Cases by Issue - Dispute

BE & K Construction Co. v. NLRB - Oral Argument

Fri, 09 Jan 2009 14:50:27 +0000

Case:

BE & K Construction Co. v. NLRB

Media File:

01-518_20020416-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of Maurice Baskin

Chief Justice Rehnquist: We'll hear argument next in No. 01-518, the BE&K Construction Company v. the National Labor Relations Board.

Mr. Baskin.

Mr. Baskin: Mr. Chief Justice, and may it please the Court: This case presents an important question arising under the Petition Clause of the First Amendment.

Petitioner BE&K Construction is asking the Court to hold that the First Amendment protects objectively based lawsuits from being declared unlawful by the National Labor Relations Board.

Now, the Court has already held that the First Amendment does protect lawsuits from statutory sanction under both the NLRA and the antitrust laws so long as the suits are meritorious, meaning that they are not objectively baseless.

In the Bill Johnson's case, the Court said... and I quote... it is not unlawful to pursue a meritorious lawsuit under the National Labor Relations Act.

In fact, the Court said it twice and specifically cited the Noerr-Pennington doctrine of the antitrust law.

Then it--

Justice O'Connor: How do you describe the test applied by the board?

Mr. Baskin: --Well, the test by the board is one which says that the employer must be... must prevail, must be 100 percent prevailing in the lawsuit.

As a standard that's impossible for any employer to anticipate in advance.

No... no employer can ever be 100 percent sure of prevailing.

Justice O'Connor: Should there be any other component?

I mean, I think your client lost basically.

So--

Mr. Baskin: Well, the question is what was--

Justice O'Connor: --What else should be part of the test?

Mr. Baskin: --The test is what is the... was there an objective basis for the litigation.

It's not a win-or-lose test, as the Court said in Professional Real Estate... and I'll quote again... it's got to be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits.

Chief Justice Rehnquist: Well, should the test from Professional Real Estate automatically be carried over to the Labor Relations Act?

Mr. Baskin: Well, in this case, Your Honor, an answer is yes because the Court itself has interacted with the... both of the acts.

They cross reference with each other.

Bill Johnson's referred directly to the California Motor Transport.

Professional Real Estate referred to Bill Johnson's as if it's one consistent whole.

And it is.

Chief Justice Rehnquist: Well, but I... I wonder if... if the National Labor Relations Board doesn't have some discretion to say that the labor situation is somewhat different, as they apparently do, from the antitrust situation.

Mr. Baskin: Well, but the irony here is that the NLRB has not... has not interpreted its own statute.

It's not being deferred to here.

The NLRB is interpreting this Court's decision in Bill Johnson's.

Justice Breyer: Which happened to say precisely what the NLRB said it said.

Mr. Baskin: Well, no, Your Honor.

In Bill--

Justice Breyer: If a judgment goes against the employer in the State court, if it goes against him, then he's had his day in court.

And then the board may proceed to adjudicate the unfair practice claim, and then the employer's suit, having been proved unmeritorious, the board can take that fact into account when it decides the labor law violation.

Mr. Baskin: --Three--

Justice Breyer: And you've been reading three cases to us, so that seems to be the language that you have.

I... I read that as saying you lose.

Period.

End of the matter.

That's what the board decides.

Now, I put that so you'll reply to it.

Mr. Baskin: --Yes.

Three things in the phrasing that you just said.

First, the Court said the board may proceed, did not say it's an automatic result.

Said may adjudicate the unfair labor practice, did not say it's an automatic result.

And then key phrase, having proved to be unmeritorious, what does unmeritorious mean?

Well, this Court has consistently said what unmeritorious means.

It said so before Bill Johnson's in the Christiansburg case.

Justice Ginsburg: Mr. Baskin, back up a bit.

Mr. Baskin: Yes.

Justice Ginsburg: The... the Court in that very paragraph gave a definition of what it meant.

So, I wouldn't look outside this document for what the Court meant by with merit/without merit when the... look at the sentence in the middle of that paragraph.

It says if the judgment goes against the employer and the State court.

Mr. Baskin: Yes.

Justice Ginsburg: Judgment against you.

Or if his suit is withdrawn or is otherwise shown to be without merit.

Otherwise shown to be merit.

I took that to mean if you lose, it's shown to be without merit.

There may be other situations in which it's shown to be without merit.

So, it seems to me the best place to find out what the Court meant merit/without merit is the very opinion that we're construing.

Mr. Baskin: Yes, and if it were the holding of the opinion, it would have greater weight.

But this is not the holding that we're talking... that we're parsing out here.

This is dicta because the essential--

Justice Souter: Well, there are two responses to the dicta point it seems to me.

The first one is it was dicta, but it was dicta that preceded a remand in which this issue in fact would be explored.

And the second response is the... as I understand it, the board itself has followed the... the dicta for... I forget how many years now, but consistently followed it and Congress has done nothing about it.

So, A, query whether it's dicta, and B, even if it is, isn't it the kind of dicta that at this point definitely should be followed?

Mr. Baskin: --It is clearly dicta because the Court stated what was the issue before it, and the sole issue before it in Bill Johnson's is stated at the beginning of the opinion, whether the NLRB may issue a cease and desist order to halt the prosecution of a State court civil suit brought by an employer to retaliate against employees.

And the holding of the case, which analyzes the First Amendment at great length, says that the right of access to the courts is too important to be an unfair labor practice.

And it also defines meritorious as being reasonable basis, language in the Court's opinion.

Justice O'Connor: I think there's another element that you're ignoring.

I thought the board looked both at whether it was a meritless lawsuit against the unions and whether it was for a retaliatory purpose.

Mr. Baskin: Yes.

Justice O'Connor: Isn't that the other element?

Mr. Baskin: Yes.

Both elements must be present.

Justice O'Connor: Okay.

And how do we define retaliatory purpose?

What... what constitutes that--

Mr. Baskin: Well, it's--

Justice O'Connor: --do you think, in the board's rule?

Mr. Baskin: --Yes.

It's very... pretty much the same as the improper motivation purpose test that was in the Professional Real Estate case, which also has the two-part test.

You look at the objective basis first, and then and only then if there's no objective basis, you look at whether there was a retaliatory motive.

And how that's defined, although the Court did not grant cert on that issue, we contested vigorously the... the board's finding of retaliatory motivation here... because in fact the board has made it a rubber stamp.

It's become automatic if the case relates in any way to union activity, the board finds that it's retaliatory motivation.

But the first part of the test is an objective one that the Court has spelled out both in Bill Johnson's itself and in Professional Real Estate.

And to take any... to take the board's standard puts employers in an impossible situation.

It is unworkable.

Going back to the question of dicta or not, you have ambiguous language at best because we have several different references to meritorious throughout the Bill Johnson's opinion.

Justice Stevens: May I just ask this, Mr. Baskin?

Do you think there is a distinction between an ongoing case and a completed case?

Mr. Baskin: It's one mostly as to timing and facts available to the board, and I think that's what the Court was--

Justice Stevens: But the... in your view, the standard is the same.

It's not that the board tries to enjoin the proceeding as... as opposed to later on bringing an unfair labor practice after it's over.

Mr. Baskin: --The substantive standard should be the same.

Justice Stevens: It should be, but--

Mr. Baskin: Should be.

Justice Stevens: --do you think that Johnson says it's the same?

Mr. Baskin: We're all here today because the language in the tail end of the Bill Johnson's opinion is ambiguous as to what they intended the standard to be.

Justice Stevens: But at least it says there's a different standard.

Mr. Baskin: As to... the... the impact was--

Justice Stevens: And your view is there should be no different standard.

Mr. Baskin: --Correct.

Justice Stevens: And that's the whole key to the case.

Mr. Baskin: That really is the whole key to the case.

Justice Breyer: And why not?

Justice Scalia: Mr. Baskin, is your... is your argument... in your opening remarks, you... you referred only to the First Amendment.

Is... is it... is it a constitutional argument you're making?

To... to agree with you here, do I have to agree that if Congress passed a law adopting the English rule on... on attorney's fees, that would be unconstitutional?

Mr. Baskin: No.

We are not saying that.

We are not seeking to constitutionally... we are asking no more than that you apply this standard to the two statutes you've already applied it--

Justice Scalia: Which says... so, it's a statutory argument.

Mr. Baskin: --No.

It is a constitutional and statutory argument, which is what the Court itself said in both of these cases because there's a sanction involved.

Justice Scalia: That's too fuzzy for me.

I don't know what you mean by a... is it... does the Constitution prohibit it or not?

Mr. Baskin: It prohibits a statute from prohibiting it.

Justice Scalia: The Constitution prohibits.

So, your answer to my question is--

Mr. Baskin: Constitutional and statutory.

Justice Scalia: --You... you cannot... that Congress could not adopt the English rule.

Mr. Baskin: No.

The difference... here's the important difference.

Justice Scalia: It would do that by statute.

Mr. Baskin: But is there an... a declaration of unlawfulness involved?

There are many fee-shifting statutes.

We're not taking issue with mere fee-shifting, but the National Labor Relations Board is saying that BE&K broke the law, and that's what also happened under the antitrust laws.

They're saying... they're issuing a cease and desist order from filing so-called nonmeritorious litigation.

Justice Ginsburg: But the fact that it's triple damages is a little different than fee-shifting.

So, one could easily say, when you're exposed to treble damages, putative damages, yes, that's a punishment.

Here fee-shifting is the rule in most countries in the world.

So, what is the more here?

I understand the more in antitrust cases, treble damages.

Here you say, well, there's a finding that you have committed an unfair labor practice.

What are the consequences in addition to that you have to pay the other side's legal fees?

What are the adverse consequences--

Mr. Baskin: First, the most important is the declaration that you are a law violator in and of itself.

You have to post a notice for your employees not only at this job site but all across the country.

You have your... your customers become aware of it.

The unions certainly make sure your customers become aware of it.

There's the serious danger of debarment either privately or by governmental action.

Justice Ginsburg: --Explain that.

You did say that in your brief about debarment, and I didn't... I can understand when you say someone... someone's reputation is affected by being labeled a law violator.

But you said something about... about the jeopardy of debarment and I wasn't clear how that would work.

Mr. Baskin: It's not meant in the legal sense and the Government... we're not... we're not talking about whether the Government has to debar the company, but both private actors and many Government contracting officers take the view they don't want to deal with people who have been declared to be law violators.

The goodwill and reputation of the company is at stake.

Chief Justice Rehnquist: Well, in our lower case, the... Wisconsin set out to do that on a State basis, didn't it?

If you violated the Labor Act, the State was not going to deal with you.

Mr. Baskin: Yes, they did.

And then the Federal Government just last... 2 years ago in the previous administration, had come through with a set of rules saying that companies would be debarred if they were found to have violated labor laws.

So, having this... a declaration of illegality in place is what makes this different, Justice Scalia, from a random fee-shifting statute, and that's why we are not asking you to do anything other than what you've already done, which is to apply the First Amendment to two statutes which you have determined have great commonality over the years, as each one keeps referring back to the other in this doctrine.

Justice Ginsburg: What do you do with the 2 decades that have elapsed... about 2 decades... since Justice White's opinion which has been interpreted by the board the way the language most naturally reads?

The one thing is to say when the case first came out it was ambiguous.

But now we have 2 decades of consistent interpretation of that language by the board.

Mr. Baskin: I regret to say it's a tribute to the speed of the board's processes and the process of getting this case up to this level on this issue because this case alone has taken 7 years to work its way through the board.

When the litigation was begun in this case, it was 1987.

The Bill Johnson's case was fresh.

There was considerable doubt as exactly... as to exactly what it meant.

I should note that in the district court opinions that are part of the appendix, the unions raised Bill Johnson's and said that it... they were protected under it, citing it interchangeably with Professional Real Estate.

Justice Stevens: They won over half their cases, didn't they?

Mr. Baskin: Excuse me?

Justice Stevens: Didn't they win... they won some 15 out of their 29 cases.

Mr. Baskin: Depending on how you count, they just barely got over 50 percent.

Justice Stevens: Did you ask... talking about the history of the case, could you tell me how did this case end up in the Sixth Circuit?

Mr. Baskin: Well, in fact, by the time this case got to the court of appeals, BE&K was no longer doing business in California.

The gravamen of its doing business was in the Sixth Circuit.

Justice Stevens: I see.

Mr. Baskin: And that's why the decision was made--

Justice Breyer: I'd like you to address, if I can go back to the... what I think was the Chief Justice's question.

Your... your basic point, I take it, assuming with you, as I will, for the moment that the language is ambiguous in Bill Johnson, is that we should treat or the statute should be interpreted as treating the antitrust statute and the labor statute a case brought by a defendant the same way.

And obvious differences, which I'd like you to address, are that, one, there is a history in the labor law of employers using cases brought at law either to break unions or to win disputes.

And that was one of the reasons why the NLRA was passed.

That had nothing to do with the antitrust laws.

There is no such history.

Second, the employer... the... the matter is committed to an expert board in the labor area, which apparently believes that the way to enforce the labor law, unlike the antitrust law, is to say the sham exception exists before the case is decided, but once the case is decided, we're going to keep employers out of the courts by saying if they lose, that's the end of any immunity that they get.

And we will now look to what their motive was in bringing this lawsuit.

We have an expert board.

We have a different history.

We have different statutes.

Mr. Baskin: --The--

Justice Breyer: And now, what is your response?

Mr. Baskin: --The irony is that the Court considered those purported differences in the Bill Johnson's case and rejected them.

Justice Breyer: All right.

Obviously... look--

Mr. Baskin: No, no.

I'm talking about the first part.

Justice Breyer: --I... but I'm trying to stay away from Bill Johnson because obviously if you're right that the statute holds it, I mean, I... all right.

Go ahead.

Sorry.

I didn't mean to interrupt.

Mr. Baskin: Well, to me it's... the interesting thing about this case is the Court has itself considered these very questions that you're raising and you have answered them, and you do not need to revisit them to... to come out with the conclusion that the NLRB has either misinterpreted the standard or that the standard is unworkable.

Justice Kennedy: Well, but I... I have... I have the same question that I think underlies Justice Breyer's concern.

You would seem to give zero weight to the board's interest in stopping a purely retaliatory suit.

The board says, now, you have organized this clerical unit and if... if you persist in your union activity, we're going to sue you for the way you've been keeping our books.

We're going to sue you for malpractice, blah, blah, blah, blah.

And so long as there's any basis for the suit, they can do that in your... or am I misstating your view?

Mr. Baskin: Well, only in one respect.

It has to have an objective basis.

We are not here defending sham litigation, baseless litigation.

Justice Kennedy: Well, I suppose there's always abuse of process if there's... but if there's some basis, then you can use it specifically to retaliate.

Mr. Baskin: More than some.

It must be reasonable basis.

And yes, yes.

Justice Kennedy: You can specifically use it to retaliate.

Mr. Baskin: The Court... this Court has said that if there is an objective basis, that means it's a meritorious lawsuit.

Then there may also be a motivation of retaliation.

Weighty, countervailing considerations.

Justice Kennedy: But... but we're talking... we're talking in... in the labor context.

Mr. Baskin: Yes.

Justice Kennedy: And you lose the suit.

So, there's... you do not... you're not the prevailing party in the suit.

And you... you lose on the merits.

There's nothing the board can do about it if you've done it specifically to retaliate and for no other purpose.

Mr. Baskin: If it is a reasonable, meritorious suit, as this Court has defined it, where the right of access to a court is too important to be called an unfair labor practice solely on the ground that what is sought in the court is to enjoin employees from exercising a protected right because of the First Amendment to the Constitution, the right to petition the courts with a meritorious lawsuit.

Justice Stevens: But the First Amendment argument goes by the boards once the case is over.

Mr. Baskin: No, Your Honor, because... for the same reasons that the Court held in Professional Real Estate.

The employer has the right not to be second guessed with 20/20 hindsight as long as it had a reasonable basis for the suit.

Justice Souter: Yes, but that ignores the fact that we're not concerned solely with chilling; we're also concerned with retaliation.

And if we didn't have the retaliatory character of the lawsuit involved, I would think you would have a much stronger argument as you just made it.

But the retaliation is there and I don't see how we can accept your... in effect, your chilling argument without ignoring the retaliatory character.

