AMERICAN HOSPITAL ASSN v. NLRB
Legal provision: National Labor Relations, as amended
Argument of James D. Holzhauer
Chief Justice Rehnquist: We'll hear argument first this morning in No. 90-97, American Hospital Association v. National Labor Relations Board.
Mr. Holzhauer: Mr. Chief Justice, and may it please the Court:
This case presents the narrow statutory question of whether the National Labor Relations Act permits the Board to establish a rule determining that eight specific bargaining units, and only those units, are appropriate for every acute care hospital in the United States.
We believe that the language and legislative history of Section 9(b) of the act, as well as the contemporaneous interpretation of the act by the Board, make it clear that the rule is not permitted.
Section 9(b) requires that the Board determine the appropriate unit in each case.
The Board and the unions argue that those words refer solely to the proceeding in which the Board is to issue unit determinations.
In their view, as long as the Board goes through the formality of the hearing the requirements of the statute are met, even if that formality is an empty one leading in every case to the same preordained result.
Of course Section 9(c) already requires hearings in contested representation cases, so in the Board's view the "in each case" language, which was added deliberately by amendment to the Wagner bill, adds nothing to the statute.
Well, those words do mean something, and their meaning is demonstrated not only by the words themselves, but by both the legislative history of Section 9(b) and the Board's contemporaneous and longstanding interpretation of that section.
The statutory language and its history were clear enough in 1980 and again in 1982 for the Board itself to hold that the adoption of a rule that a unit of registered nurses would be appropriate in every case would be, quote, 9(b) responsibility to decide in each case whether the requested unit is appropriate.
Unknown Speaker: Mr. Holzhauer, we have to determine what the meaning of the "in each case" language is in this context, and it occurs to me that this Court, for example, has an obligation to consider each case on its plenary docket, and yet we search for rules of general applicability to be applied to these cases.
Mr. Holzhauer: That's right.
Unknown Speaker: Now, isn't the Board doing essentially a similar thing in searching for some kind of rule of general applicability for most cases, leaving, of course, its extraordinary circumstances out if necessary?
Mr. Holzhauer: Sure.
Well, the Board is making that argument.
They're arguing that the extraordinary circumstances exception allows it to consider in each case whether there are exceptions allowing a different result from the rule.
But the extraordinary circumstances exception, which the Board did not say in its rulemaking allowed case-by-case determination of the... of each case, in fact it did not rely on the extraordinary circumstances exception for the purpose now asserted by the Board, that exception is so narrow as to be illusory.
The Board has made it clear in the rulemaking that it will no longer consider the individual facts and circumstances of each hospital, and it will disregard all of the factors it regards as critical in every other industry, and that it always regarded as critical in this industry.
Unknown Speaker: Counsel, suppose the Board... is this, what, is this the second rule that the NLRB has ever adopted?
It's not much more than the second, anyway.
Mr. Holzhauer: I believe that this is the first substantive rule they have adopted.
Unknown Speaker: The first substantive one.
I think they have--
Mr. Holzhauer: Right.
It's not the procedural rules.
Unknown Speaker: --Now, but there's a lot of law that the NLRB has made.
Mr. Holzhauer: That's right.
Unknown Speaker: I mean, all sorts of rules about what constitutes an unfair labor practice, and so forth.
Mr. Holzhauer: That's right.
Unknown Speaker: Now, I assume they have been adopted on a case-by-case basis in adjudication.
Mr. Holzhauer: That's correct.
Unknown Speaker: And you have no problem with that?
Mr. Holzhauer: I have no problem with that because--
Unknown Speaker: So the NLRB could say in its next adjudication it seems to us these eight units are appropriate bargaining units with respect to hospitals, and if it said that in adjudication it would be all right.
Is that all you're arguing?
Mr. Holzhauer: --No.
There are two distinctions that we're making here.
First of all, we're not arguing that the Board erred by engaging in rulemaking rather than adjudication.
In fact we think the rule would suffer from exactly the same defect and we would be making exactly the same arguments if it had been announced in adjudication.
Unknown Speaker: Well, not exactly the same.
You might say it's arbitrary, you'd make the same arbitrary and capricious argument that you make here, but you couldn't say that they're ignoring the case by case--
Mr. Holzhauer: I would make the same statutory argument if they established a rule saying that these eight units are appropriate in every case, and that we will not consider the facts and circumstances of hospitals in subsequent cases.
Unknown Speaker: --But why is that an inappropriate rule, although it is appropriate to say what constitutes an unfair labor practice, to say that every time you do this, every time you do it it's an unfair labor practice.
Mr. Holzhauer: Well, there are two differences.
First of all, the 9(b) does not apply to labor, to unfair labor practices.
Section 9(b) says, and only says, that the Board shall determine the appropriate unit in each case.
It doesn't say that it shall determine unfair labor practices in each case.
Now the Board has established bargaining unit rules in adjudication, and the Board is now arguing that the rule that it has established in this industry is much the same as those rules.
But that's not correct.
In no other industry has the Board established a rule that particular units and only those units will be appropriate in each and every case.
And that's what violates the "in each case" requirement.
Unknown Speaker: I thought that your brief said that the Board used to approve only four units because of a test it used to apply, the disparity of interest test or something of that sort.
Mr. Holzhauer: No, the Board never said that it, that it would approve or would not approve any particular number of units.
It has changed the test at times.
At times it followed the community of interest tests that it follows in all other industries.
At times it switched to a disparity of interests test, but that test did not result in a set number of units being appropriate in each and every case.
In each and every case the Board applied that test, looked at the facts and circumstances of each individual hospital, and decided whether under those facts and circumstances the particular unit that was before the Board was appropriate or not appropriate.
Unknown Speaker: But applying a general rule to all of them.
Mr. Holzhauer: That's right, a rule--
Unknown Speaker: The disparity of interest test, or whatever other test it--
Mr. Holzhauer: --That's right.
And the Board could establish a disparity of interest test and say we will decide in each case whether under the disparities of interest test this unit, the unit that's being sought in this particular proceeding, is appropriate.
Unknown Speaker: --And even though it knows that the outcome of that test will always be that there are eight appropriate bargaining units, it must not say that?
