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Advanced Life Systems Inc. v. National Labor Relations Board

United States Court of Appeals, District of Columbia Circuit

August 3, 2018

Advanced Life Systems Inc., Petitioner
v.
National Labor Relations Board, Respondent

          Argued March 12, 2018

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

          Gary E. Lofland argued the cause and filed the briefs for petitioner.

          David A. Seid, Attorney, National Labor Relations Board, argued the cause for respondent. With him on the brief were Richard F. Griffin, General Counsel at the time the brief was filed, Jennifer Abruzzo, Deputy General Counsel at the time the brief was filed, John H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy Associate General Counsel, and Jill A. Griffin, Supervisory Attorney.

          Before: Kavanaugh [*] and Millett, Circuit Judges, and Sentelle, Senior Circuit Judge.

          OPINION

          MILLETT, CIRCUIT JUDGE

         Unfair if you do; unfair if you don't. As a practical matter, that is the position in which the National Labor Relations Board's decision in this case left the employer. Advanced Life Systems, a family owned-and-operated small business, found itself whipsawed between Board precedent that, on the one hand, forbids employers to make pay increases and holiday gifts without first negotiating with the union, and, on the other, generally forbids employers to stop making increases and holiday gifts after a union's election. We hold that two statements by the company's owner constitute unfair labor practices, but the Board's ruling that the employer's suspension of personal gifts and discretionary pay raises was unlawful is not supported by substantial evidence.

         I

         A

         The National Labor Relations Act, 29 U.S.C. § 151 et seq., protects the right of employees to "bargain collectively through representatives of their own choosing." Id. § 157. The Act enforces that right by proscribing certain "unfair labor practice[s]," id. § 158(a), including any employer action that "interfere[s] with, restrain[s], or coerce[s] employees in the exercise" of that right to collective bargaining, id. § 158(a)(1). The Act also shields employees from discriminatory employer actions designed to punish or deter union participation and membership. See id. § 158(a)(3).

         Once employees exercise their Section 7 rights and elect a union to represent them, the Act makes it an unfair labor practice for employers "to refuse to bargain collectively with th[ose] representatives" on issues regarding "wages, hours, and other terms and conditions of employment." 29 U.S.C. § 158(a)(5), (d). In other words, the Act imposes on covered employers an affirmative duty to bargain over the terms and conditions of employment. See Local Union No. 189, Amalgamated Meat Cutters, and Butcher Workmen of N. America, AFL-CIO v. Jewel Tea Co., 381 U.S. 676, 685-686 (1965). Correspondingly, the Act forbids employers to make unilateral changes to those employment matters for which bargaining is mandatory. See NLRB v. United States Postal Serv., 8 F.3d 832, 836 (D.C. Cir. 1993).

         B

         Advanced Life Systems, Inc. provides ambulance services in Yakima, Washington. See Advanced Life Sys., Inc., 364 NLRB No. 117 at 13 (2016). William Woodcock is Advanced Life's majority owner and operator. Woodcock's immediate family members co-own the business, but only Woodcock controlled the company and its operations. Advanced Life began operations in 1996 and has grown over the intervening years to operate six ambulance stations and employ around fifty-five personnel, comprising a mix of Emergency Medical Technicians ("EMTs"), paramedics, dispatchers, and administrative and management staff.

         Given its size, Advanced Life never adopted a formalized wage schedule or written policy. Advanced Life Sys., 364 NLRB at 13. New hires were reportedly told that they could expect periodic pay raises on, for example, the anniversary of their hire date. But those informal predictions rarely, if ever, materialized. Id.; see id. at 3 n.8. In practice, pay increases occurred at highly irregular intervals, varying between 2 weeks and 22.5 months. Id. at 7-9 (Member Miscimarra, dissenting). The amount of any pay raise, even for the same employee, was equally unpredictable, with per hour increases ranging between 25 cents and $2.50. Id. at 14. The record reveals no discernible nexus between, on one hand, the timing or amount of any pay raises and, on the other hand, any consistent or predictable metric like seniority or advanced training. Rather, Woodcock exercised unbridled discretion over the timing and amount of each individual's pay increase (if any). Id. at 13 n.8.

         Similarly, Advanced Life lacked any formal bonus policy or standardized gift practice. Advanced Life Sys., 364 NLRB at 14. In 1996, the company's first year of operations, the Woodcock family hosted a Christmas potluck for all Advanced Life employees at one of the ambulance stations and distributed personal gifts to each employee. Id. at 14; ALJ Hr'g Tr. 83:7, In re: Advanced Life Systems, Inc., and International Ass'n of EMTs and Paramedics, No. 19-CA-096464 (NRLB ALJ Feb. 25, 2014).

