2006-6

Evidence Does Not Support NLRB's Finding That Union Failed To Show Anti-Union Animus Was Motivating Factor In Employer's Subcontracting Decision.

In Healthcare Employees Union v. NLRB, 441 F.3d 670 (9th Cir. Mar. 17, 2006)(1), Healthcare Employees Union Local 399 (the "Union") petitioned the Ninth Circuit Court of Appeals to review a final order of the National Labor Relations Board (the "NLRB" or "Board") dismissing the Union's unfair labor practice charge against St. Vincent Medical Center ("St. Vincent"). The Court granted the Union's petition for review and remanded the case for further proceedings.

St. Vincent is an acute care hospital in Los Angeles. In February 2000, St. Vincent began subcontracting out the work of its respiratory care ("RC") department. Prior to that time, St. Vincent employed 27 respiratory care therapists. St. Vincent contended that it outsourced the work in the RC department because it was unable to find and train suitable managers.

Some months earlier, in July 1999, the Union launched a campaign to organize St. Vincent's technical staff. The RC department, which made up 25% of the technical staff at St. Vincent, overwhelmingly supported the Union and was considered to be instrumental in pushing the organizing drive.

In a flier dated November 10, 1999, and distributed throughout St. Vincent's technical staff, the Union announced that it was a few weeks away from filing an election petition with the NLRB. The flier also announced that once the election petition was filed, the Board would set an election within 45-60 days. On January 5, 2000, the Union filed a petition for an election. On January 21, 2000, the parties stipulated to an election to be conducted by the NLRB on February 18, 2000.

At the same time that the Union began its campaign to organize the technical staff, St. Vincent began to hold meetings to discuss subcontracting out the work of the RBC department. Thereafter, on November 18, 1999, eight days after the Union announced it was close to filing its election petition, upper management met with the RC department managers to discuss the RC department. At that meeting, the RC managers raised the option of subcontracting out the work of the department. The next day, the hospital's senior assistant administrator in charge of patient care services, Zita Uy, authorized an RC department administrator to investigate potential subcontracting vendors.

In December 1999, another meeting was held to discuss subcontracting. At this meeting, management acknowledged that subcontracting was too expensive to be financially feasible. Nevertheless, management decided to pursue subcontracting in lieu of simply replacing the existing RC managers. On December 22, 1999, the subcontracting proposal was approved by St. Vincent's president, Bill Parente.

On December 27, 1999, Uy announced to RC department employees management's intent to investigate outsourcing the work of the RC department. Employees were told that it would take between 30 and 60 days to complete this investigation. Uy explained to the RC employees that the decision was a "business decision" motivated by "concerns about quality issues."

On January 26, 2000, two companies submitted a combined proposal to St. Vincent for taking over the RC department. St. Vincent agreed to the proposal the same day.

On February 1, 2000, St. Vincent management informed the RC department of the outsourcing decision. The employees were specifically advised that effective February 5, 2000, California Respiratory Services would directly employ the RC employees.

On February 2, 2000, the Union filed an unfair labor practice charge against St. Vincent. The charge alleged that St. Vincent subcontracted out the work of the RC department to prevent the RC department employees from voting in the Union election, in violation of Sections 8(a)(1) and 8(a)(3) of the NLRA, 29 U.S.C. ? 158(a)(1), (3). Shortly thereafter, the Board's General Counsel issued a complaint against St. Vincent and a notice of hearing.

At the hearing, the Administrative Law Judge ("ALJ") found that the Hospital was aware that the RC employees were the "core" of the Union's organizing efforts, that the timing of the decision was "suspicious" and that the Hospital's proffered business justification appeared to be a "fabrication." However, the ALJ found no basis to disbelieve the testimony of Hospital witnesses that the subcontracting had largely solved the RC department's problems. Based on that one fact, the ALJ concluded that St. Vincent would have contracted out the work even in the absence of union activity, thus defeating the General Counsel's case. The Board summarily affirmed the ALJ's findings.

