Helpers Local No. 639 (Poole’s Warehousing), 158

N.L.R.B. 1281, 1286 (1966) that actual rather than mere

potential control of labor relations was necessary to

establish single-employer status. Since that time until

this case, every decision of the NLRB which discusses

the issue of actual versus potential control has held that

actual control of labor relations is necessary for single

employer status. See, e.g., Leisure World Sales Corp.

<i

Inc., 163 N.L.R.B. 668 (1967), Fedco Freight Lines,

Inc., 273 N.L.R.B. 399 (1984), Emsing’s Supermarket,

Inc., 284 N.L.R.B. 302 (1987).

The Circuit Courts of Appeals for the First, Third,

Fifth Eighth, and the District of Columbia Circuits have

uniformly held that actual rather than potential control of

labor relations is required for single-employer status. In

J.G. Roy & Sons Company v. NLRB, 251 F.2d 771 (ist

Cir. 1958) the Court held that a strike against a neutral

employer was unlawful secondary activity. The Court

stated, “... while common ownership was admitted, it

was specifically found that there was no actual common

control over labor policies ....” 251 F.2d at 773. In»

Limbach v. Sheet Metal Workers International Assn.,

949 F.2d 1241, 1258 (3rd Cir. 1991) the court sustained

a jury instruction which required actual control of labor

relations. The court stated “[s]ince potential control

would always rest with the parent in such a situation,

what is required is actual control.” Jd. at 1260. The

Fifth Circuit held in Sheet Metal Workers International

Assn. v. Atlas Sheet Metal Company, 384 F.2d 101 (Sth

Cir. 1967), the Sixth Circuit held in Boich Mining

Company v. NLRB, 955 F.2d 431 (6th Cir. 1992) and the

Eight Circuit held in Bachman Machinery Co. v. NLRB,

266 F.2d 599 (8th Cir. 1959) that there must be actual

control of labor relations to determine that an employer

is a primary employer for purposes of a secondary

boycott. In Retail Store Employees Union, Local 1001 v.

NLRB, 627 F.2d 1133 (D.C. Cir. 1979), rev’d on other

grounds, 447 U.S. 607, 100 S.Ct. 2372 (1980) the court

held that land tithe companies with common directors

were not single employers. The court stated “... mere

unity of interests is not enough, nor even is some unity

of ownership; there ‘must be in addition such actual or

active common control, as distinguished from merely a

i ics

potential, as to denote an appreciable integration of

operations and management policies.’” 627 F.2d at

1138.

Even the Ninth Circuit, in prior cases, has required

actual versus potential control to determine single-

employer status. In NLRB vy. Transcontinental Theaters,

Inc., 568 F.2d 125, 131 (9th Cir. 1977) the Ninth Circuit

refused to enforce an NLRB order holding that a lessor

and his lessee were a single employer. The Board had

determined that the lessor exercised actual control over

the lessee’s labor relations by placing contractual caps

on operating costs in the lease. The Ninth Circuit held

that the NLRB was required to demonstrate that the

lessor exercised actual control rather than potential

control over the lessee’s labor relations. After reviewing

the record, the Court found that contractual caps on

operating costs were too tenuous to create actual control

of labor relations, “particularly in view of the lack of

evidence that respondent ever made an attempt to control

..+ labor relations or policies, through its authority to

determine operating costs or otherwise.”

Employers and unions thronghout the United States

have relied on these NLRB and court decisions. This

reliance has encouraged labor Stability and discouraged

employers and unions from engaging in unlawful

activity.

= a

B. This Decision Destabilizes Labor

Relations in Bargaining Unit Deter-

mination, Unfair Practice Liability

and Economic Action Such as Picket-

ing, Boycotts and Strikes.

Due to the extensive precedent on this issue, employ-

ers and unions have known for thirty years who the

responsible employer is for purposes of bargaining,

unfair labor practice liability and economic action. The

large number of cases which have ruled on this test is

indicative of the seriousness of this issue.

