Arc Bridges, Inc. v. National Labor Relations Board

          Argued September 16, 2016

         On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board

          Raymond C. Haley III argued the cause for petitioner. With him on the briefs was Andrew M. Swafford.

          Amy H. Ginn, Attorney, National Labor Relations Board, argued the cause for respondent. With her on the brief were Richard F. Griffin, Jr., General Counsel, John H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy Associate General Counsel, and Usha Dheenan, Supervisory Attorney.

          Before: Tatel and Kavanaugh, Circuit Judges, and Ginsburg, Senior Circuit Judge.

          OPINION

          GINSBURG, SENIOR CIRCUIT JUDGE

         The National Labor Relations Board held that Arc Bridges, Inc. violated §§ 8(a)(3) and (1) of the National Labor Relations Act by failing to give a wage increase to represented employees, with whom it was then bargaining, when it increased the wages of its nonunion employees. The Employer petitioned this court for review. Because we hold that substantial evidence did not support the Board's findings, we grant the Employer's petition for review, vacate the Board's decision and order, and deny the Board's cross-application for enforcement.

         I. Background

         The Employer is a nonprofit corporation that provides "assisted living programs, employment counseling, and related support services for individuals with developmental disabilities." Arc Bridges, Inc. v. NLRB, 662 F.3d 1235, 1236 (D.C. Cir. 2011). In November 2006 and February 2007, the Board certified the American Federation of Professionals (the Union) to represent Arc Bridges' employees in two separate bargaining units, consisting respectively of a Day Services employee unit and Residential and Supported Living employee unit. Arc Bridges, Inc., 355 NLRB 1222, 1222 (2010).

         The Board found the sequence of relevant events thereafter was as follows. In May 2007, supervisor Raymond Teso told a future employee, Teresa Pendleton, during her interview that "the Union would be gone in November." Although he did not say so, November was the end of the one-year period following the Union's certification, during which the Employer could "not withdraw recognition from the union and the Board [would] not entertain a petition contesting the union's majority status, " Arc Bridges, Inc., 362 NLRB No. 56, slip op. at 2 & n.9 (Mar. 31, 2015), https://www.nlrb.gov/case/13-CA-044627.

         In June, the Employer's board of directors authorized management to give a three percent increase in wages to all employees. 355 NLRB at 1228 (ALJ Op.). In July, however, before any raise had been announced, the Union demanded changes in health insurance and retirement benefits and a 50% increase in wages over three years. Id. at 1227. Shortly thereafter the Employer provided the Union with its financial data indicating it had only $53, 497 available to meet the Union's demands. Id. at 1227-28.

         In July or August, area manager Bonnie Gronendyke told an employee, Shirley Bullock, that Executive Director Kris Prohl "was going to give us a raise until we voted the Union in." Id. at 1230. In August, Teso told Pendleton that the $56, 000 the Employer had available to increase the employees' wages was instead being used to pay (presumably labor) lawyers. Id. Also in August, the employees in both units "voted to authorize the Union to call a strike." Id. at 1228.

         In September, the Employer offered the Union a one-time bonus for all represented employees to be paid from "certain grant money" to come from an outside source. Id. The Union did not accept that offer and the grant eventually expired. Id. In October, the Employer gave a three percent wage increase to its nonunion employees, retroactive to July. Id. In the course of their bargaining at some time thereafter, the Employer offered the Union a one and half percent and later a two percent wage increase for represented employees. Id. at 1229.

         In March 2008, no collective bargaining agreement having been reached,

[t]he union filed a charge with the Board claiming that Arc Bridges had violated § 8(a)(1), (3), and (5) of the Act by granting the [retroactive] wage increase only to non-union employees. The Regional Director issued a … complaint focusing exclusively on the theory that Arc Bridges had violated § 8(a)(3).

662 F.3d at 1237.

         The Administrative Law Judge dismissed the complaint after analyzing, under the burden-shifting framework of Wright Line & Lamoureux, 251 NLRB 1083 (1980), the Employer's failure unilaterally to increase the wages of the represented employees at the same time it gave the others a raise. 355 NLRB at 1231-32 (ALJ Op.). The ALJ first concluded "the General Counsel has not sustained her burden of proof under Wright Line by proving by a preponderance of the evidence that the employees' protected activity was a motivating factor for [the Employer's] withholding of the wage increase." Id. at 1232. Second, the ALJ held that, even if the General Counsel had carried her burden, "the [Employer] has met its Wright Line burden of proof by demonstrating it would have taken the identical action for legitimate, nondiscriminatory reasons." Id. In doing so, the ALJ determined that both the General Counsel's and the Employer's asserted rationales for the discriminatory wage increase were plausible: The employer could have "withheld the wage increase in order to punish and retaliate against the employees for bringing in the Union, " or it could have withheld the increase as a "legitimate bargaining strategy." Id. The Board reversed the ALJ's decision on the ground that annual wage increases, "if sufficient funds existed, " had become "an established condition of employment" for all employees, the denial of which was a violation of the Act. 662 F.3d at 1238 (quoting 355 NLRB at 1223).

         The Employer sought review of the Board's decision and this court reversed, finding the Board had ignored "evidence contradicting the practice" of yearly wage increases and holding the sporadic history of the increases had not made them a "condition of employment." Id. at 1240.

         On remand, applying the Wright Line burden-shifting framework, a panel of the Board held the Employer's decision not to increase the wages of the represented employees was a violation of §§ 8(a)(1) and (3) of the Act because it was motivated by antiunion animus. 362 NLRB at 1. Member Miscimarra dissented. Id. at 6. The Employer again petitioned for review and the Board cross-applied for enforcement.

         II. Analysis

         This court "must uphold an order of the Board unless it rests upon a finding not supported by 'substantial evidence'" on the record taken as a whole. S & F Mkt. St. Healthcare LLC v. NLRB, 570 F.3d 354, 358 (D.C. Cir. 2009). We give

substantial deference to the Board's factual inferences from the record before it, and [w]hen the Board concludes that a violation of the Act has occurred, [the Court] must uphold that finding unless it has no rational basis or is unsupported by substantial evidence. It is not necessary that we agree that the Board reached the best outcome in order to sustain its decisions.

HealthBridge Mgmt., LLC v. NLRB, 798 F.3d 1059, 1067 (D.C. Cir. 2015) (citations and internal quotation marks omitted) ...