Mr. Holzhauer: I don't think it would ever know that the outcome of that test would only be eight appropriate units or four appropriate units.
The test would establish a standard, and each hospital would be free to introduce the facts and circumstances of that particular hospital to try to convince the Board that under those facts and circumstances the particular unit before it was inappropriate.
Unknown Speaker: But suppose the agency does believe that applying that test faithfully will always lead to these eight.
I mean, it has studied all the types of employees at hospitals and it's confident that these eight are... that'll be the situation in every case?
Mr. Holzhauer: If the Board believes that, I think it's free to say we think that... we will presume that these eight units might, will be correct in each and every case.
Unknown Speaker: It can do that in adjudication, but not in rulemaking?
Mr. Holzhauer: No.
It can't do it... it can do it in adjudication or in rulemaking, provided that it allow each employer in each case to introduce the facts and circumstances of that particular employer to convince the Board that in that case that rule should not apply.
The "in each case" language requires case-by-case evaluation of the appropriateness of the particular bargaining unit.
That's what we're arguing.
Unknown Speaker: Without any general principles at all?
Mr. Holzhauer: Oh yes, it can establish general principles.
In fact it can establish the same kinds of principles that it has established in other industries.
Unknown Speaker: But it can't... it can't establish a rule that is conclusive, regardless of the facts of a particular case?
Mr. Holzhauer: That's right.
What the Board has done here is it has said that, first of all it said in its rulemaking that all of the... that as to all of these factors it lists in its extraordinary exceptions exception... extraordinary circumstances exception, hospitals don't vary in these respects.
But to the extent they do, we find that we're better off ignoring those variations, because the value of having a uniform rule outweighs the value of considering in each case whether that bargaining unit is appropriate.
We don't think that's proper.
We think the Board has to look at the facts and circumstances of each case to decide whether its rule is properly applied to that case.
Unknown Speaker: Does that mean simply that the Board can't have a conclusive presumption in the interest of administrative efficiency?
Mr. Holzhauer: That's correct.
It cannot have a--
Unknown Speaker: Does it mean anything more than that?
Mr. Holzhauer: --It can't have an exclusive presumption, period, no matter what the interest is.
The Board has... the Congress has determined by putting in this "in each case" language, which otherwise would be completely redundant and meaningless, that the Board must consider the facts and circumstances of each case, as long as they do that.
Now, the Board has, has argued or has written over the years that that's exactly what, what this rule requires.
It said so in adjudications in 1980 and 1982, and in 1935, when the act was first being considered, Congress explained that the question of what bargaining unit is appropriate is, quote,
"obviously one for determination in each individual case. "
Unknown Speaker: Is your argument helped, Counsel, by the provision in the statute that a majority of professional employees can vote to be included in another unit?
Mr. Holzhauer: Sure.
And in each case you would think that they would be allowed to make that presumption... to make that election.
Unknown Speaker: So the language of the statute itself helps you in that respect?
Mr. Holzhauer: I think that's correct.
It also is helped by the fact that the extent of organization is not supposed to be conclusive.
In each case the Board is supposed to consider the facts and circumstances of the particular hospital to decide whether the unit at issue is or is not an appropriate unit.
Unknown Speaker: I... as I recall, the regulations, though, did acknowledge that there could be this cross-over if a majority of the employees in the unit, in each unit accept the cross-over.
Is that the way it works?
Mr. Holzhauer: Well, as far as professionals go, yes.
There would have to be... the professional employees would have to, would have to accept that.
There is one meaningful exception to this entire rule.
That exception provides that if unions request that one or more of these units be combined, one or more of these eight units be combined, that will ordinarily be considered appropriate.
But if an employer requests that, that will be inappropriate in every case.
So I would assume that if a union came in and says we want a combined professional and nonprofessional unit in this case, the election procedures, the consent procedures would still apply, and such a combined unit, if appropriate, would be allowed.
Of course, if an employer sought that it would not be allowed in any case.
Unknown Speaker: Why isn't that enough to establish that they are considering it case by case?
Given two different hospitals, one hospital the employees want to organize in a particular fashion that has less than... less than all eight of these separate bargaining units, and the other... in the other, with respect to the other employer they don't want to.
They want to have only four or five.
Mr. Holzhauer: They are not considering on a case-by-case basis.
Unknown Speaker: Well, yes they are.
Mr. Holzhauer: The only situation in which they will consider that is when the unions come in and request a combined unit.
Unknown Speaker: That's all you need.
Mr. Holzhauer: I don't think that's all you need.
I think 9(b), and what Congress--
Unknown Speaker: Aren't those two cases treated differently?
Mr. Holzhauer: --Excuse me?
Unknown Speaker: Aren't those two cases treated differently?
You don't impose eight separate unions on each of those two employers.
You wait to see what the unions want, or what the employees want.
Mr. Holzhauer: Well, if the unions request an addition, a combination of units, that can be allowed.
But I don't think that that comports with the "in each case" requirement.
Unknown Speaker: Why?
Mr. Holzhauer: I think the "in each case" requirement requires the Board, not the unions but the Board, to look at the facts and circumstances of each case, including the employer's argument that because of the staffing patterns, supervision, contacts between employees, and so forth, that this particular unit is inappropriate or appropriate.
And that can't be done under this rule.
The employer could never offer that evidence.
Unknown Speaker: If, if the Board in 50 separate cases had heard employers' evidence to this effect, and in every single case it had said well, this evidence just doesn't change our minds, it couldn't at the end of those 50 cases adopt some general principle?
Mr. Holzhauer: It could adopt a general principle saying that we might presume that all of these units will be appropriate units, but the Board... the employer or other parties before the Board would still have to have the opportunity in each case to convince the Board that that unit is appropriate.
And that's exactly what the Board does in every other industry.
Unknown Speaker: Well, would the Board have standards of relevancy that it could impose?
It could say we're not going to hear these kinds of evidence from the employer because in these other 50 cases we have decided it didn't make any difference.
Mr. Holzhauer: Well, I think there would be some problem if the Board were saying that this is just the standard of relevance.
I think it's important to point out first that that's not what the Board has done here.
It didn't find that these factors are irrelevant.
It found instead that for the most part hospitals don't vary in the various respects that the Board talked about, and that to the extent they do vary, which they acknowledged, the value of having a uniform rule outweighed the value of considering those factors.
