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Finley Hospital v. National Labor Relations Board

United States Court of Appeals, Eighth Circuit

June 27, 2016

The Finley Hospital, Petitioner
v.
National Labor Relations Board, Respondent Service Employees' International Union, Local 199, Intervenor The Finley Hospital, Respondent
v.
National Labor Relations Board, Petitioner Service Employees' International Union, Local 199, Intervenor

          Submitted: March 15, 2016

         National Labor Relations Board

          Before MURPHY, BEAM, and GRUENDER, Circuit Judges.

          BEAM, Circuit Judge.

         The Finley Hospital (the Hospital) appeals the National Labor Relation Board's (the Board's) decision affirming an administrative law judge's (ALJ's) finding that the Hospital violated §§ 8(a)(5) and (1) of the National Labor Relations Act (NLRA) by (1) unilaterally discontinuing annual pay raises negotiated in a one-year collective bargaining agreement (CBA) without bargaining with the Service Employees' International Union, Local 199 (the Union) on behalf of the nurses, and (2) by informing the Union it was discontinuing the pay raises. For the reasons discussed below, we reverse.

         I. BACKGROUND

         The Hospital is an acute-care hospital with three facilities in Iowa. The Board certified the Union as the exclusive bargaining representative of full-time and regular part-time nurses. On June 20, 2005, the Hospital entered into a one-year CBA with the Union. Article 20.3 of the CBA states the Hospital's policy regarding pay raises: "Base Rate Increases During Term of Agreement. For the duration of this Agreement, the Hospital will adjust the pay of Nurses on his/her anniversary date. Such pay increases for Nurses not on probation, during the term of this Agreement will be three (3) percent." The CBA expired by its own terms one year after the initial effective date. Pursuant to the agreement, the Hospital gave a single raise to each of its nurses on his or her anniversary date during the one-year term.

         Negotiations for a new agreement began on March 28, 2006, but a new agreement had not been reached when the CBA expired on June 20, 2006. The Hospital sent a letter to all Union employees stating that it would not provide raises to nurses whose anniversary date fell after the date of contract expiration until the parties reached a new agreement. On June 29, 2006, the Hospital submitted a proposal that would provide a 3% increase in wages. The Union voted to strike on July 6, 7, and 8. The Hospital then told the Union it would not make wage increases in the new CBA retroactive to June 21, 2006. The Union filed a complaint arguing that the Hospital's refusal to give automatic 3% raises after the expiration of the CBA amounted to a refusal to bargain in violation of 29 U.S.C. § 158(a)(5) and (1).[1]

         On June 3, 2015, the Board found, in agreement with the ALJ, that the Hospital violated 29 U.S.C. § 158(a)(5) and (1) by declining to give its nurses additional raises after the CBA expired. The Board conceded that the Hospital's contractual obligation to provide annual raises expired at the end of the one-year term. However, because it found that the one-year CBA created a status quo of annual pay raises, it held that the Hospital had a statutory obligation under the NLRA to continue annual pay raises until a new CBA was reached or the parties bargained to an impasse. The Board also found nothing in Article 20.3 of the CBA or in the CBA in general that clearly and unmistakably waived the employer's statutory duty to continue granting annual raises after the expiration of the CBA. Member Harry Johnson dissented.

         The Hospital now appeals the Board's decision, arguing that the one-year-long CBA did not establish a status quo of annual, compounded raises after the agreement expired. Alternatively, the Hospital argues that the Union waived its statutory right to post-expiration raises.

         II. DISCUSSION

         A. Standard of Review

         We review factual findings for substantial evidence. NLRB v. Am. Firestop Solutions, Inc., 673 F.3d 766, 767 (8th Cir. 2012). "'Substantial evidence' is evidence that 'a reasonable mind might accept as adequate to support' a finding." Id. at 768 (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951)). We review legal questions to ensure the Board "correctly applied the law." Id. Under this standard, "the NLRB must be sustained if: (1) it started with the currently controlling law; (2) it correctly applied this law; and (3) substantial evidence supports its finding." Cedar Valley Corp. v. NLRB, 977 F.2d 1211, 1215 (8th Cir. 1992). For contractual questions not based on policy under the NLRA, we review the Board's decision de novo. Am. Firestop Solutions, 673 F.3d at 768. Although the Board has authority to interpret CBAs in regards to unfair labor practices, "courts are still the principal sources of contract interpretation." Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 202 (1991) [hereinafter Litton Fin.] (quoting NLRB v. Strong, 393 U.S. 357, 360-61 (1969)). If the Board were given authority to interpret contracts, "[w]e would risk the development of conflicting principles." Id. at 203.

         B. Status Quo

         The Hospital argues that the Board erred in holding that the one-year-long CBA with the Union established a status quo of annual, compounded raises that, under the NLRA, must be continued after the agreement's expiration. We agree. It is an unfair labor practice under the NLRA for an employer "to refuse to bargain collectively with the representatives of his employees." 29 U.S.C. § 158(a)(5). The obligation to bargain collectively means that the employer must "meet at reasonable times and ...


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