Mr. Baskin: Because the employers are being chilled and, in effect, the retaliation--

Justice Souter: Well, they're being chilled in... in engaging in retaliation for the exercise of statutory rights.

Mr. Baskin: --But there's actually less retaliation that's going to take place once the suit is completed.

If that were the standard, then the board should be instructed to intervene sooner to keep the employees from having to spend more money to defend themselves.

Justice Souter: And the... the answer to that, it seems to me, is set out in the cases.

We've got a... we've got a federalism interest in letting the State courts at least adjudicate their cases.

So, that's the answer to that objection.

Mr. Baskin: Well, here there's even a more compelling interest.

You have two statutes, Federal statutes, that the employer was invited to file lawsuits under.

Justice Souter: All right.

Let's go back then to the... to the difference between the two Federal statutes.

The premise of Justice Breyer's question a moment ago accepted the ambiguity.

If we are not that indulgent and if we read Bill Johnson's the way Justice Ginsburg read it... and I will be candid to say I read it... number one, the ambiguity does not leap out at us.

And number two, I'd like to go back to Justice Ginsburg's question.

Even if we assume there was ambiguity at the beginning, we have had 20 years of board practice which seems to me to have dissipated any ambiguity.

What's your response to that?

Mr. Baskin: Well, the ambiguity was in the opinion that led the board to take an erroneous view--

Justice Souter: That's right I believe, and the board has made it very clear how the board is reading it, and after 20 years, we've got a pretty clearly settled body of law, haven't we?

Mr. Baskin: --Well, a settled body of erroneous law.

And is that what the Court--

Justice Souter: And we're interpreting statutes... the... the settled body is clear and Congress is apparently quite agreeable to it.

Mr. Baskin: --Well, first, the Court has said you don't defer... that... that you can't read anything into congressional inaction, particularly when it has taken this long before the board ruling really was definitive.

And it has taken that long.

The issue has been in doubt for most of that 20-year period.

But the... going beyond that, the... the board--

Justice Scalia: I don't understand that.

Why do you say it's been in doubt for most of the 20-year period?

Mr. Baskin: --Because it's been in doubt.

Cases like this one have been taking a long time to wind their way through the process.

At each step, the board said, well, we think that it... there... it was contested, as the board said--

Justice Scalia: You mean it has been contested constantly during that--

Mr. Baskin: --Yes.

Justice Scalia: --20... 20-year period?

Mr. Baskin: Absolutely.

Justice Souter: Has the board ever taken a different position in the 20-year period?

Mr. Baskin: There have been dissents, but no, the board has generally taken a consistent view.

Justice Souter: So, the board's position has been clear for 20 years.

Mr. Baskin: Yes, but the board--

Justice Souter: The board is slow.

It may take the... the cases may be in wending their way through.

Mr. Baskin: --But the board is not entitled to deference in its interpretation of the U.S. Constitution or of this Court's decision.

And that's all that we're talking about here is the board's interpretation of the Constitution and this Court's opinion.

It's not interpreting the statute.

Justice Souter: I think we're not raising... I think Justice Ginsburg's question and my question is not so much geared to an issue of deference.

We're... we're trying to... to get at the... what seems to us the fact that the law has become settled.

It may require no deference.

It may have become settled because an administrative agency was interpreting what you think was an ambiguous opinion of this Court in the first place.

But it seems to have become settled.

And there is a good reason, which underlies ultimately our... our approach to stare decisis in statutory cases, for letting settled statutory understandings stayed settled unless the legislative branch wants to change them.

And that's the argument we're getting at, not deference.

Mr. Baskin: Well, it is... stare decisis is a form of deference, and we're talking about stare decisis would apply to the Court's own opinion.

Only this Court is required to defer to itself about its own opinion.

Your... and so that's why we are talking about deference, I would submit.

At least I interpret your question as asking should you stick with what the board has come up with.

This Court has not ruled on--

Justice Souter: I'm saying that--

Mr. Baskin: --on Bill Johnson's since Bill Johnson's.

Justice Souter: --I'm saying that in... as... as your own answers indicate, for 20 years there seems to have been a... a settled practice on the part of the board which at best is not inconsistent with our opinion.

Why shouldn't we let a settled statutory regime stay settled unless the legislative branch wants to change it?

Mr. Baskin: I contest that it's a settled statutory regime, that we are dealing with a First Amendment right, and that the board's outcome, which it has taken this long to reach back to the court, is wrong under the First Amendment.

It has proved to be unworkable and it subjects employers to the impossible situation in future cases and in cases going on right now that they are expected to have 100 percent certainty of the outcome.

Indeed, the... the board could, under this standard, say that you can win a jury verdict, go... have it upheld by the district court, only to be reversed by an appeals court, and still be found under this Court's standard to be nonmeritorious and you lose.

You have... you have violated the law.

Justice Kennedy: If there's a retaliatory motive.

Mr. Baskin: If there's a retaliatory motive.

And that's all it takes.

There's a retaliatory motive.

You go through all of that based on an attack on your businesses, which is why employers tend to file these lawsuits.

They don't like lawyers that much, don't want to spend the money to do it, but they're under attack.

BE&K was under attack in every conceivable forum.

Justice Breyer: But, I mean, that's a normal problem, isn't it, with the labor statutes and most other statutes.

It forbids retaliatory behavior.

Of course, you'll have cases where people make the wrong decision about it, where it's hard to predict, and so forth.

But that's the general situation.

Mr. Baskin: Well--

Justice Breyer: We're trying to carve out a... an exception where you're home free from that.

Mr. Baskin: --Well, no, it's the board that's carving out an exception from the basic First Amendment protection that this Court has recognized already.

Justice Ginsburg: Mr. Baskin, that... that goes back every time to how you construe this paragraph, and so if the position that Justice White is making a distinction here between, on the one hand, an ongoing proceeding... the First Amendment says you can't stop it.

Never mind deference to State courts.

That's another consideration that weighs it to the same end, but traditionally under the First Amendment, a prior restraint, stop it, has been what the Court has looked at most cautiously.

Then Justice White tells us, but it's different once the adjudication is over.

The... the line between prior restraint and subsequent punishment goes all the way through First Amendment learning, and you treat this as, well, ambiguous, but if it were clear it's that there's any difference between stopping an ongoing proceeding and looking at a situation after it's been adjudicated?

Mr. Baskin: There... there can be a difference, mainly the difference of having more facts, having an outcome in front of the board at that point.

And what the Court wanted to get across... the issue in front of the Court in Bill Johnson's was don't interfere with an ongoing lawsuit.

We don't know how it's going to turn out.

All right.

Once it turns out, if it's without merit... meritorious... I'd just invite the Court to look at each use of the word meritorious in the Bill Johnson's opinion.

You will regrettably find some inconsistencies not only internally but with other opinions of this Court both before Bill Johnson's and after.

You have the opportunity to clarify the law now in a way that is very straightforward under the Professional Real Estate Investors test.

If there are no other questions, I'd like to reserve the remainder of my time for rebuttal.

Argument of Lawrence G. Wallace

Chief Justice Rehnquist: Very well, Mr. Baskin.

Mr. Wallace, we'll hear from you.

Mr. Wallace: Thank you, Mr. Chief Justice, and may it please the Court: The board and the courts of appeals have had no difficulty in reading Bill Johnson's the way I think most people would read this Court's opinion as comprehensively addressing what the board was doing with respect to the unfair labor practice under section 8(a)(1) of the filing of--

Chief Justice Rehnquist: Mr. Wallace.

Mr. Wallace: --retaliatory lawsuits.

Chief Justice Rehnquist: Mr. Wallace, when I ask you a question, please stop.

Mr. Wallace: I didn't hear you.

I'm sorry.

Chief Justice Rehnquist: Well, listen a little more closely.

Do you disagree with Mr. Baskin's contention that the word meritorious is used inconsistently in the part of Bill Johnson's that we're talking about?

Mr. Wallace: I do disagree with that, and... and no court of appeals that has reviewed board decisions since Bill Johnson's has read it that way.

The Court quite clearly distinguished between enjoining ongoing lawsuits, which it said could be done only if the lawsuit was baseless.

Otherwise, the board has to wait until the lawsuit has been resolved.

If the lawsuit turned out favorably to the employer, then it could not be an unfair labor practice.

But if the lawsuit turned out to be unmeritorious, if the employer lost, then the board could consider whether it was filed for a retaliatory purpose.

Justice Scalia: It did say that, but of course, that was not the situation before the Court.

I mean, it... it may be the clearest dictum in the world.

It may be the dictum closest to a holding possible, but it is still dictum.

The Court did not have before it a case in which the employer had already brought the suit and had lost.

Now, you know, it said what would happen in that situation, and you know, I think that's entitled to some weight.

But the issue that your opponent wants to argue here is whether the Court was wrong to say that.

Mr. Wallace: I beg to differ.

The Court specifically noted that some of the claims of the employer had already been dismissed in the State courts, and in footnote 15, at the end of the... its opinion, it said the board, therefore, can use the criteria we--

Justice Scalia: But those cases were not before them.

It said what the board can do in those cases that are not now before us.

As I say, it may be a dictum that is the very next thing to a holding, but it is not a holding.

Those were not cases that the Court had in front of it.

Mr. Wallace: --It... it was a direction for how further proceedings in the case should be handled.

Justice Scalia: Exactly, as many dicta are.

As many dicta are, and we do not always observe those directions when we... when we have the opportunity to examine the matter in a... in a more immediate context.

Mr. Wallace: In any event, if I may turn now to address the question that the Court asked the parties to address in formulating the question presented here.

Our submission in this case is that this Court's holding in Professional Real Estate Investors interpreting the antitrust laws and the Court's decision in Bill Johnson's, including this... these dicta to govern further proceedings interpreting the National Labor Relations Act, are entirely compatible with one another in light of the important differences in the purposes, processes, remedies, and practicalities of enforcement that were implicated in the two statutory schemes at issue.

Justice Scalia: Well, I... I have one particular difference in mind that I'd like you to comment on.

I... I... it's... it seems to me that what is sought to be done here is much worse as far as the independence of the courts and the guarantee of access to the courts by... by the citizenry is concerned than what was sought to be done in... in... what case... Professional Real Estate.

And this is the difference.

In Professional Real Estate, it would have been the courts that would have decided the facts which would have imposed upon the losing party attorney's fees.

In this situation, it is going to be the Labor Board that will decide the factual question of whether there was a retaliatory motive, and the courts will have to defer to that factual finding if there is a basis in the record, whether the courts agree with it or not.

I find it quite offensive to think that Article III courts are going to be told that certain people who have come to them for relief will pay a penalty for doing so on the basis of a retaliatory motive found not by Article III courts at all but by the labor court... but by the Labor Board.

In that respect, this case is much worse than... than what was going on in... in Professional Real Estate.

Mr. Wallace: Well, the board is not contradicting anything found by the courts.

The question of retaliatory motive was not at issue in the underlying litigation, and the board has to wait under this Court's decision in Bill Johnson's before it addresses the question of whether there's been an unfair labor practice--

Justice Scalia: They will address it in a proceeding before the board.

They will find an unfair labor practice on the basis of their finding of a retaliatory motive.

And I... I note, by the way, as to, you know, how... how much we can trust those... those findings... I had one of my law clerks look up how many... how many times the board has imposed this kind of an unfair labor practice penalty for... for bringing a lawsuit.

Since the Power Systems case in '78, which is when they started this process, they have 26 decisions ordering the employer to pay attorney's fees incurred in defending a lawsuit and 3 decisions in which it... it ordered a union to do so.

Now, is... is there some reason that unions are not using lawyers as much as companies are these days?

Mr. Wallace: --Well, the... the cases against unions are much less numerous to begin with because unions are less apt to bring lawsuits to interfere with the rights of employees under section 7 for concerted activity.

We're talking about a retaliation against section 7 rights.

Usually that's been the subject of employer suits, but the board does apply the same test when--

Justice Scalia: There were union lawsuits in this present case, weren't there?

Plenty of them.

Mr. Wallace: --But those were against the employer, and... and they--

Justice Scalia: But suits... suits against the employer can certainly be brought to impair the... the rights of the employees not to... not to unionize.

Mr. Wallace: --That would have to be a showing a violation by the union of 8(b)(4), not... not that the lawsuit was an 8(a)(1) violation against the concerted activities rights of employees.

The employer would have to show that the union lawsuit violated duties that the union owes, and that was resolved against the employer on the merits in this case because the... the subject of the lawsuits was about working conditions at the site of employment, which was a legitimate union concern.

Justice Scalia: Never... never mind the 26 to 3.

Just... just tell me why I... as... as an Article III judge, I should not be concerned about leaving it to a Federal agency to make the factual finding that will determine whether somebody will be punished for bringing a reasonable lawsuit, although one which ultimately loses in Federal courts.

Why shouldn't I be concerned about that?

Mr. Wallace: Well, this isn't punishment.

It's make-whole relief under an administrative scheme which is meant to protect employees in the exercise of their concerted rights, and it involves no contradiction of any issue that was before the... the court in the underlying litigation which did not have occasion to address whether the suit was brought for a retaliatory purpose.

Justice Ginsburg: Mr. Wallace, Mr. Baskin told us that there are punitive aspects to this that could lead to debarment he said.

So, it's not simply to provide for fee-shifting, but that there are heavy consequences.

Mr. Wallace: Well, the... the case to which the Chief Justice referred earlier, Wisconsin Department of Industrial Relations against Gould, was one in which this Court held that Wisconsin law was preempted, and Wisconsin could not refuse to make purchases, State purchases, from companies that had been found to have violated the National Labor Relations Act because the whole purpose of the remedy scheme under the National Labor Relations Act is remedial and the remedies are limited, and the idea is to get labor disputes behind us, not to have disruptions of the economy, to keep productivity going, and to keep the people employed.

Justice Kennedy: Well, is... is the point of this colloquy whether or not this act can be called punitive or this NLRB doctrine can be called punitive?

I... I had thought you said that it is punitive, or am I wrong?

Maybe you think nothing... maybe you think nothing turns on that.

Mr. Wallace: Well, I... I wouldn't think that... that anything would turn on it, but it is not punitive.

The only remedy that's granted is a make-whole remedy that the costs incurred by the prevailing defendants in a suit brought for an improper motive, namely to coerce those defendants in the exercise of rights granted them by Federal statute when suit turned out--

Justice O'Connor: But is there any other effect by virtue of the finding of the unfair labor practice?

Mr. Wallace: --Well--

Justice O'Connor: I mean, true in terms of money, it's the fees.

Is there any other effect-- --by virtue of their finding?

Mr. Wallace: --Notice is to be posted.

The cease and desist order issues.

Those... those parts of the remedy were not challenged in this case.

Justice Scalia: Well, let's just talk about the make-whole remedy.

We held in 1982 that in a private suit for an unfair labor practice, which provides for making whole the... the plaintiff for... for his damages, there was no authority in the court to award attorney's fees, that making whole there did not include attorney's fees.

What... and... and, you know, the language was very clear about the American rule and what a... what a change it would be.

Why... why should it be any different when the unfair labor practice is... is decreed by the board rather than in a private action?

It doesn't say explicitly that you can get attorney's fees, just as... just as the other... the... the private action provision didn't say explicitly.

It just said, you know, whatever damages you have.

And damages were not intended to include that.

Why should we hold any differently in this situation, especially when the result is to leave it to the board to decide whether... whether somebody will be punished for bringing a meritorious but ultimately unsuccessful suit in Federal court?

Mr. Wallace: Well, board proceedings are much less burdensome than... than court proceedings to those that are issue, and the Court held in Bill Johnson's that the board remedy of recompensing the defendants who prevailed in this suit for their costs, because the suit was brought to defeat their section 7 rights, was a permissible remedy by the board.

Justice Scalia: We held it or... or said it.

I mean, that... that's one of the disputes here, isn't it?

Mr. Wallace: Yes.

They held it in the sense of... of prescribing that rule for the further proceedings to be held in that very case on remand from the Court's order.

Justice Scalia: We're just going around the dictum point again.

I consider it dictum, and... and the issue is whether that was a wise thing to say.

Mr. Wallace: Well, when the Court prescribes a rule of that nature, the United States considers itself bound by it in its further handling--

Justice Scalia: Yes.