If the Board had determined that all of the factors that it always considers in every other industry were irrelevant and didn't change its mind, I don't think that determination, frankly, could survive scrutiny.
These are the factors that the Board considers relevant in every other industry, and that it has considered relevant in hospital cases for the last 17 years.
In case after case applying these factors, the Board has found that one or another of the units that are now before it and that are now deemed to be appropriate in every case, were in fact inappropriate, and have held that those units would not be allowed.
Now, for them to suddenly, after making all these decisions over the years under both the disparity of interest standard and the community of interest standard, for them to suddenly decide no, these are no longer relevant, I don't think that could survive scrutiny.
But that's not what they have done in this case.
What they have done in this case is say they don't vary in these respects, mostly, but to the extent they do vary in these respects we're not going to consider that.
We no longer think that that variation is something we have to think about.
We think, instead, that the value of a uniform rule outweighs that.
Well, that might be so, and I think that that might be an interest that is recognized in most rulemaking, but it's an interest that Congress foreclosed by requiring the Board to decide in each case that the particular bargaining unit is appropriate.
Unknown Speaker: You're really saying that the rule ends up in... the Board just-refuses to decide what an appropriate unit is?
Mr. Holzhauer: It does.
It refuses to decide... well, to consider the facts and circumstances of a particular hospital in deciding whether one of the eight units is appropriate.
Unknown Speaker: Well, I know, but I suppose the Board would say well, if we... if we really didn't care about administrative efficiency or saving time or a lot of things like that we would decide this particular case differently, but we value whatever it is we're valuing so much that we will disregard that otherwise we would find this unit to be inappropriate.
Mr. Holzhauer: That's correct.
The Board has decided that the value of uniformity, the value, the efficiency that comes from uniformity, and that's what it says in its rulemaking, outweighs the desire to engage in case-by-case determination in those cases.
Unknown Speaker: Regardless of what... of what they would decide if they weren't so much interested in uniformity.
Mr. Holzhauer: That's right.
And in fact, the extraordinary circumstances--
Unknown Speaker: Why are they interested in uniformity?
Mr. Holzhauer: --I think that they have found--
Unknown Speaker: Just administrative efficiency?
Mr. Holzhauer: --I think it's administrative efficiency.
As we know, and we can understand the Board's frustration in this case, over 13 years the Board lost case after case in this area.
The courts of appeals kept refusing to enforce case after case involving unit determinations.
Unknown Speaker: Now you just want them to lose another one, I guess.
Mr. Holzhauer: That's right.
I would hope so.
The Board in its extraordinary exceptions rationale... explanation includes a long list of factors that it will no longer consider as appropriate, and then it goes on to say not only are these factors inappropriate, but everything we have ever seen in 13 years of adjudicating these cases are inappropriate, even though in many of those adjudications the Board found that a unit or more than one unit that it now designates as appropriate was inappropriate.
We won't even think about these factors anymore.
Unknown Speaker: Yeah, but not because they're not really inappropriate.
It's because they want to save some time.
Mr. Holzhauer: They want the value of a rule, right.
They want to save time.
They want administrative efficiency.
And I'm not saying that administrative efficiency might not be a suitable value.
What I'm saying is that administrative efficiency and that kind of exercise of administrative efficiency is foreclosed by Section 9(b) and by the requirement that the Board has acknowledged over the years, that Congress has acknowledged over the years, that Section 9(b) requires case-by-case determinations.
Unknown Speaker: Would you be here, would you be here if the rule had said that we're going to treat every hospital the same, namely we're going to have only one unit in every hospital?
Mr. Holzhauer: I suspect that if they made that thing I would be here, but I would be on the other side of the table.
I strongly suspect the AFL-CIO would be here saying that this rule violates the "in each case" requirement.
Unknown Speaker: But you would say... but you would be supporting the rule.
Mr. Holzhauer: Well, in that case certainly the interests of--
Unknown Speaker: xxx possibly do it.
Mr. Holzhauer: --the interests of the AHA might favor such rule, but on the other hand I would have to submit that the "in each case" language prohibits that kind of uniform rule as well.
Unknown Speaker: Exactly.
Mr. Holzhauer: Even if it had one unit or two units or the statutory minimum of three units, professional, nonprofessional, and guard.
Unknown Speaker: In labor cases generally other than in the health care area, if employees agree upon a unit, is that generally accepted by the Board?
Mr. Holzhauer: The employees cannot agree upon a unit, no.
There is a procedure where if the employer and the union seeking the unit agree, that the Board will ordinarily agree to that unit, provided it's not clearly inappropriate or violates the statute.
Unknown Speaker: Suppose all of the employees make a submission as to what they want the unit to be.
Does the Board accept that, or does it... it just doesn't work that way, is that what you're telling--
Mr. Holzhauer: It generally doesn't work that way, although if, if a union and an employer says we want it, that would be one thing.
Although still there are some standards, like the professional/nonprofessional standard, that the Board has to work from, and it has to determine whether the unit is appropriate.
If the employer and the union, and the unions agree that this is an appropriate union... unit, we'll have an election, the Board ordinarily will go ahead with that.
But it can determine that that's inappropriate.
Unknown Speaker: --Mr. Holzhauer, is it correct, as is charged in respondents' brief, that the, your client, the American Hospital Association once upon a time took just the opposite position, that the... it was necessary for the NLRB to develop a, quote,
"uniform national approach to appropriate units in the health care industry? "
Mr. Holzhauer: I believe that was correct.
In fact most, much of that explanation occurred during the rulemaking proceeding when the Board was, when the American Hospital Association, once the Board decided to engage in rulemaking, decided it was going to get the best rule it possibly could.
But the fact of the matter is--
Unknown Speaker: No, this was before the rulemaking, I think.
This was much earlier when the Board was still proceeding case by case.
You were knocking down these cases in the courts of appeals because you were saying it's necessary to have a uniform national approach.
So they now go through a rulemaking and adopt a uniform national approach, and you change the tune.
Mr. Holzhauer: --Well, let me respond in two different ways.
First of all, the "in each case" requirement requires case-by-case consideration of bargaining units, and if the American Hospital Association took a contrary position and made an argument that is contrary to what the statute means, the American Hospital Association was wrong.