Employers and Unions need to know where to draw

the line. Until this decision, the line was drawn at actual

behavior: an entity who chooses to take the benefit of

control has to also take the burden of economic action,

union recognition and liability. The NLRB and the

Ninth Circuit decision, in this case, now purport to draw

the line at potential control. However, in a economic

society of conglomerates, joint ventures and partner-

ships, there is no clear line where potential control ends.

Every parent company is now exposed to the labor rela-

tions problems of its subsidiaries, since, as the court

stated in Limbach, supra, “... potential control would

always rest with the parent ....” 949 F.2d at 1260.

Every subsidiary is now exposed to the liabilities of its

sister subsidiaries. Every joint venturer is liable for the

labor misdeeds of its co-venturer. Even lessors face

liability for the labor relations of their lessees. (Cf.

NLRB vy. Transcontinental Theaters, Inc., supra, 568

F.2d 125.

<

C. This Decision Impacts Other Em-

ployment Laws Which Rely Upon

the Same Test.

Courts have applied the Radio Union “integrated

enterprise” test to claims under a number of different

laws including Title VII of the Civil Rights Act, the

Americans with Disabilities Act, the Pregnancy Dis-

crimination Act, the Ku Klux Klan Act of 1871 (29

U.S.C. § 1983), 29 U.S.C. § 1981 and 29 U.S.C. § 1982.

In each of those cases, the courts have relied upon prece-

dent requiring actual rather than potential control of

labor relations.

In Fike v. Gold Kist, Inc., 514 F. Supp. 722 (1981

N.D. Ala.) the Plaintiff alleged violations of Title VII of

the Civil Rights Act, and the Ku Klux Klan Act for

pregnancy discrimination. The court dismissed the

alleged employer Stating, “[i]t is well settled that the

‘control’ required to meet the test of centralized control

of labor relations is not potential control, but rather

actual control of day to day labor practices.” Jd. at 727.

In Webb v. American Red Cross, 652 F. Supp. 917

(D.C. Neb. 1986) the Plaintiff alleged violations of Title

VII of the Civil Rights Act and constitutional guarantees

of equal protection and due process. The court had to

determine whether it had Subject matter jurisdiction over

the American Red Cross for the alleged discriminatory

actions of its local chapter. The court applied the four

prong test used by this Court in Radio Union, supra, and

Stated, “[t]he requisite control is not potential control,

but rather actual and active control of the day to day

labor relations.” The court dismissed the American Red

Cross from the suit.

ee

In Jackson v. NFL, 1994 U.S. Dist. Lexis 8303; 65

Fair Empl. Prac. Cas. 358 (S.D.N.Y. 1994) the Court

applied the integrated enterprise test to a claim of viola-

tion of 42 U.S.C. § 1981 and Title VII of the Civil

Rights Act. The plaintiff argued that potential control

was sufficient to meet the centralized control test. The

court held that in determining employer status that it is

actual rather than potential control which is deter-

_ minative.

In Tatum v. Everhart, 954 F. Supp. 225 (D.C. Kan.

1997) in determining employer status under Title VII of

the Civil Rights Act and the Age Discrimination in Em-

ployment Act, the court applied the four prong test used

in Radio Union, supra. The court stated, “[t]o establish

centralized control, the parent corporation’s control of

the day to day employment decisions of the subsidiary

must be shown. Day to day control must actually be

exercised; potential control is not sufficient.” Jd. at 228.

The decision in this case, impacts the determination

of single-employer status under employment discrimina-

tion laws as well as the National Labor Relations Act.

This case muddies the waters where clarity is needed.

Employers and employees in employment discrimination

cases, need to know where liability begins.

Xe

V.

CONCLUSION

The National Labor Relations Act was enacted to

promote labor peace and to prescribe the lawful rights of

employers and employees. 29 U.S.C. § 141. This deci-

sion promotes confusion, litigation and economic war-

fare. The Court needs to draw the line between actual

and potential control so that employers and unions know

the point where unlawful activity begins.

DATED: October 16, 1997.

Respectfully submitted,

SONNENSCHEIN NATH

& ROSENTHAL

LEE T. PATERSON

Counsel of Record

Attorneys for Amicus Curiae

Employers Group