I'm... I'm not criticizing you for arguing the point, certainly not.

Justice O'Connor: Mr. Wallace, I... do you agree that under the board's rule here that it does allow the board to find the unfair labor practice and impose the sanctions on litigation brought by employers that is not limited to just shams and abuse of process?

Mr. Wallace: --That's--

Justice O'Connor: It does allow the imposition of these things for an employer suit that could be considered objectively reasonable at the time it was brought.

Mr. Wallace: --Exactly so.

That... I thought the Court made it quite clear in Bill Johnson's that as long as the suit was an unmeritorious one, in the sense that it did not prevail, the board could afford the limited remedy that's available under the act.

Justice O'Connor: Well, does that have the necessary effect of at least chilling some conduct that is protected by the First Amendment?

I mean, it seems to me it does.

You have to... you would have to concede that it does.

Mr. Wallace: But it... it's a far less daunting situation than what the Court was faced with under the antitrust laws in the Professional Real Estate Investors case.

Justice Stevens: Mr. Wallace, isn't it correct that the scope of chilling is limited to those with a retaliatory motive?

Mr. Wallace: Absolutely.

Justice Scalia: I thought it's where the board finds--

Justice Stevens: --should be chilled in those cases.

Justice Scalia: --to those where the board and not Federal courts on their own find a retaliatory motive.

Mr. Wallace: But, of course, the board's findings are subject to judicial review.

Justice Scalia: For... so long as there's substantial evidence, which means... you know.

Mr. Wallace: Correct.

Justice Breyer: All right.

So--

Justice Stevens: --In every 8(a)(1) case, the retaliatory motive is found by the board.

That's part of the statutory proceeding, isn't it?

Mr. Wallace: That is correct.

Justice Scalia: The other parts of this statutory proceeding do not exclude the Federal courts from their business, do they, which this does by imposing penalties upon people who come to the Federal courts?

Mr. Wallace: Well, I think this Court's make it quite... this Court's decisions make it quite clear that under the National Labor Relations Act, it is board rather than courts that have the responsibility of ruling about unfair labor practices.

Justice Scalia: We agree with that and the only issue is whether that statutory provision places within the board the power to impose this particular sanction for an unfair labor practice, a penalty for bringing a meritorious lawsuit.

Mr. Wallace: Well, make-whole relief--

Justice Breyer: Isn't the make-whole relief simply that they've said, since ours is a statute which foresees taking labor disputes out of the courts and putting them into the board, since that's why it was passed, we're going to say a... a loser in a Federal lawsuit that violates that basic underlying purpose has to pay attorney's fees to the winner?

Now, is there anything here other than that?

Mr. Wallace: --Not... not at all.

That's... that is what is at issue, and the... the National Labor Relations Act authorizes the board, under this Court's opinion in Bill Johnson's, to afford that kind of a limited remedy--

Justice Stevens: Well, isn't what--

Chief Justice Rehnquist: --Is the courts'... is the board's definition of a unmeritorious lawsuit simply one which... in which the plaintiff does not get what the plaintiff wants.

It's thrown out of court, so to speak.

Mr. Wallace: --That's approximately it, yes, Mr. Chief Justice.

Chief Justice Rehnquist: How... how would it vary?

Why do you use the term approximately?

Mr. Wallace: Well, there can... there can be cases in which a voluntary dismissal was taken with prejudice.

Sometimes the question of whether it was an unmeritorious suit becomes a debatable question.

But ordinarily it's one, as it was in this case, in which the courts have ruled against claims that the employer made.

Justice Breyer: Is... is... I'm sorry.

Is there any authority?

I mean, I thought, as a matter of proposition, maybe there would be some authority like a... an electricity generating regulator would have said in certain kinds of lawsuits, you have to have fee-shifting.

The SEC might say in certain kinds of lawsuits, certain companies have to pay attorney's fees.

The barbers' regulator might say in certain union... or certain... certain instances the barbers have to pay the legal fees of somebody else.

Is... is there any comparable authority any other place that you've found?

It... it doesn't seem to me an absurd proposition of law or of constitutional law that a regulator who's in charge of a particular group of individuals or businesses says in particular circumstances there will be fee-shifting.

But maybe that's total... maybe this is the only case that's ever come up.

Mr. Wallace: Well, we... we didn't come up with analogies in which regulatory agencies do the fee-shifting.

There are certainly many statutes that provide for fee-shifting.

The Fogerty case discusses a number of them.

Justice Scalia: But they have to be very explicit because it's such an extraordinary thing.

That's what our jurisprudence very clearly says.

And here with... with no more explicitness than there was in the case in Summit Valley, the... the agency is assuming the power to fee-shift and to make the factual determination upon which the fee-shifting turns.

I think that's extraordinary.

Mr. Wallace: Well, there is not a reference to fee-shifting as such in the National Labor Relations Act, but Congress did say in section 8(a)(1) that it shall be an unfair labor practice to an employee to interfere with, restrain, or coerce employees in the exercise of the concerted activity rights for mutual aid and protection that are guaranteed in section 7.

And this Court in Bill Johnson's recognized that there had been a history of the use of the courts for that purpose.

Justice Ginsburg: Mr. Wallace--

Justice Kennedy: --In... in a case like this, if we have essentially these facts, if the finding of the board was is that the purpose of the employer in bringing the suit was because the employer's board of directors met and they say, we are being hurt in the marketplace, public opinion is against us, we must bring these suits to protect our position in the business community, I take it that is a retaliatory motive.

Mr. Wallace: Well, the retaliatory motive would be... it would have to be shown that the suit was brought for the purpose of coercing, discouraging, suppressing, restraining the employees in the exercise of their rights.

Justice Kennedy: Well, but you... you know what I'm trying... trying to get at.

The... the union is doing these to weaken the employer and the employer meets and says, this is hurting our business, it's hurting us in the marketplace.

Is that retaliatory?

Mr. Wallace: Well, the... the board addresses that question in light of all the circumstances of the case.

To the extent that the suit was not baseless in law or fact that the employer brought--

Justice Kennedy: Assume... assume that there... it's not baseless.

Mr. Wallace: --That weighs in the employer's favor.

There are other factors that weigh against the employer.

In this--

Justice Kennedy: But it can be retaliatory for the employer to protect its business against suits by the union which are brought by the union for the motive of weakening the employer.

That's retaliatory.

Mr. Wallace: --Well, only if the employer has brought suits against the union or the employees.

It certainly can defend against any suit--

Justice Kennedy: No.

It's been bringing suits in order to stop the other suits.

Mr. Wallace: --Well--

Justice Kennedy: Let... let me ask you in a related vein.

Maybe it's an unrelated vein.

Can... could Congress overrule Noerr-Pennington?

Mr. Wallace: --This Court did not indicate in any way that it could not reexamine, modify the rules of Noerr-Pennington or of Professional Real Estate.

The Court--

Justice Kennedy: In other words, Noerr-Pennington doesn't have a constitutional underpinning.

Mr. Wallace: --It... it certainly construed the antitrust laws in light of the fact that those laws focus mostly on private conduct in the marketplace, not on petitioning for Government-imposed restraints, and that there was a need in construing them not to... to allow improper chilling of the bringing of lawsuits or other forms of petitioning activity.

And in... in Professional Real Estate itself, the procedural posture focused on the need for summary judgment to be available against a counterclaim for treble damages under the antitrust laws in circumstances in which the counterclaimant, after the underlying copyright infringement suit was found to be objectively reasonable, was saying, but I still need further discovery in order to ascertain the intent and motives of the original plaintiff in bringing the copyright infringement suit because it's my view that... that they didn't really expect to prevail and that they were bringing it for anticompetitive purposes.

And the danger that the Court was addressing there was that much of the protective quality of the Noerr doctrine itself could be undermined if the original lawsuit that supposedly is protected could be chilled by the prospect of burdensome discovery and treble damages.

Justice Kennedy: My... my concern... my concern is... is this, is that the First Amendment has its own corrective counterspeech, but what the board has done here is it's defined retaliatory motive so broadly that it's taken away that First Amendment corrective.

And that is itself a distortion of First Amendment principles which allowed the unions to bring these suits in the first place, it seems to me.

Mr. Wallace: Well, there... there is a very limited remedy available here compared to the prospect that treble damages might be awarded on the basis of rather unpredictable findings about subjective motivation in bringing the lawsuit.

And it... it... it's a remedy that's been applied against a background of what this Court in Bill Johnson's referred to as a... a powerful tool.

Powerful was the word the Court used.

Justice Ginsburg: Mr. Wallace, is retaliatory motive... is that before us in this case?

I mean, it may be that this Court, by saying that the board... that there was, even in this case, insufficient evidence of retaliatory motive, but I didn't think that was the question presented here.

Mr. Wallace: I agree with you on that point, Justice Ginsburg.

Justice Ginsburg: Because on that, I was going to ask you, well, what is it that shows that this was in retaliation for violation of section 7 rights instead of being in... in response to the union's desire simply to harass the employer?

I think that there are very serious questions about that, but my view was of this case that... that wasn't before us.

Mr. Wallace: I... I agree with you completely.

In fact--

Justice Kennedy: I take it... I take it the background of this case is that there was a finding of retaliatory motive and we have to make our decision based upon the way the board interprets retaliatory motive in cases such as this.

Mr. Wallace: --Well, it's certainly part of the background of the case, but the Court did limit the grant of certiorari to whether these two decisions are compatible given the differences between the two acts.

Justice Scalia: And we have to defer both to the board's determination of what constitutes a retaliatory motive and, even more so, to the board's factual determination that retaliatory motive existed.

All it takes is one witness who says it existed, and that would constitute substantial evidence.

And if the board goes with that witness, the courts have to effectively penalize the company for seeking resort in the courts.

Mr. Wallace: Well, there is seldom direct evidence of that kind, although occasionally there is direct evidence of animus in the bringing of the suit.

But the board has relied on a number of factors, which we've set out on page 47 of our brief, in various... in various cases in seeing retaliatory motive.

In this case one of the more persuasive ones was that the lawsuit was brought against parties that the plaintiff knew or should have known did not participate in the allegedly unlawful conduct.

They included as defendants unions that had not--

Justice Stevens: That's an issue that was raised by question 3 of the cert petition, and we didn't grant it.

Mr. Wallace: --That's correct.

That's correct.

The... the petition--

Justice Ginsburg: But... but--

Mr. Wallace: --was about the compatibility of the Court's decision in Professional Real Estate with what we had taken to be the Court's clear prescription of the limits on the remedy of the 8(a)(1) and unfair labor practice in the Bill Johnson's case.

Justice Ginsburg: --Mr. Wallace, we are concerned with the Bill Johnson's case, and a question has been raised about where does the authority to come... come from for this fee-shifting.

It does appear in the Court's opinion in Bill Johnson's.

If a violation is found, the board may order the employer to reimburse the employees, whom he has wrongfully sued, for their attorney's fees.

Where did the Court come up with that fee-shifting?

Was that something that the board had been doing?

Did the Government propose it?

But it's right there in the Court's of opinion that the proper remedy is fee-shifting.

Mr. Wallace: Precisely so.

But the board had been doing it regardless of the merits of the underlying lawsuit.

The board had become so concerned with the use of the courts for retaliatory litigation that whether the lawsuit was meritorious or not, if it found that it was brought for the purpose of defeating section 7 rights, it was awarding fees.

And the Court said, no, wait a minute.

You can't do that and you can't enjoin lawsuits that are not baseless.

The Court was really correcting the board and reining in that remedy in a way that the board has complied with.

Rebuttal of Maurice Baskin

Chief Justice Rehnquist: Thank you, Mr. Wallace.

Mr. Baskin, you have 4 minutes remaining.

Mr. Baskin: Thank you, Your Honor.

I would just briefly like to address the question of retaliatory motive, but only as I understood the Justices' questions to be does it suffice alone so that they... the board can rightly ignore the question of the objective basis.

And... and the reason it does not suffice, among others, is perhaps looking at the 26 decisions Justice Scalia found, there's only one among them where there was no finding of retaliatory motive and there only because it was found that the action didn't relate in any way to the union activity.

Justice Scalia: There was only one... one where what?

Mr. Baskin: Where there was no finding, where the board found no retaliatory motive.

It found against the employers 25 out of 26 times.

Once it found that the employer had lost the lawsuit, automatically according to the board, no merit.

Even though they had all the best circumstances leading up to the loss, they lost.

No merit.

Then the board proceeds to the retaliatory motive step supposedly going to protect employers, and all they say is does it relate to union activity.

Well, if it relates, except for one case where it didn't, boom, you lose.

The employers lose.

And what the result of that is, is that no employer can go to court if any sort of protected activity is even arguably involved because even if you convene a panel of experts, as BE&K did in this case, and go as far as you can to make sure you are not trampling on any employee rights, if you go to court, you will be found to have violated the law unless you can say with 100 percent certainty that you're going to win.

And no one can say that.

Justice Breyer: I didn't know... as long as you're finished, I thought the 26 cases were 26 cases in which they awarded attorney's fees.

Mr. Baskin: No. 26 cases with attorney's fees plus, attorney's fees--

Justice Breyer: All right.

Now, I thought they weren't supposed to award attorney's fees or anything unless there was a retaliatory motive.

Mr. Baskin: --Yes.

The board found retaliatory motive.

Justice Breyer: All right.

No, but I mean, of course they did.

I mean, how many cases where there where people alleged retaliatory motive and they found the opposite?

Mr. Baskin: In the 26 cases--

Justice Breyer: No.

Those are the ones where they won.

How many did they lose?

I mean, I don't understand this 26 case business.

I thought the 26 cases were the ones that they awarded it in, and I thought they were only supposed to award it where it's retaliatory.

So, it's hardly surprising it's retaliatory.

Mr. Baskin: --No.

As I understood Justice Scalia, and frankly our own research, is these are 26 cases that reached the board where the board could have gone either way, and every time, except for the one, they found no merit and retaliatory motive.

And they did so almost automatically because of their misreading of a principle.

We say a misreading.

But either way, it's a bad principle.

Justice Souter: Well, when you say the board could have gone either way, you don't mean that you know the evidence and that, in fact, on the evidence, the board could have gone either way.

You simply mean that it's a case in which if the evidence showed there was retaliation, they could award the fees, and if the evidence did not show retaliation, they couldn't award the fees.

Right?

Mr. Baskin: The 26 cases are--

Justice Souter: So, all we know is that in those cases, they found retaliatory motive.

We don't know that they're wrong.

Mr. Baskin: --Yes, that's... that's what we know.

They found retaliatory motive.

And the limited point that I'm making here at the end is that this retaliatory motive idea is no more... not enough protection under the NLRA just as it is not enough protection... and you've already found it to be not enough protection... under the antitrust laws.

And that's why the Professional Real Estate standard is the correct standard and it's the only one that protects employers' rights under the First Amendment.

Thank you.

Chief Justice Rehnquist: Thank you, Mr. Baskin.

The case is submitted.

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National Labor Relations Board v. Health Care & Retirement Corporation Of America - Oral Argument

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National Labor Relations Board v. Health Care & Retirement Corporation Of America

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Transcript:

IN THE SUPREME COURT OF THE UNITED STATES

NATIONAL LABOR RELATIONS BOARD, Petitioner v. HEALTH CARE & RETIREMENT CORPORATION OF AMERICA

No. 92-1964

February 22, 1994

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 10:59 a.m.

APPEARANCES:

MICHAEL R. DREEBEN, ESQ., Assistant to the Solicitor General, Department of Justice, Washington, D.C.; on behalf of the Petitioner.

MAUREEN E. MAHONEY, ESQ., Washington, D.C.; on behalf of the Respondent.

PROCEEDINGS

10:59 a.m.

CHIEF JUSTICE REHNQUIST: We'll hear argument next in No. 92-1964, the National Labor Relations Board v. Health Care & Retirement Corporation of America.

Mr. Dreeben.

ORAL ARGUMENT OF MICHAEL R. DREEBEN ON BEHALF OF THE PETITIONER

MR. DREEBEN: Thank you, Mr. Chief Justice, and may it please the Court:

This case involves the rule adopted by the National Labor Relations Board for determining when nurses are supervisors within the meaning of the National Labor Relations Act. Now, the Board's rule is that a nurse's direction of less-skilled employees, as a matter of professional judgment incidental to the treatment of patients, does not make the nurse into a statutory supervisor.