Secondly, a uniform rule or a uniform... that's right, a uniform rule or a uniform policy does not have to be a conclusive presumption.
It doesn't have to say we will regard these units as appropriate in each and every case, regardless of the facts and circumstances of each case.
A uniform rule can allow for meaningful exceptions, which is not what this rule does.
In fact a uniform rule can be like the rules that the Board has established in other industries.
In no other industry has the Board established a rule that particular units and only those particular units will be appropriate in every case.
In those few industries where the Board has established presumptions, employers are given the full opportunity to rebut those presumptions and to show that the facts and circumstances of a particular workplace warrant a different result.
Unknown Speaker: Has any other industry litigated as assiduously as yours?
Mr. Holzhauer: I don't know.
I don't know that.
I assume that there has been litigation in some industries, but there has never been a rulemaking like this.
And also, our industry had a much different history than other industries.
Our industry was not covered by and large by the National Labor Relations Act, at least the dominant nonproprietary sector was not covered by the National Labor Relations Act until 1974, at least between 1947 and 1974.
And the announcement that it would suddenly cover did give rise to an increased amount of litigation.
There is no question about that.
But other industries have litigation over units and appropriate units over the years.
But in all those other cases the employer is allowed to offer evidence to rebut the presumption and to show that the facts and circumstances of the particular workplace warrant a different result.
There is no such possibility under the Board's rule, and the Board emphasized in its rulemaking that it was not merely establishing rebuttable presumptions that the eight units were correct.
I think it's important to realize that acceptance of our argument would not mean that those other vastly different rules would be invalid.
When those other rules are applied, the Board continues to give case-by-case consideration to the facts and circumstances of each employer and to comply with the "in each case" requirement.
We're not engaging in any broad attack on presumptions or upon the Board's rulemaking authority.
We're merely making the argument that in this one area, where the statute requires case-by-case consideration, the Board must take into account the circumstances of each employer and cannot adopt rules that eliminate that consideration.
Now, our argument, in addition to the original language and history of the National Labor Relations Act--
Unknown Speaker: If the Board had just made it a rebuttable presumption, how often do you think you would ever win a case?
Mr. Holzhauer: --Well, in other industries the cases are won quite often, and I think we would win cases quite often if the facts and circumstances showed that a different unit was appropriate--
Unknown Speaker: I know, but you would have to convince the Board that the facts or circumstances really showed it though.
Mr. Holzhauer: --That's right.
And I think we would be able to that.
And I think we would be able to do that in numerous cases.
Now I'm not sure whether it makes sense to say that in those circumstances the Board--
Unknown Speaker: More often than you would by showing... what do they call it under this rule... exceptional circumstances?
Mr. Holzhauer: --Extraordinary circumstances.
Extraordinary circumstances is an empty exception.
Here the Board says that all of the factors--
Unknown Speaker: How do you know it is?
Mr. Holzhauer: --Because the Board says it is.
Unknown Speaker: What, it's empty?
We've got it in there, but it means nothing.
Mr. Holzhauer: Well, the Board has said, the Board, first of all, has not said at any time in its rulemaking proceeding that the extraordinary circumstances exception is designed to allow case-by-case determination of bargaining units.
It basically said that it was an escape valve--
Unknown Speaker: Well, it says in any case, and in any case there may be extraordinary exceptions.
Mr. Holzhauer: --But those extraordinary circumstances that could exist exclude all of the factors, all of the facts and circumstances that are most relevant in every other industry.
Unknown Speaker: Is that what the rule says?
Mr. Holzhauer: That's what the rule says.
That's what the Board has explained the rule as saying in its notice of proposed rulemaking.
Unknown Speaker: Does extraordinary circumstance mean something other than a bargaining unit that would have five or less members?
Mr. Holzhauer: It's hard to believe, under the circumstances that the Board has said, that it could possibly mean anything more than that.
The extraordinary circumstances exception says that every kind of issue, every kind of factor that we have seen in the past 13 years of adjudicating hospital cases and all of these other factors that we have seen in other cases cannot be considered extraordinary circumstances.
Things like the size of the institution, the services provided, functional integration of employees, which is a critical factor in every other industry, contact among employees, different kinds of concepts that are important in the hospital industry, multi-competent workers, people who are cross-trained, team care, none of these things can be considered--
Unknown Speaker: Maybe it thinks these factors never... that's why it had the rulemaking.
Maybe it found that these factors never exist, that there isn't any functional integration between... between nurses and doctors, or between nurses and guards, or between nurses and maintenance workers.
Maybe it has found that as a result of its rulemaking.
It hasn't conducted rulemakings for other industries.
Mr. Holzhauer: --Well, what has happened, what has happened in this rulemaking is two things.
First of all, it said that we don't think these differences exist in significant extent in this industry.
I think that's arbitrary and capricious, and we have made that argument.
Secondly though, it says that to the extent it does exist, and they acknowledge these variations do exist to a certain extent, we will disregard them because we think the value of a uniform rule exceeds the value of going through this case-by-case consideration.
Well, I think that's a determination that Congress said the Board can't engage in.
I would like to reserve the remainder of my time.
Unknown Speaker: Very well, Mr. Holzhauer.
Argument of David L. Shapiro
Mr. Shapiro: Thank you, Mr. Chief Justice, and may it please the Court:
After 13 years of extensive controversy, uncertainty, delay, and expense, the Labor Board decided to initiate a rulemaking proceeding on the vexing question of unit determinations in the health care industry.
After some 2 years, which included two very extensive notices of proposed rulemaking, a number of significant modifications in the proposed rule, consideration of some 3,500 pages of testimony from over 140 witnesses, and 1,800 written submissions, the Board formulated its final rule, specifying the types of bargaining units that in the absence of extraordinary circumstances would be considered appropriate on the filing of a proper petition for most acute care hospitals.
I sure doubt, parenthetically, as Mr. Holzhauer has mentioned, that the rule specifically contemplates the possibility of a union petition for a combination of units, and in that sense the regulation is significant in imposing a ceiling rather than a floor.