The Union then filed a petition for review with the Ninth Circuit pursuant to Section 10(f) of the NLRA. The Union challenged the Board's conclusions that the General Counsel failed to carry its burden of persuasion and that St. Vincent established its affirmative defense. The Union argued that neither conclusion was supported by substantial evidence.

The Ninth Circuit agreed with the Union, finding that "substantial evidence does not support the Board's finding that the General Counsel failed to show that anti-union animus was a motivating factor in St. Vincent's decision to subcontract out the [RC] department." In particular, the court found that the ALJ had improperly credited the Hospital's evidence of post-subcontracting improvement in the RC department as a basis for dismissing the General Counsel's case. The court stated that "we would need to ignore a powerful string of coincidences to conclude that St. Vincent would have implemented subcontracting, when and as it did, in the absence of union animus."

In finding what it characterized to be a "stunningly obvious" inference of anti-union animus, the court noted that the subcontracting decision occurred between the time the Union filed its election petition and the election. In addition, the Hospital had acknowledged during the hearing that management problems in the RC department had existed for more than a decade before it decided to subcontract out the work. Based on these facts, the court concluded that the only obvious precipitating event for the subcontracting decision was the looming election.

The court also concluded that the Hospital had failed to present a "clear rationale" for the way the subcontracting decision was carried out. At the hearing, Parente was asked why he had not simply outsourced the work of RC department managers, continuing to directly employ the RC therapists. He explained that such an arrangement would have created a "divided accountability" problem. However, his testimony was substantially weakened by the fact that the RC manager and the RC employees were not actually employed by the same employer. (The employees worked directly for California Respiratory Services, while the manager worked for Total Rehab Care, a company which contracted with California Respiratory Services to provide management services to the RC department.) This evidence provided additional support for a finding of anti-union animus on the part of St. Vincent.

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California Court of Appeal Upholds County Civil Service Commission's Rejection of Sheriff's Claim for Back Pay.

In Zuniga v. Los Angeles County Civil Service Comm'n, 137 Cal.App.4th 1255 (Cal.App. March 27, 2005)(2), plaintiff Jesse Zuniga ("Zuniga"), a deputy sheriff in the Los Angeles County Sheriff's Department (the "Department"), was suspended without pay after being charged with grand theft. Zuniga's suspension was made pursuant to a County Civil Service Commission rule that allows the Department to suspend an employee who has been criminally charged or indicted for a period which may exceed 30 days and continue until the expiration of 30 days after the judgment of conviction or the acquittal of the offense charged in the complaint or indictment has become final.

In April 2001, Zuniga requested a hearing before the Commission to challenge the suspension. The request was granted and the hearing was stayed until the criminal proceedings had concluded. Meanwhile, Zuniga retired from the Department on February 12, 2002. The criminal charges against him were dismissed on February 25, 2002.

The hearing was held in July 2002. The hearing officer recommended to the Commission that Zuniga receive full back pay for the suspension period because the Commission had presented no evidence to show that Zuniga had, in fact, committed the felonies with which he was charged and, therefore, had failed to show that the suspension was an appropriate disciplinary measure. The Commission sustained the suspension without pay, finding that the Department met its burden of demonstrating that Zuniga had been charged with two felonies pursuant to the Commission's rules.

Zuniga filed a petition for writ of mandate to the superior court, challenging the decision. The trial court denied Zuniga's petition, finding that his due process rights had not been violated.

The Court of Appeal affirmed the trial court's judgment on procedural grounds, finding that the Commission lacked jurisdiction to hear Zuniga's appeal because he had retired from the Department before the appeal process had concluded. In reaching its opinion, the court noted that the Los Angeles County Charter contains no provision granting the Commission authority to hear a wage claim brought by a former civil servant who voluntarily resigned. In the absence of an express grant of such jurisdiction, the Commission lacked the authority to investigate the charges and award back pay to Zuniga.

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1. Opinion by Pregerson, J., joined by Canby, J. Dissent by Beezer, J.

2. Opinion by Epstein, P. J., joined by Willhite and Hastings, JJ.