In this case, the Board applied that rule to the nurses employed in respondent's nursing home. The Board found that the nurses employed by respondent in that facility engaged in direct patient care, making rounds, administering medicines, talking to physicians, and maintaining records. As an incidental function of taking care of patients, the nurses give some direction to the nurse's aides who work with the nurses to bathe, dress, and feed the residents in the home. The Board concluded that the nurses' use of the aides in that fashion to carry out their nursing responsibilities did not make the nurses statutory supervisors.

QUESTION: Mr. Dreeben, does the Board's rule or decisions in this area of nurses and who is a supervisor and who isn't, are there analogous rules or principles in other areas of employment?

MR. DREEBEN: Yes, Justice O'Connor. The Board's rule in this case is really a particularized application of a general principle that has found expression in two different areas under the statute. The first is that the Board has crafted a rule to deal with the problem of minor supervisory personnel; those persons who are characterized by Congress as being below the level of foreman and not exercising the kind of supervision that aligns them with management.

And in cases of that character, the Board has found that when direction is given by leaders of groups that work together or by journeymen to apprentice, that when that direction is a function of superior skill or greater experience and not the sort of supervision that aligns the employee with management, that kind of employee is not treated as a supervisor.

QUESTION: Well, in looking at the language of the statute, it appears that the Board relies, primarily at least in this context, on the language that it is -- that the nurses are not acting in the interests of the employer, but rather in the interests of the patient.

MR. DREEBEN: That is one of the three means by which the Board reaches the route that it does under the statute.

QUESTION: But that seems to be the primary reliance.

MR. DREEBEN: I think, Justice O'Connor, it's -- it is equally important with two other provisions of the statute. The one that is most relevant here is the requirement that a supervisor exercise one of the functions listed in the statute, and the relevant one here, the most important one here, is -- are the words "responsibly to direct."

QUESTION: I read the opinions below the same way Justice O'Connor did, that the Board seemed to be principally relying on the idea that the claimed supervisors acted in the patient's interest and not in management's interest, which I frankly find quite a weak read.

MR. DREEBEN: Chief Justice Rehnquist, that is one of the ways that the Board has used to articulate the point that it's trying to get across. The point that it's trying to accomplish here is to distinguish and draw lines between the kind of supervision that Congress intended would disqualify a person from the protection of the Act from the sort of direction that goes on a day-to-day basis in a variety of workplace settings when minor supervisors, who have greater skill or familiarity with the working situation, are -- give some direction to people who work on a team with them.

QUESTION: But, yes --

QUESTION: How does that, in any way, relate to the distinction between acting in the client's interest or the patient's interest and acting in the employer's interest?

MR. DREEBEN: The Board is not taking the position that the nurses are working contrary to the employer's interest, but the words "in the interest of the employer" have to have some meaning, because all employees, as the Board has recognized, from the board of directors right down to the maintenance staff, the lowest levels, all work to further the employer's business interests.

Those words were not put into the statute to be a superfluous reiteration of that principle. They were put in, as the original draftsman of the language explained, to express the view that these are the type of employees who are really expressing managerial authority in their work. And the Board is not, in this case, attempting to say that these nurses are somehow working contrary to the employer's interest. It is simply defining and interpreting the language "in the interest of the employer" to give it the kind of meaning that Congress had originally intended.

QUESTION: Are you saying that the nurses fall into the same category as what your adversary calls the straw boss?

MR. DREEBEN: Yes, the Board has said that. And, in fact, in this very case at page 40a of the petition appendix, the ALJ explicitly drew the analogy between the kind of work direction that these nurses do and the kind that is done in this minor supervisor line of case that the Board has had under the statute for many, many years.

QUESTION: Mr. Dreeben, I always envisioned the so-called lead man or straw boss as someone who supervises a single team. I mean, you may send five men out to chop wood and you say one of them, you know, you take charge and all he does is say, well, you chop this tree, I'll chop the other tree.

But these nurses are doing much more. And if nothing more were at issue here than a nurse directing the nurse's aide with respect to the particular patient that that nurse is working with at that moment, I would say yes, the nurse -- you know, when she tells the nurse's aide, you know, bring this, bring that, bring the other, that's acting as a straw boss, that's acting as a lead man. But not when she shifts, it seems to me, nurse's aides from one patient to another, from perhaps one wing of the hospital to another; when she authorizes overtime; when she does all sorts of things that relate not to the particular team that is working on a particular patient, isn't -- I don't know any other way to distinguish the straw boss or the lead man.

MR. DREEBEN: Well, first of all, the straw boss cases do involve kinds -- the kinds of cases that you've described, Justice Scalia, but they also involve cases where you have the most skilled person, say, at a print shop supervising a variety of lesser-skilled employees and telling them what to do, telling them where to go, what -- when to do their various assignments in order to make sure that the whole puzzle fits together.

But I think it's very important to focus on what these nurses did at the nursing home in question, because the ALJ made fact findings on it and the record supports those fact findings. I don't think there's any question here of substantial evidence.

The ALJ found that to the extent that the nurses had any function at all to assign the aides, that was purely a matter of routine that involved no independent judgment. I believe that the assistant director of nursing described it as being "pretty well cut and dried"; that's in the transcript at 1106. The floor was simply split into sections and the aides were rotated from one section to another. And as she put it, it was just a sort of formula to be followed.

And the ALJ found, again at page 40a of the appendix, that the assignment that these nurses did during the relevant period in time was purely --

QUESTION: Whereabouts on -- whereabouts on page 40a are you referring to, Mr. Dreeben?

MR. DREEBEN: On page 40a of the petition appendix, Chief Justice, that's at the top of the page. It's a carry-over from the prior paragraph.

QUESTION: Thank you.

MR. DREEBEN: The ALJ says: "The eight assignment duties of the nurses seem to me to fall well short of requiring the use of independent judgment." And that is an independent requirement for being a supervisor under Section 2(11) of the Act. Without a showing of independent judgment in the tasks that are described, there is no supervisory status.

QUESTION: Is that a factual determination or a legal determination?

MR. DREEBEN: I think it's a factual determination which is subject to review under the substantial evidence standard.

QUESTION: He surely doesn't put it that way, does he?

MR. DREEBEN: And -- well, the ALJ referred to Board cases and to a court of appeals case that make that clear. The Board certainly has latitude under Chevron to interpret what independent judgment and what routine is within the context of reviewing the application of the act to specific circumstances.

And in this case that's what these nurses did. They did it as a matter of routine. The assignment functions were not nearly as sophisticated as Your Honor has implied. Now, there may be a change that's reflected in the record where the director of nursing decided I want things done in a different way, I want them -- I want you to use much more judgment in the way you do it. If so, nurses who do those sorts of things might be exercising independent judgment, but these nurses with respect to assignment were not doing that.

QUESTION: What about authorizing overtime? I mean you --

MR. DREEBEN: They did not authorize overtime. The ALJ again explicitly found that they did not have authority to authorize overtime.

QUESTION: Where is that, Mr. Dreeben?

MR. DREEBEN: That's in the petition appendix. I do not have the exact page at this moment. But the ALJ, again, specifically found they do not have the authority to authorize overtime. They initialed time cards.

QUESTION: Look at page 41a of the petitioner's appendix where the opinion says: "The second way the duty nurse may attempt to deal with an aide's failure to show up for work is to ask the aides who are scheduled to go off duty if one of them is willing to remain at the facility on overtime."

MR. DREEBEN: That's correct. But the nurse herself did not make any decision about whether the aide would be authorized to obtain overtime. That was a decision that was reserved by the director of nursing.

QUESTION: Oh, really? She -- you mean she can ask the nurse's aide if she's willing to serve on overtime -- and I assume this means at a time when there's no one else around. During 75 percent of the day at the time this case came up, as I understand it, if these nurses were not supervisors, there was no supervisor --

MR. DREEBEN: Well --

QUESTION: -- Present at the hospital or at the nursing home, isn't that right?

MR. DREEBEN: The director of nursing was always available on call, as was the administrator. Most of the hours --

QUESTION: Sure. Well, so are we. But I'm saying that there were --

(Laughter.)

QUESTION: -- There was nobody at the nursing home who was a supervisor during 75 percent of the working day. That's the position that the Board is taking, right?

MR. DREEBEN: Well, yes, that is the position that we're taking, and a large component of that time consists of the night shift at which there is very little staff at the hospital other than what is necessary and nurses on duty at each --

QUESTION: Where was this, in Alaska, you have a 75 percent night?

MR. DREEBEN: No, I said a large component of that. Obviously, Justice Scalia, there were times when the director of nursing or the administrator were not there. But there is testimony in the record, and the ALJ again found that the director of nursing is available on call at all times. And this is at page 47a of the appendix. Since the administrator and the DON are always on call and since the nurses do, in fact, call the administrator and the DON at their homes when nonroutine matters arise, that was an indication that, indeed, this nursing home had a mechanism of supervising its aides.

QUESTION: Well, Mr. Dreeben, looking at the language of this statute today, and in an attempt to justify the Board's rule, what do you think the strongest point is?

MR. DREEBEN: I think that --

QUESTION: Under the language of the statute?

MR. DREEBEN: Well, we do rely on the "interest of the employer" language. We also rely on the language "responsibly to direct," which the Board has interpreted --

QUESTION: But that's just an alternative. The statute also says if the nurse can assign or do other things or responsibly direct.

MR. DREEBEN: That's correct. And in this case the assignment --

QUESTION: And they did have some assignment functions.

MR. DREEBEN: And those assignment functions were found to be purely a matter of routine not requiring the exercise of independent judgment. Now, if this were a case in which the assignment functions did require some judgment, then there would a supplemental inquiry for the Board to make about whether those --

QUESTION: Well, then, is your strongest point no independent judgment? Is that what your --

MR. DREEBEN: As to the assignment, that's what the record in this case shows. There's no basis for arguing that they're supervisors, since they fail that threshold requirement, and there's never been a challenge to that requirement.

There's another very important consideration in the Board's interpretation of the statute, Justice O'Connor. You asked me earlier what categories of employees are treated analogously.

QUESTION: Uh-hum.

MR. DREEBEN: Another major category of employees treated analogously are professional employees. Now, the Act in Section 2(11) excludes supervisors from coverage.

QUESTION: Well, do you -- do you take the position that these nurses are professional employees within the definition of the statute?

MR. DREEBEN: No, in this case they are not. But the point of my reference to the professional inclusion is that Congress specifically did want people who exercise judgment and do so on the basis of superior skill and knowledge to be covered by the Act, and that creates some tension between Sections 2(11), which exclude supervisors, and Sections 2(12) which includes professionals, because --

QUESTION: Why are they not -- why are they not professional employees?

MR. DREEBEN: They are considered technical employees. These are licensed practical nurses. Licensed practical nurses have a lesser educational requirement and the Board is --

QUESTION: So a registered nurse would be considered professional?

MR. DREEBEN: No question, a registered nurse would be considered a professional. And the major significance of that distinction I think would simply be that the nurses who are registered nurses would have the right to a unit that did not include nonprofessionals. But for purpose of interpreting the Act and looking at the interplay between the professional exemption and the exclusion for supervisors, the important point is that the Board has to make an accommodation.

Because virtually all professionals will supervise some lesser-skilled employees in the course of their duties. They do so as a matter of simply getting the job done, and Congress could not have been ignorant of the fact that architects have draftsmen, engineers have machine operators, and the like. Lawyers have paralegals and secretaries, and doctors have nurses.

And if Congress had not intended to accord protection to the Act to these people because they engage in such minor supervisory activities, the entire coverage of professionals would have made very little sense. And so the Board takes into account that structural aspect of the statute in arriving at its construction of when nurses should be deemed to fall on the supervisor side of the line.

QUESTION: Can you tell us an opinion in which the Board has done just that, has shown that it is playing off the tension between these two sections?

MR. DREEBEN: Well, first of all, the Board issued a decision in Northcrest Nursing Home which we cite in our reply brief, which occurred after we filed our opening brief in this case, that represents a comprehensive review of the legal principles in this area and explicitly draws the connections both to the straw boss/lead man line of cases that I referred to earlier, as well as the tension to the professional line of work.

QUESTION: Any case before this decision?

MR. DREEBEN: Well, there are also a series of cases that this Court considered and discussed in its Yeshiva University opinion at page 690 in footnote 30.

QUESTION: The footnote 30 cites Board opinions.

MR. DREEBEN: Yes, footnote 30 cites Board opinions in which the Board had considered cases where professionals were functioning as project captains or group leaders, and in the words of the Court describing the Board's cases, "they were deemed to be employees despite substantial planning responsibility and authority to direct and evaluate team members."

And if you read those cases, the Board is quite conscious of the fact that this is the way professionals operate, and it's necessary that they be given the protection of the Act, notwithstanding this minor form of direction. Otherwise it would have been pointless to cover them. The court --

QUESTION: Is that Doctors' Hospital against -- of Modesto, is that the one?

MR. DREEBEN: And Doctors' Hospital of Modesto was cited as one of the cases in that series, which is really the case in which the Board gave its most complete articulation of its current theory before 1974. That was a case in which the Board examined the role of nurses who worked at a hospital and gave some -- they were called charge nurses. They had some responsibilities over a wing of a hospital with respect to nurse's aides and other nurses there to make sure that patient care was done properly, and the Board did not consider that to disqualify them from protection under the Act. It did not view them as being made supervisors.

This Court explicitly took note of that when it described Board cases favorably, saying that the Board has not eliminated employees whose decision-making is limited to the routine discharge of professional duties in projects to which they assign them. That's -- the Court characterized those decisions as accurately capturing the intent of Congress. That is the line of decisions that really supports the Board's analysis of the nurses in this case.

And when you look at the sort of direction that the nurses gave to aides in this case, it clearly is well within the routine discharge of their professional or technical duties. Many patients at a nursing home have strict regimens of having to be turned every 2 hours. A nurse might remind an aide that that needs to be done, or ensure that it is done. Other patients need to have cushions placed in particular ways to support them. A nurse may correct an aide if the aide hasn't put the pillow in the proper place, hasn't followed the doctor's instructions with respect to the way the patient should be treated.

QUESTION: A nurse can tell an aide to go work with another nurse too, can't she?

MR. DREEBEN: Again, that relates to the assignment function.

QUESTION: Right.

MR. DREEBEN: It's what happened in this case when there was a shortage of aides, is that one of the aides might be rotated from one --

QUESTION: By a nurse. A nurse would say don't work with me, go and work with someone else, right?

MR. DREEBEN: Correct.

QUESTION: And a nurse could also say too few people have reported for work today; we would like someone, or two or three people, to work overtime. And the nurse could say that and authorize that overtime, isn't that right?

MR. DREEBEN: Well, I don't agree, Justice Scalia, that she could authorize the overtime. I think the findings are inconsistent with that.

QUESTION: The findings say that -- and, again, it's page 40 -- 41a and 42a. What the opinion says is, "the nurses otherwise" -- at the top of 42a, "the nurses otherwise have no authority to grant overtime." And the preceding paragraph makes clear that they do have authority to grant overtime when it's necessary because of absences.

MR. DREEBEN: Well, I think that the sentence that follows that is equally important, Justice Scalia. It says: "The nurses are not authorized to deal with an unusually heavy workload by asking aides to work on an overtime basis."

QUESTION: That's right.

MR. DREEBEN: So --

QUESTION: An unusually heavy workload is no justification, but the failure of some people to report to work does enable them to authorize overtime.

MR. DREEBEN: Well, I think the record says what it says on this subject, Justice Scalia.

QUESTION: Well, you're not arguing with that point, are you? You're not challenging the statement in the opinion?

MR. DREEBEN: No, no, no. We are not state -- challenging the statement in the opinion.

QUESTION: So they can authorize overtime then.

QUESTION: Yes.

MR. DREEBEN: Well, to the extent reflected in the opinion, yes.

QUESTION: Well, why don't you -- why don't you admit it rather than fight it?