This regulation is fully consistent with the Board's authority under the Labor... under the Labor laws, it is firmly rooted in an exhaustive investigation and analysis of the record--
Unknown Speaker: Mr. Shapiro, would you say the rule would be valid even if there were no extraordinary circumstances--
Mr. Shapiro: --I believe that it would, Your Honor.
Unknown Speaker: --exception?
Mr. Shapiro: Yes, I believe that it would.
I think the Board was very wise in including an extraordinary circumstances exception in the record... in the rule, but I do not believe that anything in the act or the legislative history of the 1974 act requires such an exception, or indeed analogous precedents of this Court in other areas.
The rule is in fact, we submit, a model of how the administrative process should work.
Now it has been challenged by the petitioner--
Unknown Speaker: Even though it's the first time in history they have ever tried to do it?
Mr. Shapiro: --It's unfortunate that it has taken so long, Your Honor.
Unknown Speaker: They did pretty well on the first try, is that it?
Mr. Shapiro: I think they did magnificently, because they knew how important this process was.
Unknown Speaker: A lot of courts and commentators have criticized the Labor Board in the past, haven't they--
Mr. Shapiro: Yes, Indeed.
Unknown Speaker: --for not conducting rulemaking?
Mr. Shapiro: Yes, indeed, and I think the Board has been responsive to those criticisms in an area where there was a singular need for that kind of response.
Unknown Speaker: 13 years of litigation, though.
Mr. Shapiro: Well, it... that was a factor, no question about it.
Unknown Speaker: Your comment that this is a ceiling on the number of groups, because there can be fewer groups if the employees so elect, that excludes any participation by the employer in that determination, and that, I take it, and I take it also that that is inconsistent with the Board's rule in all other areas, where the employer has a voice.
Mr. Shapiro: Well, the employer... I think it's important to establish at the outset that the employer's role in the petitioning process is a very limited one.
It is the union as the representative of the employees that chooses the bargaining unit to be sought through petition.
The only time that an employer is authorized to petition under the act is when confronted with a union demand for recognition.
And if the employer files a petition, my understanding is that by withdrawing the demand the union can effectively boot that petition.
The petition route is a route that allows the union, as the representative of the employees, to seem an appropriate unit.
Now, when a petition is filed it is not open to the employer to argue that another unit is also appropriate or even much more appropriate.
The employer's burden would be to show that this unit is not appropriate.
And of course the whole purpose of this regulation was to establish rules under which we acknowledge indeed we are very--
Unknown Speaker: Well, that's just, that's what exactly the employer wants to do in this case, is to show that it's inappropriate.
Mr. Shapiro: --Well, the employer--
Unknown Speaker: And the Board won't let him.
Mr. Shapiro: --You mean in this rulemaking proceeding?
They want to attack the rule as arbitrary and capricious because they, they claim that this rule cannot properly establish appropriate units in the industry.
In a particular proceeding, of course, the operation of the rule would effectively preclude the employer from trying to show that a given unit within the rule is not appropriate unless in the very limited case, and we acknowledge it is very limited, extraordinary circumstances--
Unknown Speaker: Did the employers participate... did the association participate in this rulemaking and oppose this rule?
Mr. Shapiro: --Yes they did, Your Honor.
There was suggestion from the industry--
Unknown Speaker: And they had their full say in the hearing?
Mr. Shapiro: --Oh, yes.
Unknown Speaker: Too much?
Mr. Shapiro: At least enough.
The rule is challenged here by petitioner on three grounds, although Mr. Holzhauer really concentrated only on one of them in his oral argument.
First, that the rule is inconsistent with the language of Section 9(b) and particularly the "in each case" language.
Second, that the rule is inconsistent with an admonition that appears in certain committee reports accompanying the 1974 amendment to the act which removed the exemption for nonprofit hospitals.
And finally, that the rule is arbitrary and capricious.
The court of appeals, we submit, properly rejected each of those three grounds.
It properly rejected the reliance on Section 9(b) because the "in each case" requirement does not preclude the Board from formulating rules of decision that govern in each case, that effectively supply rules of relevance, and that help to assure that like cases will be treated alike.
Unknown Speaker: What do the Mr. Shapiro?
Mr. Shapiro: Your Honor, we think the obligation of the "in each case" requirement is an obligation to apply whatever standards and rules may exist in the context of a particular proceeding to determine the appropriate unit.
If you go back to the history of the 1935 legislation, the "in each case" language was one of a number of amendments proposed by Secretary of Labor Bergens as she described it for the sake of clarity.
That clarification may not have been essential, but it was helpful because the very specific petition requirement of Section 9(c), which the Board later developed and which now appears in Section 9(c), was not a part of the original act.
The original Section 9(c) was a good deal vaguer about how the process worked, and in that context we believe the "in each case" provision was a useful one.
We do not believe that that clarifying language should be given the radical and very destructive definition that petitioner would give it here.
It does not preclude the Board from formulating rules of decision that facilitate a determination that in a particular case there is no genuine issue of material fact.
It does not require the Board to... to reinvent the wheel in each case.
Now, this argument, we believe, has two very strong supports.
One is that very similar arguments have over the past 35 years been rejected by this Court in a series of decisions beginning with Storer Broadcasting back in the 1950's.
The argument has been repeatedly made that particular regulations cannot survive challenge, not because they clash with some substantive provision of law, but because they are at odds with the statutory requirement of an opportunity for a hearing or a statutory requirement of a individualized determination.
This Court has repeatedly rejected those challenges on the grounds they do not undermine the fundamental administrative authority to formulate rules of decision.
It did so in the Storer case in the 1950's, in the Texaco case in the 1960's--
Unknown Speaker: Was there similar language in the Communications Act to the "in each case" language in the Labor Act?
Mr. Shapiro: --In a way it seems to me, Your Honor, that there was stronger language, because in the Communications Act the statute said that if the agency cannot decide that a particular application, a particular license, would be in the public interest, then it was required to set the case for hearing.
Now what the communications decision... commission did was to say that if a station owner already owned five stations, he could not get a sixth.
That was a flat rule.
There was a waiver procedure provided, but the rule in a sense facilitated, permitted summary judgment.
If a station owner already had five stations, there was no genuine issue of material fact that required a hearing.
This language, "in each case", says nothing about a requirement of a hearing, and does not address the sources of law to be applied in each case.