         As the company grew, the potluck grew into an annual Christmas party at which Woodcock and his wife distributed assorted gifts and prizes to their employees, including everything from raffle tickets and gift cards to cash, appliances, and trips. Advanced Life Sys., 364 NLRB at 14. Those gifts were all paid for by the Woodcocks out of their personal funds. Id. at 14 n.21, 15; see also id. at 16. Advanced Life continued this holiday practice until 2011, with one exception. In 2010, in lieu of gifts, the Woodcocks donated approximately $10, 000 to an employee whose home was destroyed in a mudslide.

         Neither the Woodcocks nor Advanced Life kept any records of the gifts given to employees. Advanced Life Sys., 364 NLRB at 14 n.21, 15. Since the Woodcocks paid for the gifts entirely from their personal funds, they never claimed a tax deduction nor sought other favorable treatment for those expenditures. The employees, for their part, never claimed the gifts as wages nor reported them on their income taxes.

         In July 2012, the now-defunct National Emergency Medical Services Association ("Union") began an organizing campaign among Advanced Life's paramedics, EMTs, and dispatchers. During the organization campaign, one of the unit employees, Matthew Schauer, talked with Woodcock about the "pros and cons" of unionization. ALJ Hr'g Tr. 74:20. In testimony that the Board credited, Schauer reported Woodcock as saying that Advanced Life "would not be able to give us raises if we brought a union in." Id. at 27:1.

         Shortly after that, the Union won the representation election, and the Board certified it as the unit's exclusive collective-bargaining representative. Following the Union's election, Advanced Life discontinued pay raises and the Christmas party and gifts pending negotiation of those matters with the Union.

         Four months later, in December 2012, Lenny Ugaitafa, a bargaining unit employee, inquired about a pay raise. Woodcock explained that his attorney had advised him to temporarily freeze all changes in the employees' terms and conditions of employment, including pay raises, "because of the whole Union deal." ALJ Hr'g Tr. 65:15.

         The next month, another unit employee, Cole Gravel, asked Woodcock why Advanced Life had not made any pay raises in the five months since the employees had unionized. Woodcock replied that, because pay raises had been discretionary prior to the election, Advanced Life was now legally obligated to negotiate any change in pay with the Union. Advanced Life Sys., 364 NLRB at 2.

         C

         The International Association of EMTs and Paramedics, a labor organization affiliated with the Union, filed two unfair labor practice charges against Advanced Life in January 2013. Then-Acting General Counsel Lafe Solomon issued an order consolidating the cases and complaints. General Counsel Richard Griffin subsequently ratified the consolidated complaint and, after independently reviewing the merits, authorized continued prosecution of the matter.

         The General Counsel's complaint alleged that Advanced Life violated Section 8 of the Act, 29 U.S.C. § 158, by (i) "withholding regularly scheduled biannual wage increases;" (ii) "failing to provide employees with Christmas bonuses;" (iii) "telling employees that wage increases were withheld because of their union activity[;]" and (iv) "discriminating in regard to the hiring, tenure or terms and conditions of employment of its employees" to discourage union and concerted activities. Advanced Life Sys., 364 NLRB at 13.

         After a hearing, a Board administrative law judge concluded that Woodcock's three statements made to employees about halting wage increases after unionization violated Section 8(a)(1) of the Act, 29 U.S.C. § 158(a)(1), because they were designed to discourage the exercise of the employees' Section 7 collective action rights, 29 U.S.C. § 157. The administrative law judge also found that Advanced Life "had a longstanding practice of granting hourly wage increases mainly between 25 to 50 cents once every 6 months or sooner, depending on tenure and performance[, ]" and that its unilateral cessation of pay raises and Christmas bonuses violated Section 8(a)(5) of the Act, which prohibits changing the terms and conditions of employment without bargaining, 29 U.S.C. § 158(a)(5). Advanced Life Sys., 364 NLRB at 15. Lastly, the administrative law judge ruled that Advanced Life's decision to halt wage increases and Christmas gifts pending negotiations with the Union constituted anti-union retaliation in violation of Section 8(a)(3), 29 U.S.C. § 158(a)(3), as evidenced by Woodcock's contemporaneous statements. Advanced Life Sys., 364 NLRB at 18.

         The Board affirmed most of the administrative law judge's findings and rulings, concluding that Advanced Life was liable for two violations of Section 8(a)(1) based on Woodcock's statements immediately before and four months after the election that tied the temporary halt in wage increases to the need to negotiate with the Union. Advanced Life Sys., 364 NLRB at 2. The Board also found two violations of Section 8(a)(3) for discriminatorily ceasing pay raises and Christmas bonuses following the ...


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