MR. DREEBEN: I think that whatever the finding -- those findings on overtime are not inconsistent with -- any way with the Board's ultimate conclusion that these nurses are not supervisors. The nurses did not have the kind of authority, in the Board's view, that aligned them with management, and there were ample mechanisms in place for the nursing home to conduct the supervision at issue.

Now, again, we think that the Court's opinion in Yeshiva University very strongly supports the Board's approach in this case, its general legal approach, regardless of how any particular fact situation may be applied, whether correctly or incorrectly, under that approach.

QUESTION: Mr. Dreeben, I don't read that finding as saying a nurse is authorized to -- has the authority to authorize overtime. But what I understand it to say is that hospital policy is if somebody doesn't show up for work and if you have to divide it up, the other -- the aides can decide among themselves which one shall work overtime, and the nurse can let them do that.

MR. DREEBEN: Well --

QUESTION: It's this hospital policy that says that somebody has to work overtime when somebody doesn't show up, they'll ask them to do that.

MR. DREEBEN: Certainly all of this flows from the hospital policies. And we're -- I don't think that really, one way or the other, this point is dispositive of the validity of the Board's legal role, which is the issue that we're presenting for decision to this Court. The Board's rule is a mechanism for attempting to distinguish between those employees who are high enough up on the chain of command to require them to be treated as supervisors, and employees who are lower down and who exercise some amount of direction, but not enough to align them with management for purpose of collective bargaining.

QUESTION: And in this particular facility you say there are four nurses that fit that category, the director of nursing, assistant director, patient assessment. There were four that you put in the supervisory category?

MR. DREEBEN: I don't think findings were made about whether the patient assessment and treatment nurse qualified as supervisors, and that really isn't an issue here. The director of nursing, the assistant director of nursing, and the administrator were all found to -- I think there is no dispute that they are supervisors in this case.

And the director of nursing was actively involved in supervising on the floor. She testified that she was out of the floor an average of 50 percent of the time. That's at page 913 of the transcript. That's an average. There were ample mechanisms in place for the supervisors to accomplish their goal. And, in fact, an administrator at one point said to a nurse, don't ever make a decision on this floor without my consent first. I think the record amply bears up what the ALJ ultimately found in this case, which is that respondent --

QUESTION: Well, what happens in that instance if the supervisor isn't there, which is a substantial part of the time.

MR. DREEBEN: That's when the telephone comes in handily, Justice Kennedy. The director of nursing, the assistant director of nursing, and the administrator are available by phone --

QUESTION: Are these the kind of decisions that the statute characterizes as decisions made which require the use of independent judgment?

MR. DREEBEN: Well as to the assignment functions, the ALJ found that they are not. As to the question of whether to consult a supervisor, there was no finding made about whether that required independent judgment. I'd suggest that --

QUESTION: Well, let me put it this way; is your understanding of the record that whenever independent judgment is required, that the nurse must talk with the supervisor?

MR. DREEBEN: We -- I don't think we would disagree that independent judgment might have been required in seeking the authority of a true supervisor in this case, whether it is or not --

QUESTION: Can independent judgment ever be exercised under the policy of this hospital without consulting the supervisor?

MR. DREEBEN: Yes, I think that there are some instances in which the nurse is exercising independent judgment.

QUESTION: So that it's more than just arranging a pillow and so forth.

MR. DREEBEN: Well, no, I think that itself is a matter of independent judgment. The nurses there are providing their medical judgment. They are -- they are the ones who hear from the doctors what is required for the patient's care. They read the materials that describe it, and they are ultimately responsible for making sure that the care is done in a professional manner.

QUESTION: Well, I take it they have to monitor the condition of the patient.

MR. DREEBEN: That's correct. And, again, they have to use judgment in whether to require that some aide look in on a patient more often than not to make sure that the patient doesn't suddenly spike a temperature. And those are the kinds of independent judgment that the nurses used in this case, but that's totally coextensive with the sort of independent judgment that a professional routinely uses in the kinds of projects that a professional carries out. And Congress did not view that sort of expression of professional judgment as inconsistent with the treatment of the employee as a protected employee under the statute.

Now, I wanted to mention again the case of Yeshiva University, because we do think that the Court's general approach in that case is precisely the same that is at issue today. The Court said that if the faculty had been simply exercising routine professional judgments in the matter of their teaching work, that would not have been a problem for coverage under the Act. The problem in that case is the faculty were really managers and they were really determining what the school would do, what teach -- what courses it would teach, what students would be admitted, and making all the decisions which would be characterized as managerial in any other setting.

In this case the nurses are not doing what would be characterized as managerial or supervisory in any other setting. They are much more analogous to the type of project captains that supervise other professionals and other less-skilled employees, and they also fit within the line of cases that dealt with lead men and straw bosses, and for that reason the Board properly placed them on the side of the line where they are protected rather than the side where they are not protected.

I'd like to reserve the balance of my time.

QUESTION: Thank you, Mr. Dreeben.

Ms. Mahoney, we'll hear from you.

ORAL ARGUMENT OF MAUREEN E. MAHONEY ON BEHALF OF THE RESPONDENT

MS. MAHONEY: Mr. Chief Justice and may it please the Court:

I'd like to start out by saying that I really did think that the issue in this case was not whether the court of appeals had erred in its application of the substantial evidence test under the traditional statutory criteria for finding supervisory status, but rather that the question that was presented in the petition was whether the court of appeals had erred by rejecting the Board's interpretation of the statute, not the application of the evidence.

And, in fact, there is -- under Universal Camera this Court has said, and repeatedly held, that the application of substantial evidence to a settled statutory meaning is something that's placed in the charge of the court of appeals and it would rarely be disturbed by this Court absent some indication that it was grossly misapplied or misapprehended. So for the Government to now come in today and suddenly start citing all these transcript cites about how these people really didn't -- these nurses really didn't have any independent judgment or meet the traditional statutory criteria seems not to be, to me, the issue in this case.

And in fact, as the court of appeals found, if you evaluate the activity that these nurses performed on behalf of the nursing home under the traditional criteria, look at the structure of the operations, look at what the higher levels of management were expecting them to do, you would find that they were, in fact, charged with the overall direction, assignment, with the use of independent judgment for the operation of the facility.

In fact, the findings of the ALJ specifically say that these nurses were in charge of a wing of the nursing home for much of the time. I think it's important to emphasize here that there's only one floor nurse on the floor on the wing of a hospital overseeing the care that's being given to 50 residents at any time, and that the director of nursing and the assistant director of nursing are absent from the facility 75 percent of the time.

Similarly, to say that the ALJ found that they didn't exercise independent judgment in connection with the exercise of their responsibilities is not supported by the -- either the findings of the judge or what he said at page 40a. He finds -- he does not say they do not exercise independent judgment in connection with the direction of the work of the aides. He says he finds that what they do doesn't equate to responsibly directing the aides in the interests of the employer.

He never goes on to make some separate finding that they didn't use independent judgment, and the question, the way it's posed, seems to presume that they did, by saying whether the Board reasonably determined that employees, in the exercise of professional judgment, were properly denied supervisory status. So --

QUESTION: Ms. Mahoney, may I just ask you a question about the assumption you're making about the statute, and I think I'll understand your argument better. Do you agree that in each of the three categories covered by the statute, the sort of assignment responsibility, the direction responsibility when they're working, and the grievance responsibility, that the statute seems to make a distinction between levels of responsibility?

It seems to assume that a given professional, for example, could do any of these three things conceivably, but there are different levels of responsibility. For example -- and just as an example, it doesn't speak merely of directing other employee, it speaks of responsibly directing them. Now, those may be sort of opaque adjectives, but they seem to be -- at least to be getting to the -- to make the point that there are two different levels, and only if you meet the sort of whatever the standards are for the highest level do you fall into the supervisory category.

Do you accept that basic view of the statute?

MS. MAHONEY: That there is a?

QUESTION: That there's kind of a two -- there's an assumption that there's a two-tier possibility for each of these three categories?

MS. MAHONEY: I think so. Let me see if I understand your question correctly. We would acknowledge and agree that in order to be found to have engaged in activity that could be called responsibly to direct the activities of other employees on the site that, yes, you'd need to do something more than just exercise independent judgment. And that they are talking --

QUESTION: In other words, there can be some direction which is not responsible direction?

MS. MAHONEY: There could be --

QUESTION: So the mere fact that a nurse says, you know, go to bed one rather than bed two, that may not get you to the point where you want to get.

MS. MAHONEY: Absolutely, Your Honor. In fact, what the courts and the Board has traditionally done outside of the health care area and some other professional contexts, is they have looked at the structure of the employer's operation and tried to locate where that -- the person who's alleged to be a supervisor falls on the hierarchy, and whether that person has overall day-to-day responsibility for overseeing the activities of other subordinate employees.

That's precisely the analysis that the court of appeals said should apply in this case. In the Beverly decision it said we're going to look at the structure of the operations. We're not going to just exclude nurses wholesale, because they might give some direction to an aide in the course of performing their duties, but rather we'll see what role they were play.

QUESTION: Do you see a disagreement between the court of appeals and the Board on that general proposition?

MS. MAHONEY: No, I do not.

QUESTION: Okay.

MS. MAHONEY: No, I think if you go back to the Beverly opinion, which was the predicate for the court of appeals analysis in this case, it very specifically said our disagreement with the Board is that they are wholesale denying protection -- or granting protection to persons who under the traditional criteria would be engaged in supervisory activity, and that's not just a nurse who is giving some direction to a patient. In this case, for instance --

QUESTION: And supervisory activity of the higher rather than the lower degree.

MS. MAHONEY: Well, not a straw boss, not a straw boss.

QUESTION: That's right, yeah.

MS. MAHONEY: Right. And not someone who just directs someone on a team with independent judgment, you know, in an occasional kind of way for a particular patient.

QUESTION: How does it differ from a lawyer giving instructions to a paralegal --

MS. MAHONEY: Well --

QUESTION: -- That would involve independent judgment? Are there situations where a lawyer giving instructions to a paralegal, the lawyer could still not be a supervisor?

MS. MAHONEY: Yes, I think there could be, Your Honor. I think you have to look at what the courts have done and what the Board has done, is look to see what the responsibility of the lawyer is for the overall management of that paralegal's activities. If, in fact, the lawyer's --

QUESTION: Suppose the paralegal is assigned to an associate, first-year associate got this paralegal who will do whatever the lawyer tells the paralegal to do. Does that mean that the lawyer is a supervisor so you could not have -- suppose we had a legal aid unit that was operating that way; the lawyers would not be protected under the Act?

MS. MAHONEY: Well, Your Honor, if the lawyer in that assignment process also had the authority to effectively recommend, for instance, whether that paralegal would get a raise, then I think even under the Board's rule they acknowledge that that person, in fact, would be a supervisor.

QUESTION: Let's take out controlling pay.

MS. MAHONEY: Okay. And does the lawyer also determine precisely what activities that paralegal is going to perform on a day-to-day basis and assign that paralegal to other lawyers when the workload is different and essentially tell that paralegal when they can come, when they can go, and that they really are the only supervisor for that paralegal?

QUESTION: If this -- this description in this record seems not unusual for a setup where you have practical nurses, a relatively small staff, and a large staff of nurse's aides. So is there anything in this record that makes this an atypical setup? In other words, you seem to be saying we have to look and see what these nurses are doing, but I get the picture that anytime you have a staff of practical nurses and a large staff of nurse's aides, it's going to be roughly the same as this setup.

MS. MAHONEY: No, Your Honor, I don't think so. First of all, one of the important points here is that this is structured in a very different way from a hospital. You wouldn't see, ordinarily, the same kind of ratios of lesser-skilled employees to higher-skilled employees. And what you have here is --

QUESTION: Is typical of nursing homes.

MS. MAHONEY: It may be more typical of nursing homes, but nursing homes also, for instance, may have another level of supervision inbetween the licensed practical nurses and may have some other RN's, for instance, who are in fact the person in charge on the floor at any given time.

QUESTION: The Board has had a number of nurses' cases now. Is there something that shows whether this is typical, not typical, or, as you say, are most of the Board's decisions coming out the same way and the record's more or less the same?

MS. MAHONEY: Well, Your Honor, the -- in the Avon Convalescent Center case, which was decided after the Doctors' Hospital case, they looked at a fact situation that's almost identical to this, where the licensed practical nurses were found to be supervisors because they were exercising --

QUESTION: What year was that?

MS. MAHONEY: It was in 1972, I believe.

QUESTION: Since 1974, has there been any deviation in the Board's rulings in this area?

MS. MAHONEY: I think that -- you mean have they found some nurses to be supervisors?

QUESTION: In the -- since 1974 -- you pointed out, quite correctly, that the Board seemed to be shifting here and there before 1974, but for the last 20 years I haven't noticed that they have, and correct me if I'm wrong.

MS. MAHONEY: Well, the shift, Your Honor, that's occurred is they've been finding more and more and more nurses to be supervise -- not to be supervisors even if they disciplined -- for instance, in the Riverchase case -- even if they disciplined a nurse's aide in connection with patient care. Because the Board took its rationale to sort of its logical conclusion, which is that anything done incidental to patient care is going to disqualify them from supervisory status.

And, again, if we just look at the structure of this nursing home and compare it to the structure of many of the industries and facilities that the Board has traditionally looked at, the Dale Operating case; Ohio Power; Maine, Vermont and Yankee; what they do is they say if the person who's in charge of the floor or the facility -- even if they don't have the power to decide whether to give someone a raise or whether to fire them or hire them, if they really are responsible for the safety of the operations and for ensuring that those people do their work and keep to it and do it in a safe manner, that an employer has got to be able to demand the undivided loyalty of its representative on the floor of the plant or on -- in this case, on the floor of the nursing home.

That's really what these cases are designed to find, is whether the employer has a legitimate need in order to rely upon the undivided loyalty. Because if we back up and look at what Taft-Hartley was all about to begin with, it was a reaction to the fact that the Board has interpreted its authority to permit foreman to unionize.

QUESTION: Are you saying --

QUESTION: So it's the need to ensure the loyalty of the employee that is the touchstone for determining whether they're acting in the interest of the employer.

MS. MAHONEY: No, Your Honor, absolutely not. I don't think that the phrase "the interest of the employer" has anything to do with assessing the loyalty of the employee, but that rather simply the fact that that's how Congress sought to identify the categories of activity that would require or -- or an employer to want to have undivided loyalty. In other words, the people who do the assignment, who do the responsible direction, the employer's got to be able to count on them to report infractions of rules to make sure that the operations are run in a safe manner, because --

QUESTION: Well, you began your argument by telling us that we were focusing too much on the facts in the transcript, that this was a legal argument.

MS. MAHONEY: Yes, Your Honor, it is.

QUESTION: And I take it your principal legal argument is that the Board is incorrect in the way it's interpreted the phrase "interest of the employer."

MS. MAHONEY: Absolutely. And the reason is that that phrase, looking at the statute, is used for -- as this Court found in Packard, for common law notions of respondeat superior. Without it, the statute doesn't make any sense. The Board suggests that our interpretation of it is superfluous, and it's not. It --

QUESTION: But all -- almost all employees or supervisors are both covered by respondeat superior. I don't see how that helps us.

MS. MAHONEY: But, Your Honor, it doesn't. That's not the way that this particular statutory provision is written. And if I could just turn to the language, the reason I think it's necessary is because it doesn't define supervisor in terms of any employee that works for a particular employer. If it said that, then there -- they might have an argument that the additional phrase "in the interest of the employer" was superfluous. Instead it says the term "supervisor" means, "any individual having authority."

And, of course, the term "employee" extends to employees throughout industries, regardless of what particular employer they work for. So unless you put in this phrase, "in the interest of the employer," you don't have any attribution to the particular employer who is alleged to be denying the Section 7 rights.

And that's important in several circumstances. First of all, it's important because if you take it out, quite literally a union steward who is employed by an employer and engages in, for instance -- effectively recommends discipline of other employees, also adjusts grievances, they would be found to be a supervisor under the literal definition.

QUESTION: So you're saying that "interest of the employer" is inserted to make sure that we're covering employees?

MS. MAHONEY: Excuse me? I'm sorry.

QUESTION: You're saying that the function of including the phrase "interest of the employer" in the statute is to ensure that what we are dealing with are employees, as opposed to independent contractors?