Now the, the precedent of the Storer case has been repeatedly applied by this Court, in Texaco in the 1960's, more recently in WNCN, in Heckler and Campbell, and just last month in the Mobile case.
So not only is there a long line of precedent in this Court, there is also, we believe, a consistent view of the Labor Board that squares with its position in this proceeding.
Unknown Speaker: What were the circumstances, or what was the reason that the Board undertook this rulemaking and arrived at this result, rather than doing what it did for 13 years?
Mr. Shapiro: Well, I think there were a number of reasons, Your Honor.
I think one was that the Board had had a good deal of difficulty both understanding the industry, acquiring enough information, and in persuading the courts of appeals that it was acting consistently with its legal obligations.
The courts of appeals were widely divided on what those obligations were, very widely divided, but they all did seem to agree on one thing, and that is that the Board had to address the problem as a distinctive problem in a distinctive way.
And I think the Board was both responding to that and to its very acute need for more information by undertaking this proceeding.
I also believe that part of what the Board was doing was an echo of what it tried to do in the first St. Francis case, that is the Board was mindful of the admonition in the 1974 committee reports that there should not be too many bargaining units, and one thing it tried to do in its first St. Francis case was to set a ceiling on the number of bargaining units that would be authorized in the industry to prevent the kind of balkanization that had occurred in the construction industry, which is an industry that had a very large number of different skills and crafts, very much like a hospital industry.
And so one of the objectives of this rule, we believe, and a very significant one, was to establish a cap on the number of units which would apply in each case.
Unknown Speaker: You don't think they had any reason just to administrative efficiency or just some abstract value of uniformity--
Mr. Shapiro: I think administrative--
Unknown Speaker: --without which they might have found some of these units to be inappropriate?
Mr. Shapiro: --I think administrative efficiency was a factor.
I think it has been vastly overrated in the argument that Mr. Holzhauer just made.
I think that what was motivating the Board... the Board here, and what it made very clear in its lengthy opinions, was a desire to determine whether despite the variations among hospitals they had enough in common so that as a matter of law they should be treated alike.
That their goal ultimately was to focus on the issue whether a certain class of acute care hospitals had enough in common to warrant this kind of treatment.
They recognize that no two hospitals are alike, just as no two fingerprints are alike, no two people are alike.
The question remains whether a valid legal generalization can be made about fingerprints, people, or hospitals.
The Board concluded that it could.
Now, I think it's probably true, Your Honor, that as a result of the rule individual cases might be decided differently.
Indeed, if that were not so there seems to be little point in having the rule.
And the Board has made a conscious and we believe wise decision that the tradeoff is worth it.
Indeed, there is some indications that deciding of accordance with the rule--
Unknown Speaker: There's a tradeoff, and what's traded off against what?
Mr. Shapiro: --What is traded off is perhaps certain marginal cases where a particular proceeding might be decided differently in the sense that a given unit was inappropriate, and yet it doesn't qualify for the extraordinary circumstances exception and is governed by the rule.
Unknown Speaker: Well, in that kind of a case is the Board really acting consistent with the direction to decide in that particular case what unit is appropriate?
Mr. Shapiro: Yes, I believe it is, Your Honor, because I... I believe that the "in each case" requirement does not stand in the way of the Board's articulating rules that are to be applied in each case.
Unknown Speaker: But you just said that except for this general rule that they have now made, that they would decide the case differently.
If they really got down to brass tacks and decided, and looked at the case, they... you just said they would... might decide it differently.
Mr. Shapiro: Well, yes, they might decide it differently for a wide variety of reasons.
One might turn simply on--
Unknown Speaker: One of them is that the hospitals are different.
Mr. Shapiro: --Hospitals are different.
The question is are they so different that the Board is precluded from this kind of generalization about when units are appropriate.
There are problems involved in leaving decision to the discretion of the adjudicator every time, and in our view 9(b) does not require that.
Those problems include the possibility that the result may turn on the particular three-member panel that is sitting... out of the five members of the Board in that case... might turn on the particular skills of the adversaries.
One of the great virtues of the administrative rulemaking process is to allow agencies to narrow their discretion, not just to avoid costly and expensive litigation, although of course--
Unknown Speaker: But it has been done only in the area of hospitals by the Board, has it not?
Mr. Shapiro: --Your Honor, this kind of regulation is novel.
But I think--
Unknown Speaker: I didn't quite get your--
Mr. Shapiro: --This regulation is novel.
There is no other industry that has a comparable regulation.
But the Board has in fact in the past formulated rules of decision that are not simply presumptions, as petitioner would suggest.
The Board has in the past formulated conclusive presumptions in the area of unit determination.
For example, in the tenth annual report which petitioner relies on where the Board said that under 9(b) they are required to make a decision on the facts of each case, the Board articulated a number of rules that it had developed.
Some of those rules were conclusive rules.
For example, this was before Taft-Hartley, the Board had a conclusive rule that supervisors would never be put into the unit with the people they supervise unless there was a long history of bargaining in that very unit.
The Board had a conclusive rule that confidential employees would not be put in any unit.
The Board had a conclusive rule that people who monitor other people would not be put in a unit with the people they monitor.
In the postal industry, after the enactment of the Postal Reform Act, the Board announced what was essentially a conclusive rule that a petition would be dismissed unless it sought to represent all the employees in a region or section unless it submitted on a nationwide basis.
These were... had it been crafted--
Unknown Speaker: --That was a rule established by adjudication.
Mr. Shapiro: --Yes, Your Honor, but it was conclusive in character.
Unknown Speaker: But it was a very... with a result very similar to this rule that has been adopted.
Mr. Shapiro: Yes.
Yes, Your Honor.
The Board in a wide variety of areas has done its job well in adjudication in establishing a range of rules that vary from mild preferences to very strong presumptions.
For example, in the single facility area the Board has said that units will be restricted to a single facility unless a very strong showing that more than one facility operates on an integrated basis can be made, to rules that are truly conclusive.
We submit it is not a defect of this rule that it increases certainty and predictability.
It's a virtue.
I would like, if I may, to address the admonition in the 1974 reports, because it has been such a large part of the litigation over the years, and because petitioner places so much emphasis on that in its brief.