MS. MAHONEY: No. I'm saying that it draws a number of lines. It makes sure that the supervisory activities are being performed on behalf of the employer, as opposed to on behalf of the employee in his personal interests or in the collective interests of the union. Second, it also makes sure that, for instance, with respect to third parties who may be supervising the employees of the employer, that they -- because it says "any individual," that they also could be a supervisor as long as their activity was done in the interest of the employer.

QUESTION: Well, that is a very sweeping interpretation of that phrase, and it seems to me to contradict the rather common sense observation that all employees to some extent are working for the interest of the employer.

MS. MAHONEY: Well, Your Honor, in the -- if I could just mention also the third place where it's significant, is that if an employer -- I mean if an employee works for two different employers and is a supervisor for one and not a supervisor for the other, if you don't have that phrase in there they actually would be deemed a supervisor for all employers. Because this is what -- the language that brings it back to the particular employer who is alleged to have engaged in the wrongful activity or denying the Section 7 right.

QUESTION: So, are you saying that the phrase, then, has rather little to do with this case, or that it has everything to do with this case?

MS. MAHONEY: It has all -- it has little to do with this case in that it is -- it's -- in the situation where you're dealing with employees, this phrase, prior to the 1970's in the health care context, was never a dispositive factor in the cases. We can go all the way back to 1947, and the Board never used this phrase as an additional prerequisite for an employee to be found to be a supervisor, because it really is just a common law agency kind of test. It serves a purpose, but it's not -- it's not important to most of the cases that are adjudicated under this section. It's certainly not superfluous, though.

QUESTION: Ms. Mahoney, if we find that this language is not entirely clear, is there a role for deference to the Board and in taking -- and answering that question, what credit, if any, should we give to the Board's consistent rulings for the last 20 years in cases of this nature?

MS. MAHONEY: Your Honor, first of all it is unambiguous because Packard said it was unambiguous. It interpreted precisely the same phrase prior to the adoption of Taft-Hartley, said it was unambiguous, and there's absolutely nothing in the legislate --

QUESTION: So that would mean for the last 20 years the Board has been essentially wrong, which I think is --

MS. MAHONEY: Absolutely, Your Honor.

QUESTION: -- Your position, yes.

MS. MAHONEY: Absolutely.

QUESTION: But if we don't agree with that, then we would owe some deference to the Board, is that not so?

MS. MAHONEY: Well, no, Your Honor, I -- well, I mean if you found that it was a long term, long standing, consistent interpretation that had a basis in the language --

QUESTION: Yes.

MS. MAHONEY: -- Then I would have to say some deference. But I'd like to emphasize that what the Board is really trying to do here is to regain, reclaim authority that Congress took away from it in 1947. That what the whole purpose of Taft-Hartley was to do was to say to the Board we don't want you out there just deciding who's got conflicting interests and who doesn't, because we don't like the way you've balanced those policies.

Instead what we're going to do, unlike Section 7 and Section 8 where we've given you sort of broad delegations to come up with rules that make sense for industry, here what we're going to do is we're going to spell out the criteria, we're going to tell you what categories of activity entitle an employer to demand undivided loyalty. Because we find that the balance of power has totally shifted under your interpretation of the Act, and that it's of critical importance that employers be allowed to have representatives with undivided loyalty who will not fail to report disciplinary problems because they're siding with the organized -- organizational interests of the employees that they supervise.

That's what Taft-Hartley was about. They took away the Board's authority to engage in some sort of broad rulemaking as they have done in the health care area. And I think --

QUESTION: Ms. Mahoney, isn't it arguable that in 1947 Congress adopted the position of the dissenting justice in the Packard case?

MS. MAHONEY: No, Your Honor, I don't think so. First of all, as this Court recently said in Betts, that unless Congress -- when this Court has interpreted a phrase in a statute and said that it's unambiguous, the fact that Congress changes the result in the case doesn't mean that it disavowed the interpretation of the plain language. This is identical to that situation.

Moreover, if you look at --

QUESTION: Of course, it did reject the holding in the case.

MS. MAHONEY: It -- well it, what it -- no, it actually didn't even reject the holding. It didn't -- what it said was the Court has found that the -- are you talking in Packard?

QUESTION: Right.

MS. MAHONEY: What it said is that the Court has found that the definition of employee, which essentially has no limitations, allows the Board to decide that foreman can unionize, even though we, the Supreme Court, question that policy.

Congress didn't say the Court got it wrong. Congress said we understand that we need to come forward and we need to establish a definition that will take that authority away from the Board. We don't want them to decide who's an employee and who's not in accordance with their own assessment of the policies of the Act. That's what they did.

There's nothing in the legislative history of that amendment, after Packard was decided, that suggests that they were interpreting the "interest of the employer" to be the dividing line between those who were super -- those who were minor supervisory employees and those who were not. The only reference to the phrase "the interest of the employer" is contained in a different section where Congress was changing the definition of employer to -- from those who act in the interest of the employer to those who act as an agent of the employer, saying that they thought it was too loose a test.

And that is essentially what this Court found that phrase meant in Carbon Fuel. It's hard to believe that Congress would have known about the Packard interpretation, changed it in one section because it was a little loose, and then intended a totally different meaning in this section of the Act without saying so somewhere. That just does not conform with statutory principles.

Even if it means something more than common law agency, what does it mean? Maybe it means in the interests of management. Well, we win under that test too, because the whole point here is that what these individuals were doing had to be in our interests. I mean when they attended a disciplinary conference or when they wrote up warning notices, whose interests were they acting in? They were acting in the interests of management, they weren't acting in the interests of -- the collective interests of the employees.

QUESTION: Ms. Mahoney, suppose we were to agree that maybe the Board's heavy reliance on the language "in the interest of the employer" is not justified, what do we do in this case? Are there other findings below that would justify the result reached by the Board?

MS. MAHONEY: No, absolutely not, Your Honor. If we look at what the court of appeals said, it said "the interest of the employer" cannot be interpreted in the way the Board has said because -- and I need to emphasize this -- the Board has said that the only way that a nurse is going to act in the interest -- that we're going to find that they're acting in the interest of the employer is if they take action or have the authority to affect job status or pay.

And, of course, that's the key point here because that's not the test for supervisors in any other industry. Congress, in fact, made it clear that you didn't have to have that authority. So the Court rejected that definition of "the interest of the employer" because it was inconsistent with the other provisions of the Act.

They then, under the Beverly analysis, looked at how would these people be supervisors in other industries? Do they meet the statutory criteria? Is the employer vesting them with the type of authority to responsibly direct its operations, oversee its work force, that they would be found to be a supervisor in any other industry? And they found that it was clear that they would be.

And, in fact, if you go through the Board's cases from 1947 forward outside the health care area, on analogous facts there are many cases without any reference to "the interest of the employer," of course, where they have found that precisely this kind of activity is supervisory in character and that an employer is entitled to demand the undivided loyalty of those people.

And one of the things, too, that the Board referred now to say that its test is not whether they have the authority to affect pay or job status. They claim that now, although if we look back, for instance, at the petition reply at page 4, it says: "The Board will find nurses to be supervisors where in addition to performing professional duties, they also possess the authority to affect the job status or pay of employees." They have never suggested what authority these nurses could have had that would have made them eligible for supervisory status under Section 2(11) that was not covered by one of the other statutory criteria. They've rendered it superfluous.

I should add in the reply there is one thing they said, was well perhaps if the nurses had responsibility to establish the job description of these nurse's aides, that that might mean that they were engaged in responsible direction. But no Board case has ever said that that was a prerequisite for a finding of "responsibly to direct," and, in fact, that's the kind of managerial authority that ordinarily is exercised by a much higher management level and not by the lower level that is the supervisory level.

QUESTION: Ms. Mahoney, am I correct in thinking that the Board's opinion in this particular case dealt with the supervisor-employee issue only in a footnote, and then simply discussed who had the burden of proof?

MS. MAHONEY: That's correct, Your Honor. There's no indication of precisely what the Board was doing. But I think that essentially if this Court rejects the Board's rule, as the court of appeals does. If you find that there's adequate room here to accommodate the -- you know, not excluding all professionals under the statutory criteria the way that the court of appeals found, that the court of appeals decision has got to be affirmed because it really is just a question of whether there was substantial evidence to support the judgment under the statutory criteria.

And there the Board's decision -- the Board's decision in the Avon Convalescent Center case and the University Health Care case fully support, because the facts are essentially indistinguishable with the court of appeals' application of the law to the facts. The problem here is that the Board stopped applying that test after 1974, and then went off on this -- this different kind of analysis where everything that a nurse did that furthered the interest of the patient was no longer supervisory.

I mean, the bottom line here is that the Board's rule gives greater organizational rights to nurses than it does to employees in any other industry. The lead person -- not the lead man, but the senior personnel, for instance, in the power plant example is entitled to supervisory -- is not entitled to organizational rights when they perform exactly the same job functions as the licensed practical nurses in this case. And that's the real irony in the way that the Board has interpreted the statute to give --

QUESTION: Who was that, Ms. Mahoney? Give me -- what is the example you're giving?

MS. MAHONEY: In the power plant cases, for instance, what they will have is a lead control operator who is the senior person that's responsible for overseeing the work of others in the operation or in the control room of the power plant. And they also perform work themselves, but they have the responsibility -- they're the one who's in charge. They have the responsibility to decide, you know, what's going to be done in the event of an emergency, whether they need to get additional staffing, or whatever.

And even in the absence of the authority to effectively recommend pay raises or, you know, personnel authority under the other sections, they are found to be the people who are in charge, they are found to be those who are engaged in responsible direction. It doesn't make any sense to say that those exact same activities are now somehow not supervisory because they occur in the context of a nursing home and the employer chooses to use a nurse to perform those functions. That's really what is going on here.

There's also no problem here with --

QUESTION: So you're saying there should be no industry-by-industry distinction in when people are working or not working for the interest of the employer --

MS. MAHONEY: No, Your Honor.

QUESTION: -- Despite the fact that in the power company the people are not engaged in helping other people, whereas in the nursing company they are?

MS. MAHONEY: Well, they're engaged in helping the customers. They're acting pursuant to regulatory standards, a lot of skill and training, and they're acting in the interest of the power plant's customers. The patients in this case are no different than the customers of any other industry.

There's simply no rational distinction, I don't believe, for that analysis. That instead you really have to look at what are the functions they are performing; where are they in the hierarchical structure; what is the employer relying upon them to do? And here the ALJ acknowledged they were the senior personnel, they were in charge of the facility, but because of the Board's patient care rule they could not go ahead and find that they were supervisors.

Yeshiva is really exactly analysis -- exactly analogous because what the Board did in Yeshiva, and, in fact, what it did in Bell Aerospace, was it came to this Court saying we want to find that managerial employees, employees who meet the traditional criteria for managerial status, are not managers. And they're entitled to the protections of the Act because we don't think there's a potential for conflicting loyalties, because in Yeshiva they exercise professional judgment so it's our informed discretion, looking at this industry, that really there's no need to deny them the protection of the Act. They said the same about buyers --

QUESTION: What do you make of footnote 30 in Yeshiva which seems to say that nurses fall in this group that are deemed employees despite substantial planning responsibility and authority to direct and evaluate others?

MS. MAHONEY: I think what Yeshiva is talking about is they were asking the question that the court -- is consistent with the court of appeals, and that is to say do these -- do the university professors only do those things that all university professors do, or do they do something beyond that.

And I think that what the Court was really saying is that when they exercise decisionmaking authority that goes beyond that which sort of every nurse or every university professor inherently must have, that you go ahead and you apply the criteria. Because if you didn't do that, if you said, for instance, that the mere direction, any direction of an aide or -- was automatically supervisory activity, then you'd have a wholesale exclusion. And Yeshiva --

QUESTION: What would you have to take away from these nurses to make them nonsupervisors?

MS. MAHONEY: I'm sorry, Your Honor.

QUESTION: What would you have to take away?

MS. MAHONEY: What would you have to take away from them?

QUESTION: In other words, you said --

MS. MAHONEY: You'd have to take away the responsibility to be the senior personnel who's got the oversight of all of the performance of their functions. If you've got another hierarchical structure, I think that that's the main distinction among the cases.

QUESTION: Thank you.

MS. MAHONEY: I'm sorry, my time is up.

QUESTION: Thank you, Ms. Mahoney.

Mr. Dreeben, you have 4 minutes remaining.

REBUTTAL ARGUMENT OF MICHAEL R. DREEBEN ON BEHALF OF THE PETITIONER

MR. DREEBEN: The burden of respondent is to show that the Board's construction violates the statute, that it is inconsistent with the statute. The terms that appear in Section 2(11) of the Act are terms that are open to more than one interpretation.

This is a Chevron case. The Board has examined the facts of various industries in light of its power to apply the Act to particular situations, and it has arrived at an interpretation designed to draw the very distinction that Congress intended between those with supervisory authority that aligns them with management and those with minor supervisory duties.

QUESTION: Has the Board found that any other character of individual, in attending to the needs of the customer of the employer, is not acting in the interest of the employer but rather in the interest of the customer? It is uniquely nurses that when they take care of nursing-home customers, are not acting in the interest of the employer?

MR. DREEBEN: No, it is not uniquely nurses.

QUESTION: What other fields has the Board applied that theory to?

MR. DREEBEN: The Board has not applied a theory that's phrased in the same terms to other categories of professionals, but --

QUESTION: Why would that be if it's the central feature of this section of --

MR. DREEBEN: What the Board has done is draw an analogy between the -- what nurses do and what other minor supervisory employees do. Our reply brief at page 5, note 7, collects cases that do, in fact, show that the Board's rule in this case is fully consistent with the traditional rule that it has applied. There are many factual distinctions that get drawn between the various cases. The Board tries to draw consistent distinctions. Occasional cases are going to wander on one side of the line or another, but the Board has done what it can to generate a general category.

It does not mean that all nurses are supervisors or are not supervisors. That depends on what they, in fact, do. But the Board's principal rule here is designed to test out what a nurse does as a professional doing what professionals typically do, from what persons do who do exercise genuine supervisory authority.

I thank the Court.

CHIEF JUSTICE REHNQUIST: Thank you, Mr. Dreeben.

The case is submitted.

(Whereupon, at 11:58 a.m., the case in the above-entitled matter was submitted.)

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First National Maintenance Corp. v. NLRB - Oral Argument

Wed, 18 Feb 2009 06:13:06 +0000

Case:

First National Maintenance Corp. v. NLRB

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80-544_19810421-argument.mp3

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80-544_19810421-argument_transcript.xml

Transcript:

ORAL ARGUMENT OF SANFORD E. POLLACK, ESQ., ON BEHALF OF THE PETITIONER

Chief Justice Burger: We will hear arguments next in First National Maintenance Corporation v. the Labor Board.

Mr. Pollack, I think you may proceed whenever you're ready.

Mr. Pollack: Thank you, Your Honor.

May it please the Court:

I have the privilege of representing First National Maintenance Corporation in an appeal which comes to you from the second circuit court.

The question presented for your determination is whether an employer's unilateral decision to terminate a losing portion of its operation solely for legitimate business reasons breaches the duty to bargain under Section 8(a)(5) of the National Labor Relations Act.

In this case, Your Honors, we are not dealing with anti-union motivation.

No animus is present.

Nor are we dealing with what has been stipulated and accepted as the mandatory nature of effects bargaining.

Nor are we dealing--

Unidentified Justice: Mandatory nature of what?

Mr. Pollack: --Effects bargaining, Your Honor.

Nor are we dealing with subjects which may be unlawful under the Borg-Warner concept.

Stated another way, therefore, Your Honor, we are here to determine whether or not terminating a losing portion of its business for a legitimate business reason is either a mandatory subject of bargaining within the National Labor Relations Act or a permissive subject of bargaining within the National Labor Relations Act.

Unidentified Justice: Mr. Pollack, was this a fairly large operation in New York?

Mr. Pollack: No, Your Honor.

As the record indicates depending upon the time that you look at it, during the critical period the petitioner operated either two or four facilities.

We had some 17 months covered by the entire period of operation in the particular facility which is affected.

Thirty-five employees were employed in the Greenpark facility which is the particular facility in which operations were terminated.

Unidentified Justice: Does the record show whether there is much turnover in this business as far as servicing customers is concerned?

Mr. Pollack: No, Your Honor, the record does not show that.

The record does, however, show that there was no interchange between the various facilities serviced by First National.

First National, as Your Honors, I'm sure, are aware, was a service corporation which did cleaning and maintenance work in nursing homes and old age homes within the City of New York.

We have been fortunate in that we have had the benefit of two Supreme Court decisions in this area, one entitled Fibreboard, wherein the Supreme Court had the opportunity of affirming a decision of Mr. Chief Justice Burger who was then sitting in the circuit court, and in which Mr. Justice Stevens wrote a concurring opinion.

Thereafter, about one year later, this Court had an opportunity to examine the case in Darlington.

Darlington concerned a partial secession of operations and it arose under Section 3 of the National Labor Relations Act and not under Section 12.

I think it can be fairly stated that as we view the decisions of this Court in Fibreboard through its rationale in Darlington as interpreted by the majority of the circuits, and even, I might suggest, by the two circuits who came to different conclusions and by the National Labor Relations Board, which comes to a different conclusion at face, what seems to me to be apparent, that there evolves a concept of law which is really what I would suggest is the status of the law today.

And that is to require an employer to bargain about the matter which is within his entrepreneurial control would be in the permissive area as opposed to mandatory.

When there are replacements performing the affected work as part of an integrated work process who are still controlled by the original employer, then a change in that original work is a mandatory subject of bargaining.

I believe that when Fibreboard talked about subcontracting and subcontracting in terms of the employer still exercising control, and all that the employer did in Fibreboard was to replace one group of employees with another group of employees, that's what was meant: an employer replacing employees performing the affected work as part of the integrated work process, who are still controlled by the employer.

And Fibreboard correctly stated that that subject would have been mandatory.

However, if there is a secession of the work and there are no longer replacements performing that work, or if on the other hand as in Darlington the employer withdraws himself as an employer of the affected work, then in those instances I would submit the cases almost uniformly hold that the bargaining would then be permissive.

The hard cases, Your Honors, where the courts very often look to the possibility of taint of union animus, are really cases where the court is trying in my opinion to look to see whether there is a subterfuge, whether the employer is still becoming the employer, whether the work is really still being done by an ally or where there is really a continuation of the same employment relationship but with different employees.

That is not the case which is before you.

As I stated, the petitioner services at best four facilities in the New York area.

It goes into those facilities with its own employees, it cleans the facilities, it receives as compensation from the nursing home a weekly sum which is the equivalent of its out-of-pocket expenses for the payment of its own employees plus a management fee.

In this case the management fee should have been $500 by agreement at the beginning of the arrangement with Greenpark.

It was $250 when the petitioner requested Greenpark to replace it to the $500.

Greenpark refused and the petitioner ceased operations.

It left, it terminated its relationship as an employer performing that service, or, in the case of General Motors, of producing the item.

So I would suggest to you that when there is a true partial, or a true total closing... I'm sorry?

Unidentified Justice: What happened to the employees when the employer withdrew?

Mr. Pollack: Your Honor, as part of the effects bargaining, there were negotiations and the employees were ultimately granted severance pay.

And although I don't know that it's part of this record, there was talk at least of preferential hire into the other facilities.

Unidentified Justice: But they were not in fact hired in one of the other three facilities?

Mr. Pollack: Your Honor, it is not part of this record because the effects bargaining was stipulated to at the lower level and it was acceded by all parties that there should and is mandatory bargaining on the effects, clearly.

And the reason for that is because we should be looking to the policy of the Act.

The policy of the Act, as you know, is set forth in the Act itself.

It talks in terms of its policy.

And it says, in effect, that there is a desire to have collective bargaining, and that the parties should recognize under law each of others, one another's legitimate rights.

The legitimate right of an employee, I submit, is to look to the work which he has traditionally been doing for an employer and say, Mr. Employer, if you continue to do this work, if you continue to be an employer who has control of this work, then I have a legitimate right to want to continue to do it.

If you want to take that legitimate right away from me, then at least talk to me about it.

On the other hand, the legitimate right of an employer is to say, like an employee can say, I quit.

I don't want to work anymore.

An employee has a right to quit.

An employer has a right to withdraw himself as an employer.

Now that does not mean, Your Honors, that he has to withdraw himself as a total employer in every single facet of a multi-faceted operation.

It's only as an employer who produces a particular affected item so that, as in First National--

Unidentified Justice: Was there a successor employer here?

Mr. Pollack: --Yes, there was, Your Honor.

Unidentified Justice: Someone to do that job?

Mr. Pollack: Yes, sir, there--

Unidentified Justice: Was there any claim of the employees that they were entitled to?

Mr. Pollack: --They did in fact, as the record shows, make a claim on the successor.

The successor was the nursing home who took the operation over by itself and the employees did in fact make a claim on that nursing home.

Unidentified Justice: Was there any privity between the new employer and the old?

Mr. Pollack: Well, in that, that they had a contract which put the old employer into the business as the nursing home subcontractor; there was that kind of privity, but there is no allegation that there is an alter ego concept as between First National and Greenpark or an unlawful successorship.

Unidentified Justice: Let me get at it more directly.

Mr. Pollack: I'm sorry, Your Honor.

Unidentified Justice: Did First National have anything to do with the nursing home after they terminated?

Mr. Pollack: Nothing, Your Honor; nothing.

Unidentified Justice: Then there was no privity.

Mr. Pollack: That was the end of their relationship.

Unidentified Justice: Then there is no privity?

Mr. Pollack: At this point there is no privity; that is certainly correct.

It's been held by many, many of the circuits that employees have a right to quit a job even where an employee cannot strike.

Employees en masse have a right to quit.

So too does an employer in recognition of the entrepreneurial, core of entrepreneurial control doctrine, have a right to say he does not wish to make that kind of product.

If he totally excludes himself from making the product, I suggest that the dangers inherent in calling this subject a mandatory subject of bargaining, would require that he not be forced into that dilemma.

Once a subject is called mandatory, it brings into play disclosure of all relevant facts during the bargaining process, it brings into fact disclosure of the fact that there is a desire to terminate to the world at large.

That includes the employer's suppliers, the employer's creditors, key personnel of the employer, potential and possible purchasers of the business, all of which, Your Honors, works to the detriment of the employer's legitimate rights.

In a free enterprise society, as the majority, as the Fibreboard decision recognized, even in the majority opinion as compared to the concurring opinion, there is an inherent management freedom.

The concurring opinion called it the core of entrepreneurial control.

The National Labor Relations Board in the Ozark Trailers case, which really is probably the single most important case from the National Labor Relations Board, since it sets the framework within that Board's functions in this area, even there they recognized that to deal with the problem of partial closings they have to deal with the direct effects of the decision.

I suggest that the direct effect is not an incidental effect of a decision to terminate the management's desire to stay in business.

It is indirect to the determination made by management in the core of his entrepreneurial control, to terminate.

True, there is no doubt about it, that that decision does affect working conditions, but it affects them indirectly.

It affects them incidentally.

The subject is not whether the employer should terminate, but what the effects of that termination should be.

The desire of the respondent to deem all areas of partial closing almost on a per se basis as mandatory subjects of bargaining, really is a way of saying that they need to hold a plant hostage in order to have efficient, effective, effects bargaining.

Unidentified Justice: Well, you're effectively arguing for the position that Judge Kearse took in her dissent in the 2nd Circuit.

Mr. Pollack: That's extremely true, Your Honor, very much so, and I think that's in line with Fibreboard and Darlington.

Unidentified Justice: That you have to... may have to bargain over the consequences of the closing but that you don't have to bargain over whether or not you'd close?

Mr. Pollack: Indeed, Mr. Justice Rehnquist.

In fact, we admit we have to bargain over the consequences.

There is no doubt about that.

Unidentified Justice: Did you state a little while back that you have bargained over the consequences?

Mr. Pollack: Yes, Your Honor, that has been done.

It is really not the issue which is before Your Honors, which--

Unidentified Justice: No, but what was the result of that bargaining?

Mr. Pollack: --There was severance pay paid to the employees.

There was some... the employees had some 17 months, at most, of accumulated seniority, and so there was some severance pay and there was discussion... although I don't believe it's in the record, because it happens after the record, Your Honor... there was discussion about preferential hiring in the other facilities.

Unidentified Justice: Well, now, wouldn't the new employer have to be a party to that bargaining?

Mr. Pollack: No, Your Honor, because the discussion concerned itself with preferential hiring in other facilities operated by the petitioner herein.

And the other--

Unidentified Justice: Oh.

And often the successor employer would have to be a party to the effects bargaining, wouldn't he?

Mr. Pollack: --Not necessarily.

It's only if the effects bargaining was to go to the area of continued employment in the same relationship.

The privity of contract--

Unidentified Justice: Well, no, wouldn't it go beyond that?

I mean, if there's a successor employer, don't the employees have a demand upon him under those particular facts?

Mr. Pollack: --I think that other... oh, indeed, Your Honor.

There are other sections of the labor law which clearly show that in a true successorship there is an entitlement of employees to stay in employment.

Certainly--

Unidentified Justice: That's our Burns Detective and other cases.

Mr. Pollack: --Oh, indeed, Your Honor.

I was addressing the mandatory nature of the bargaining as opposed to--

Unidentified Justice: There's been much in the newspapers about Ford and Chrysler and others completely shutting down plants and letting go some several thousands of employees.

In those instances, I suppose, there, there is bargaining on effects and consequences, but there hasn't been any that I've read about, over whether or not they could close down those plants, has there?

Mr. Pollack: --Your Honor, there are... if I may, we must be careful not to read into this problem a problem of normal layoffs.

As you know--

Unidentified Justice: No, no, I'm talking about... what I've been reading is, in Mahwah, New Jersey, for example, Ford has completely cut out a plant, stopped operating it entirely.

Laid off some four or five thousand workers.

That's the sort of thing I'm talking about.

Mr. Pollack: --Yes.

I would suggest, Your Honor, that if Ford doesn't subcontract out that work to somebody else to do that Ford would have the right to unilaterally make that decision.

That's necessary.

Unidentified Justice: Are you saying that if Ford simultaneously opened a new plant in Hamburg, Germany, employing substantially the same number of people, that that would be a subject of mandatory bargaining?

Mr. Pollack: Yes, Your Honor.

I believe that that is correct.

I believe that because of that set of circumstances the employer still remains the employer.

The work is being done by a replacement group.

Now, that's really what Fibreboard said.

Unidentified Justice: And you think that situation as hypothesized by the Chief Justice is similar enough to Fibreboard to have the Fibreboard rule apply?

Mr. Pollack: Well, there is, of course, Your Honor, a very vast geographic difference.

Unidentified Justice: I understand.

Mr. Pollack: Fibreboard was really a subcontractor suing--

Unidentified Justice: But was that the basis of your answer to the Chief Justice?

Mr. Pollack: --Yes, Your Honor.

Yes, sir.

Unidentified Justice: Now, they might be able to show in that bargaining valid reasons, and there'd be no problem; the problem would wash out.

Mr. Pollack: Yes, but the question, Your Honor, is whether or not it would be permissive bargaining or mandatory.

Because once it becomes mandatory we now get into the whole concept of good faith bargaining and it is that, I suggest to you, that an employer who really is going to stop being an employer does not have to become involved in.

Just as an employee has a right to quit without good-faith bargaining on that subject matter, so--

Unidentified Justice: Well, in a sense, the word "valid reasons" at the bargaining table doesn't have too much significance, does it?

It's more arguments back and forth rather than saying one argument is valid and another isn't?

Mr. Pollack: --No, Your Honor, because... I appreciate that if you just accept what I say at its surface, it may appear that it's against my position, but it is not against my position.

There can be situations where an employer decides that he wants to cut his labor costs as in Fibreboard, and brings the union in and says to the union, if you don't cut your costs, I am going to subcontract out that maintenance work or that work of making tops of convertible cars.

At that point the union can validly in behalf of its members agree to increase productivity to reduce--

Unidentified Justice: Well, when you say, validly, I mean, it can agree, period, can it not?

Mr. Pollack: --Surely.

Unidentified Justice: Why does the word "valid" creep in?

Mr. Pollack: I think, Your Honor, Mr. Justice Rehnquist, the word "valid" is whether there's a valid termination of employment, meaning the employer validly goes out of business.

He doesn't run away and open up a plant in another state in order to avoid some sort of union problem, or he doesn't hire a subcontractor in his own plant.

Unidentified Justice: So "valid" means without anti-union animus, or?

Mr. Pollack: Well, it wouldn't even matter whether... it would include anti-union animus, motive, but it would not only be limited to that.

It could be a good business decision where he wants to save some money, and I suggest to you that if he wants to save some money and if he wants to stay an employer and he really just wants to replace his labor costs, that at that point of time he should be dealing with his employees.

Now, it's true he doesn't give up his rights to make the ultimate decision to close.

He still reserves the prerogative to close.

I agree that he has the right, however, if he is going to only do what was done in Fibreboard, subcontract the work to another labor force, and under those circumstances he should bargain.

"Bargain", as has been said many, many times, does not give up the right to make the ultimate decision.

It just means to listen.

I believe he does not have the mandatory bargaining obligation if he genuinely intends or is forced to cease being an employer.

Therefore, if his supply of raw materials ends, he has the right to do it unilaterally.

If his major customer says, no more business and he's forced out of business, he has the right to do that.

If he's just tired of shuttling back between two various places, plants, and he genuinely intends to close and does close one plant without surreptitiously moving the work to the other plant, he has the right to do that.

That right does not preclude permissive bargaining.

Permissive bargaining says, I'll listen to what you have to say; maybe I don't even want to listen; if I don't want to listen, I don't have to listen.

But I may want to talk to you.

Unidentified Justice: Well, 8(a)(5) is involved only if there's mandatory bargaining.

Mr. Pollack: That is absolutely correct.

Your Honor, I have reserved certain time for rebuttal.

I'd like to continue that reservation.

Chief Justice Burger: Very well.

Mr. Come.

ORAL ARGUMENT OF NORTON J. COME, ESQ., ON BEHALF OF THE RESPONDENT

Mr. Come: Mr. Chief Justice, and may it please the Court:

First of all, I'd like to clear up a few things about the facts in this case.

The petitioner had a maintenance contract with the Greenpark Nursing Home.

Under that contract Greenpark paid the labor cost of the petitioner's employees plus a weekly management fee which was originally $500 and then was cut down to $250.

Petitioner experienced difficulties in making out with the reduced management fee and wanted Greenpark to increase it back to a $500 weekly fee.

In the meantime, the union was certified by the Labor Board as the representative of petitioner's employees.

The union made a demand for bargaining which petitioner did not respond to.

When it could not work out its monetary difficulties with Greenpark, it gave notice that it would terminate the contract, which was terminable on 30 days notice, and then two days before the end of the 30 days it told the employees that they were going to be terminated.

And that was the first word that the union had that petitioner had a monetary problem.

Unidentified Justice: Since you emphasize the two days, what if they had given them 30 days notice, as soon as they terminated with the nursing home?

Would that make it different?

Mr. Come: Well, had they given them 30 days, it is conceivable, given the type of monetary problem that petitioner had, that the union would have been able to bargain over ways of reducing the labor costs that would have enabled petitioner to remain with the contract.

Because petitioner did not just go out of business.

It remained in business at its other, at the other nursing homes that it was servicing.

It was willing to remain in business here, according to the testimony of one of its top officials, if the union could work out the problem, but the point is that at that time there was no time left to negotiate, because the petitioner took the position that it was under no duty to bargain with the union about its decision to terminate its operation.

Now, as far as the effects bargaining is concerned, it is true that two years after the contract was terminated and when the case was pending in the court of appeals, that the parties did engage in effects bargaining and according to the stipulation in the record some provision for severance pay to the employees was made.

I think the facts of this case illustrate why in the Board's view a blanket exemption from the statute for so-called partial closing decisions is not necessary to... well, first of all, it does not effectuate the statutory purposes.

Unidentified Justice: Mr. Come?

Mr. Come: Yes?

Unidentified Justice: Wouldn't that statement you just made require this Court to at least disapprove the 8th Circuit's decision in the Burns case, as to the Omaha operation?