The Board's view, as articulated in its decision in this case, is that the admonition in those committee reports, which neither accompanies nor explains any relevant statutory language, it does not have any binding legal effect.
The admonition is a request to the committee, to the Board by the relevant committees.
We submit that it is a matter essentially between the Board and the committees of Congress that wrote those admonitions.
Now, we also contend that even if the admonitions were incorporated in the statute itself that the Board has fully complied with their letter and their spirit.
The admonition, to begin with, does not, despite petitioner's heroic efforts, does not speak at all to the choice between rulemaking and adjudication.
And indeed there is nothing in the legislative history of this legislative history that suggests that the admonition is concerned with the choice between rulemaking and adjudication.
The Board... the admonition asks the Board to give due consideration to preventing proliferation.
The Board has done that in this rule in two very significant ways.
First of all, it has paid very close attention to the problem of the number of units.
It has determined on the basis of the record and its experience that there is no domino effect in the hospital industry, that the authorization of a particular unit, and most of the units that have been authorized look like the units that are specified in this regulation, that the authorization of a particular unit--
Unknown Speaker: Are you suggesting that over all these years of litigation about hospitals, that their case-by-case adjudication sort of pointed towards eight units?
Mr. Shapiro: --By and large, Your Honor, yes.
And the units that are specified are the units that in general have been traditionally recognized.
Now, physicians rarely seek units.
Guards rarely seek units.
But the history shows, most of the time by consent and sometimes by litigation, that when registered nurses seek a unit a registered nurses' unit will be authorized.
In fact the two main controversies that have led to litigation are rather limited ones.
One involves registered nurses and whether they should be combined with other professionals, and the other involves separate maintenance workers.
But a report by the Federal Mediation and Conciliation Service shows that of all hospitals that have bargaining units today, 55 percent have only one bargaining unit, 80 percent have two or less, and 90 percent have three or less.
And the Board was conscious of that.
The Board also, as I have suggested, was very conscious of the need to put a cap on the number of units to prevent the kind of balkanization that occurred in the construction industry.
So the Board has ruled that all other professionals are confined to one unit, that all technical workers, despite the very substantial difference in their skills and their functions, are combined in one unit, that all skilled maintenance workers, despite the balkanization od... of workers in other industries, are confined to one unit.
So the Board has been concerned about the numbers problem.
The Board has also investigated exhaustively the question whether the evils thought to come with proliferation are associated with these bargaining units, and the Board has determined that they are not.
The statistics indicate that the strike rate in the hospital industry is quite low, lower than in other industries, and indeed there is empirical evidence to suggest that the size of units, or... I'm sorry, the number of units is inversely related to the likelihood of a strike.
Beyond that there is evidence, and indeed it doesn't take a lot of evidence to know that the larger the bargaining unit, the more disruptive a strike is like to be, especially in the absence of a sympathy strike.
Unknown Speaker: Mr. Shapiro, to what extent... this is to show my ignorance about this area, but to what extent is there room under the regulation for there to be debate and divergence over whether a particular employee is, for example, a professional or a technical employee?
Mr. Shapiro: That question is effectively left open in most areas.
Unknown Speaker: That has to be resolved in each case, does it?
Mr. Shapiro: There are many questions that have to be resolved in each case.
Some questions go to unit determination itself, for example single facility or multi-facility, and many questions go to closely related issues, employee placement, for example, the question that you raise, dual-capacity employees, a wide variety.
In fact, the, in our brief, I think it was at note 14, we indicated a whole raft of questions that remains for determination in each case.
Unknown Speaker: Mr. Shapiro, did I understand you to say that it's very likely that an awful lot of hospitals will, as a matter of fact will not have the eight bargaining units?
Mr. Shapiro: That's correct, Your Honor.
Unknown Speaker: How many... what percentage?
Mr. Shapiro: Oh, I can't give you a percentage, except that I don't think there are many hospitals out there that have been operating under the 1974 act that have any where approximating those... that number of units.
Unknown Speaker: So this... you're saying this is just a ceiling?
Mr. Shapiro: This is a... for all practical purposes--
Unknown Speaker: Just a ceiling, and... so in each case it's going to have to be decided which of the eight units are going to be--
Mr. Shapiro: --Depending on what is sought.
Now, we acknowledge--
Unknown Speaker: --Depending on what?
Mr. Shapiro: --On what is sought.
Unknown Speaker: So it... and, I take it that the Board just isn't automatically going to agree with... every time with what is sought?
Mr. Shapiro: Well, I think the Board has indicated, Your Honor, that if a... let's take a hypothetical.
If a union seeks a unit of registered nurses... that's one of the most controversial areas... and the employer comes back and says I want an opportunity to show that in this hospital a unit of registered nurses is appropriate, let's say because we operate in teams here--
Unknown Speaker: Will they listen to that?
Mr. Shapiro: --Not if that's all that the employer says, unless there is some, as the Board has said, very extraordinary circumstance.
The Board has in fact not only dealt with these cases over many years, but has dealt very exhaustively in the rulemaking proceeding with that kind of argument.
Unknown Speaker: Wouldn't it be the case that sometimes there will be more than one union involved in the case?
Mr. Shapiro: Well, if they're, if they're competing unions which are seeking different formulations, I must say one important question I'm not sure of the answer of, if you have one union that comes into--
Unknown Speaker: Well, at least in each case they're going to have to decide, aren't they?
Mr. Shapiro: --Cases involving rival claims where one union wants a broader unit than another union, my reaction to that is that would be a case that the Board would necessarily have to resolve.
The regulation may be helpful, but I don't quite see how the regulation could determine it if one union were seeking a unit that included what another union was seeking.
But it is true that in the main--
Unknown Speaker: Why wouldn't it?
I thought the rule was that if any of these sub-units is sought, it is granted.
Mr. Shapiro: --That may be.
I'm trying to work this through because I just hadn't thought of it.
If one unit of a union seeks a unit of skilled maintenance workers, and another unit of the union wants a combination, I guess that's right, that the union that seeks the unit of skilled maintenance workers would prevail.
Unknown Speaker: Wouldn't it be pretty unlikely that they would both have a majority--
Mr. Shapiro: It's not inconceivable, particularly if the skilled maintenance workers are a very small number of the larger unit.
Unknown Speaker: --I see.
Mr. Shapiro: But in cases, of course, where combined units are sought, the Board would determine whether that was appropriate in that case.
I would like, if I may, just--
Unknown Speaker: But the Board would take a union's suggestion that, that all technical employees, all skilled maintenance employees, and all business office clerical employees should be included in one unit?
Mr. Shapiro: --If the union sought that?
Unknown Speaker: Um.
Mr. Shapiro: That would... that would be consistent with the regulation.
The Board might not necessarily approve it.
The Board would have to find that that was an appropriate unit.
Unknown Speaker: Yes.
Mr. Shapiro: But the regulation would not preclude that finding.
Unknown Speaker: It would not what?
Mr. Shapiro: Preclude that finding, because the regulation allows a union to seek a combination.
Unknown Speaker: So that in each case there might be different units than what is, are specified in the eight, in the list of eight?
Mr. Shapiro: If the union sought it, yes, Your Honor.
My time is up.
Unknown Speaker: Thank you, Mr. Shapiro.
Mr. Holzhauer, do you have rebuttal?
You have 3 minutes.
Rebuttal of James D. Holzhauer
Mr. Holzhauer: Yes.
It's interesting that the Board refers here to the first St. Francis case, and says that it is basically trying to reestablish the first St. Francis approach.
In that first St. Francis case the Board held that the in each case language of Section 9(b) precludes the kind of presumption that it had in the past that a nurses unit, an R.N. unit, would be appropriate in each and every case.
What this rule does is it says if a union comes and asks for any one of these eight units, that unit is appropriate.
The employer cannot offer facts and circumstances of a particular employer, or a particular workplace, or a grouping of employees to rebut that presumption.
Unknown Speaker: Will the Board inevitably accept the union's choice?
Mr. Holzhauer: The Board will accept the union's choice.
Unknown Speaker: Inevitably?
Mr. Holzhauer: The only time when the Board will not accept the union's choice is if it's inconsistent with these eight units.
Frankly, I think that's as wrong--
Unknown Speaker: What if they... what if the union... what about the question I just asked Mr. Shapiro?
The union comes in and says we want a unit made up of numbers 4, 5, and 6?
Mr. Holzhauer: --The second notice of proposed rulemaking, and the second rule said that we will assume that these are always appropriate.
Now it says in the final rule that no, we're going to look at it because we don't want to have inappropriate groupings together, such as perhaps a physicians and guards unit.
But ordinarily the Board will consider those to be appropriate.
But it will look--
Unknown Speaker: Even though they group these, what would otherwise be separate units?
Mr. Holzhauer: --Right.
Combined units will be regarded as ordinarily appropriate, but not always appropriate, when requested by the union.
They will never be regarded as appropriate when the employer makes that kind of request.
Unknown Speaker: So at least to this extent it has to be case-by-case adjudication?
Mr. Holzhauer: That one issue, where they decide to combine units, yes.
But when, let's say, there's a petition for a unit of registered nurses and the employer goes up, as it can in every other industry and as it has always done in this industry, and says this unit is inappropriate because of the way we staff, or where they say we're going to have a service and technical unit that is separate, as it said for example in the Vicksburg Hospital case, the Jewish Hospital Association case, and all three cases mentioned in the admonition, we're going to say that these units are not appropriate.
The Board is going to say we will not listen to that argument.
We will not consider the facts and circumstances of this employer if the union is asking for one of the eight units that's in the rule.
The argument here from the Board is basically that the 9(b) language adds nothing to the statute.
Section 9(c) requires a hearing in each case.
All the factors that the Board is still going to consider, the issues that they are going to consider, don't go really to which units are appropriate, but go to the kinds of things that are appropriate under Section 9(c) and that have to be decided.
9(b), where it says the Board shall determine the appropriate unit in each case, will be completely ignored.
I think it's useful to look at page 186 and 187 of the Joint Appendix where the Board describes the extraordinary circumstances exception, and where it sets out all of the things it will no longer consider, and I think to compare that with other cases.
Thank you, Your Honor.
Chief Justice Rehnquist: Thank you, Mr. Holzhauer.
The case is submitted.
Argument of Speaker
Mr. Speaker: The opinion of the Court in No. 90-97 American Hospital Association versus National Labor Relations Board will be announced by Justice Stevens.
Argument of Justice Stevens
Mr. Stevens: This case requires us to review the first exercise of substantive rule making by the National Labor Relations Board.
The board promulgated a rule providing that with limited exceptions including an exception for cases presenting extraordinary circumstances, eight and only eight bargaining units are appropriate for collective bargaining in acute care hospitals.
Petitioner, American Hospital Association, brought this challenge to the facial validity of the rule.
Petitioner raised three arguments; first, that Section 9(b) of the National Labor Relations Act requires the board to make a separate bargaining unit determination in each case, those are words from the statute, and therefore, prohibits the board from using general rules to define units.
Second, that, the rule violates a congressional admonition to the board to give due consideration to preventing proliferation of bargaining units in the healthcare industry.
And finally, that the rule is arbitrary and capricious.
The District Court agreed with the second argument and enjoined the rule.
The Seventh Circuit found no merit to any of the arguments and reversed.
In an opinion filed with the clerk today, we affirm the Court of Appeals
The board's rule making powers are not limited by Section 9(b)'s requirement that the board decide the bargaining unit in each case.
The phrase, in each case, simply indicates that whenever there is a disagreement between employers and employees about the appropriateness of a bargaining unit, the board shall resolve the dispute.
Even when an agency is required to exercise individualized discretion in each case, the agency has authority to formulate rules of general applicability to guide the exercise of its discretion unless Congress clearly indicates an intent to withhold this authority.
The rule is not invalid because of the congressional admonition that the board should give due consideration to avoiding proliferation of bargaining unit.
Even if the courts should properly enforce an admonition in legislative history tied to no specific language and a statute, the board in any event complied with the admonition.
An admonition of this sort is best understood as a warning by Congress that it will take legislative action if the board does not heed congressional wishes.
Finally, the rule is not arbitrary and capricious, but is based on a reasoned analysis of an extensive rule making record and on the board's years of experience in the adjudication of healthcare cases.
Our opinion is unanimous.