Mr. Come: I think that it depends upon the reasons for the decision.

There are some partial closing decisions that turn upon financial or other investment decisions that bargaining, that there is little that a union could contribute through the give and take of the bargaining process.

In those cases the Board has not required bargaining.

Unidentified Justice: When you're talking about bargaining, you're talking about bargaining between the employer and the union, are you not?

Mr. Come: Yes, Your Honor.

Unidentified Justice: So when you say that there is little or nothing that the union could contribute to the bargaining process, you're talking about a discussion between the employer and somebody else besides the union?

Mr. Come: No, I'm talking about the type of considerations that go into a decision to terminate an operation, as we have here.

In many cases the reason to terminate on economic grounds relates to considerations of labor costs, labor productivity.

Or where concessions in those areas could alter the decision to close.

Experience has, as shown, particularly in the corollary of Cohen, where as a result of give and take on these issues between management and labor, plant closings have been averted.

Unidentified Justice: Tell me, Mr. Come, has the Board taken the position... for example, it's a single plant, and it's organized, and the employer just has such a hassle constantly with the union that he says, it's not worth it, I'm going to give up and go move to Florida, and I'm going to get out of business.

And I'm... why?

I'm getting out of business because this union is just giving me too much trouble.

I want no part of them anymore and I'm just getting out of business.

Does the Board think that's a situation in which the employer before he goes out of business must negotiate the closing with the union?

Mr. Come: I don't know that the Board has had that case but I would point out that there are cases that suggest that the Board would find that there might not be an obligation in that situation.

Unidentified Justice: And it wouldn't be an unfair practice under (a)(3) or something?

Mr. Come: No, because under--

Unidentified Justice: Or (a) something.

Mr. Come: --8(a)(3).

Ah--

Unidentified Justice: Let me give you a slight variation of that.

Suppose, on the first of that month, the proprietor of the establishment says to his wife, I am 80 years old this month and let's move to Florida, and just go out of business.

Have you got to bargain that question with the union?

Mr. Come: --Well, as I've pointed out to Justice Brennan, I don't recall such a case, but I am confident, at least in my reading of the analogous situations, that the Board would be unlikely to find a bargaining obligation in that sort of a situation.

But that is poles apart from the situation that we have here and the situation that we have in many of the termination cases.

Unidentified Justice: Mr. Come, why is it poles apart?

What is the difference between that case... maybe the man is a little older, but still, on the economic decision, he'd rather spend his money in Florida than where he was.

And here the man decides he doesn't want to spend his operation in this particular location.

Mr. Come: Well, I think that Judge Adams in the Brockway case summed it up better than I can when he pointed out that a decision to close down can be motivated by a variety of considerations.

On some considerations the union is not a very helpful interlocutor.

On others, it may very well be, and what we're talking about here is that the end result is a termination of employment, a termination of the jobs of the employees which put--

Unidentified Justice: Well, Mr. Come, what if a 40-year-old couple who are proprietors decide that they're sick and tired of shoveling snow up here in the north and want to move to Florida?

Do you think the Board would say that was a subject of mandatory bargaining?

Mr. Come: --I don't think so.

I don't think so, but on the other hand, if you have a situation such as you had here, where the only reasons that this employer wanted to close down were, as he put it, the money items, and the money items were such that it was not unreasonable to believe that the union could point out to him ways in which the money problem could be solved and the operation remain in operation, that is a situation where it furthers the statutory purpose to require bargaining first.

Unidentified Justice: Well, the union could point it out to him by sending him a letter, couldn't it?

Mr. Come: Well, sending a letter does not have the same meaning or likelihood for persuasion that sitting down at the bargaining table--

Unidentified Justice: Well, but you're suggesting that the union is kind of a management consultant that can help him save money.

Mr. Come: --No, it is not a management consultant but it certainly knows about what wages--

Unidentified Justice: Do you mean something like this, Mr. Come?

The union might come in and say, look, you need to net $500 a week.

If the 35 of us took a $3 decrease in our weekly pay, that would give you enough, coupled with the $250 you've got, to give you the $500.

Mr. Come: --That is what I'm talking about, and that is exactly what has happened in many forms and is happening today--

Unidentified Justice: But what about the situation--

Mr. Come: --in the rubber industry and in the auto industry.

Unidentified Justice: --Well, I was going to ask, what about the... maybe I'm wrong about the facts, but didn't Ford cut, close down, permanently close down its Mahwah plant and let some 4,000 employees go?

Mr. Come: It did.

Unidentified Justice: Now, was there any negotiation with Ford about the closure of that plant?

Mr. Come: I don't know about that plant, but there are instances which we have set out in our brief where in the rubber industry and in other auto plants, UAW and Chrysler, for example, before the loan guarantee statute was enacted, did bargain about the decision in advance, and as a result of that bargaining the union did agree to take wage cuts, defer pension accruals, defer cost of living increases, with the result that the plant was able to continue operating.

Unidentified Justice: Mr. Come, perhaps you can't answer this in just a word but are you defending the court of appeals opinion here or are you furthering Board's view, or both?

The court of appeals didn't sustain the Board's rule, did it?

Mr. Come: Well, I think that the court did.

It--

Unidentified Justice: Well, it sustained on the judgment, maybe, but the Board's rule is more of a per se rule than the court of appeals would agree to, isn't it?

Mr. Come: --No, I don't think so.

The Board's position, and I should point out that this is a position that has evolved over time and--

Unidentified Justice: This is your so-called Ozark rule, is that it?

Mr. Come: --Well, it's the Ozark rule as modified in the light of cases subsequent to--

Unidentified Justice: In the light of subsequent elections.

I--

--I will put it to you this way.

Does the court of appeals view of the law satisfy the Board completely?

Mr. Come: --I think it would; I think it would.

Unidentified Justice: That's all I really--

Mr. Come: I think there's really no difference other than perhaps a difference in formulation between the court of appeals position and that of the Court, which is that as a general principle, there is a duty to bargain about an economic decision to shut down a part of an operation, absent a showing that such bargaining would be futile or significantly interfere with the employer's right to manage his business.

I don't think that there is, as I say, a difference between the Board and the--

Unidentified Justice: --Well, does the Board recognize any exception to its Ozark rule?

Mr. Come: --Yes, Your Honor.

I think we've set those out in our brief, particularly in the pages 40 to 41.

And... or actually beginning on 38.

I think one of the first exceptions that was recognized was General Motors, which is not a recent decision, where General Motors decided to sell--

Chief Justice Burger: We'll resume there at 1 o'clock, counsel.

0 [Recess.]

Mr. Come, you may resume.

Mr. Come: --The heart of this case was illustrated by a question of Justice Brennan's before the example that he gave of the closing of the auto plants.

You have here a situation where labor cost is the major portion of this contract.

As a matter of fact, there's no capital investment at all and that Greenpark, the nursing home, furnished even the mops and the pails and the materials.

Petitioner furnished only labor.

In that sort of a situation the case is very close to Fibreboard because the chances of bargaining, being able to make a difference in the decision to terminate the operation, are sufficiently good to further the statutory purpose of bringing it under the scope of bargaining.

In Fibreboard the Court pointed out that the reasons for the employer's decision to contract out, that economies could be derived by reducing the work force, decreasing fringe benefits, and eliminating overtime payments, involved matters peculiarly suitable for resolution within the collective bargaining framework.

And the Court held that in those circumstances the chances were sufficiently good that bargaining would be able to work out a resolution of the problem, that the statutory purpose would be served by bringing it within the area of mandatory bargaining.

Unidentified Justice: Mr. Come, does it make any difference that in this case the nursing home had agreed to pay all of the labor cost and was obligated to do so?

Mr. Come: No, Your--

Unidentified Justice: That was not the case, of course, in the examples you've cited.

Mr. Come: --That is correct.

But insofar as the nursing home was concerned, all it was concerned about was in paying no more than the total bill.

Unidentified Justice: Is that demonstrated by the record in this case?

Mr. Come: I believe that it is.

Unidentified Justice: Would not the nursing home also have to participate in the bargaining?

Wouldn't you have to have a three-way bargaining under those circumstances?

Suppose the nursing home just said, we can't afford to pay more than $250 regardless of what the wages are?

Mr. Come: Well, there was certainly no indication that that would be the problem.

They never got to that--

Unidentified Justice: Is there any evidence as to what the nursing home would be willing to do?

Mr. Come: --No, the only indication is that, when the union was told to go to the nursing home about keeping on the employees, the nursing home said that, we can't do it because there's a clause in the contract the precludes us from hiring any of the petitioner's employees for 90 days.

Unidentified Justice: Anyway, Mr. Come, even if the nursing home took the position that $250 is our rock bottom dollar, we're not going to contribute any more, you wouldn't have to have them in the negotiation if you could get the union to agree to reduce their wages enough to make up the additional $250, would it?

Mr. Come: That is correct.

This is a situation where the total price could be kept where it is if the union were willing to reduce wages or introduce some productivity changes that would make the operation more efficient.

As a matter of fact, earlier in the year, before the union came into the picture, the nursing home had given petitioner a notice that it was going to terminate its contract because a state inspection had found that its employees were not being efficient enough and petitioner instituted some changes in procedures that improved efficiency and enabled them to continue the contract.

It's not necessary to guarantee that something like this could have been achieved.

All that is necessary in order to further the statutory purpose is to have a situation where, as in Fibreboard, it is reasonable to believe that something could be done.

Unidentified Justice: Well, Mr. Come, what precisely was the factual sequence here?

Did the company simply announce without any previous notice to the union at all that it was shutting down this operation?

Mr. Come: Yes, Your Honor.

Two days before.

And it didn't even announce it to the union.

It announced it to the employees who in turn notified the union.

Now--

Unidentified Justice: Did the contract contain any provision calling for consultation or notice, independent of any other factors here?

Mr. Come: --No, it did not, because at the time the contract was negotiated the union had not been certified as the bargaining representative and the petitioner and the union never got to negotiating a contract.

Now, if there were a duty to bargain over partial closing situations, the parties can in their contract negotiations, as have many employers, worked out in advance of a termination the conditions for notice and the amount of bargaining--

Unidentified Justice: But does a duty to bargain under the Act supply a contractual term that is nonexistent?

Mr. Come: --Well, the duty to bargain imposes a legal obligation that might... there was no contract between the union and the employer.

The contract was between--

Unidentified Justice: But you're making the duty to bargain in effect a part of a contractual provision that was nonexistent.

Mr. Come: --No, I think you misunderstand me, Your Honor.

What I'm saying is that without a contract there would be a duty to bargain.

Nowever, in negotiating a collective bargaining agreement the parties can in their negotiations define the, or restrict the limits of the bargaining obligation, and there are contract provisions that provide for advance notice, what sort of bargaining if any has to occur in the event of a termination, what sort of severance pay and things of that sort would be provided?

But we never got to first base on that here.

But the logic of petitioner's position that there is no duty to bargain at all over the decision would remove from the mandatory bargaining obligation even the situation at the stage of contract negotiations where the parties in advance of such a situation seek to make provision for it.

The duty to bargain is a very, very flexible concept.

Unidentified Justice: Where is the obligation to stay in business?

Whence does that arise?

In any business, whether it's Chrysler, or First National Maintenance?

Mr. Come: I don't think that there is an obligation to stay in business if you want to go completely out of business.

I think the Darlington case recognizes that.

If an employer wants to pick up--

Unidentified Justice: Isn't that what was done here?

Mr. Come: --No, Your Honor, it was not done here because this employer remained in business.

He--

Unidentified Justice: Not in this business.

Not in the particular enterprise that we're concerned with on this record.

Mr. Come: --Well, he remains in business at his other nursing homes.

He was perfectly willing to remain in business here if the money items could be worked out.

Unidentified Justice: Well, but Chrysler is not only willing but anxious to remain in business, but they certainly can close some of their plants which are nonproductive in order to survive.

Mr. Come: After bargaining, however.

The duty to bargain does not mean the duty--

Unidentified Justice: Do you suggest that Chrysler had to bargain with somebody before they closed a plant somewhere?

Mr. Come: --I am suggesting that.

I am also suggesting that they and the UAW did.

Unidentified Justice: Well, the fact that they did doesn't necessarily, they may have done that in terms of future relations with the United Automobile Workers because they've got to continue to work together, but are you saying there's an obligation if they decide that a losing plant must be closed, an obligation to negotiate?

Mr. Come: Where the considerations are of the nature that we have here, if it is--

Unidentified Justice: What you mean, Mr. Come, if the union can contribute anything which would lead the employer not to close the plant, then he ought to sit down with the union and negotiate.

Not that he ought to; that he must, under the law, it's mandatory.

Mr. Come: --That is correct.

Unidentified Justice: Or you lose your case, don't you?

Mr. Come: That is correct.

I want to just make one point and that is that everybody concedes here that there is a duty to bargain about the effects of a closing.

Now, the effects of a closing are often intertwined with the decision.

Experience has shown, and the authorities that we have cited in our brief, that enlightened management have recognized that you can't meaningfully bargain about the effects if the employees are going to have suspicions and recriminations about the decision.

The only way you can get on to meaningful bargaining about the effects is to candidly discuss the reasons for the closings and--

Unidentified Justice: Mr. Come, I was a little surprised to hear you say that you would accept the court of appeals' view that a presumption was enough to satisfy the Board.

Now, suppose the employer comes back and says, look, I didn't want to bargain because economics didn't have anything to do with it, I just didn't like the union.

Now, in this very case, a union gets certified, suppose the employer says, I decided to close down this branch because I just don't like unions?

Mr. Come: --I don't know that that would be a... the court of appeals didn't say, just a presumption.

It said--

Unidentified Justice: It said that the employer... that there was--

Mr. Come: --that the employer would have to show--

Unidentified Justice: --a presumption that he must bargain.

Except that the... it's rebuttable.

If he's got the right reasons, he doesn't need to bargain.

Mr. Come: --Well, but the reason that the court of appeals gave was that bargaining would not effectuate the purposes of the statute.

I agree with you.

And if he doesn't like unions, certainly bargaining isn't going to effectuate much.

Well, it may be that bargaining would not be very meaningful.

But on the other hand, petitioner's position--

Unidentified Justice: I thought you told me earlier, Mr. Come, in precisely... I gave you that hypothetical.

And I thought you said to me in that circumstance you didn't think there was any duty to bargain.

Exactly.

That's what I thought so, too.

Mr. Come: --Well, I'm talking about a situation where he goes completely out of business, which is the Darlington situation, for an anti-union reason.

And the court there found that it is no 8(a)(3) unless you can show a purpose to chill.

The Board in that sort of a situation has indicated that it would find no duty to bargain either.

But the situation of a partial closing where he remains in business, which is what we have here, I submit, presents a different questions.

And that is what we have here.

Thank you.

Chief Justice Burger: Do you have anything further, Mr. Pollack?

Mr. Pollack: Yes.

Mr. Chief Justice--

Mr. Chief Justice, and may it please the Court:

If I may just for the record possibly correct what may be some confusion concerning the costs which were applicable under the contract between First National and the nursing home, as I said earlier, this was a cost-plus contract which meant any give-back of costs by way of the laborers, the union, the employee saying, I would be willing to take less pay, would in reality inure to the benefit of the nursing home.

Now, it might be argued, and I suggest, Your Honors... and forgive me, we're probably off the record, because the record didn't get into this, but in response to the question I would like to.

In the nursing home industry in the State of New York we are dealing with predominantly a reimbursement state statute concept under Medicare and Medicaid.

The probability is that if there were a cost saving in labor, that the state reimbursement to the nursing home would be proportionately reduced and so the reason why, I might suggest, the respondent is willing accept the 2nd Circuit's presumption that they labeled rebuttable, is because in reality it's not.

In this very case it should have been rebutted.

The dissent from it points that out admirably well.

ORAL ARGUMENT OF SANFORD E. POLLACK, ESQ., ON BEHALF OF THE PETITIONER -- REBUTTAL

Unidentified Justice: I don't understand that argument.

If the union were to agree to take a cut in wages in order to let your client realize $500 a week, why would that trigger the reimbursement, New York reimbursement statute?

Mr. Pollack: Because the contract between Greenpark, which was the nursing home, and First National, says that the nursing home repays the out-of-pocket expenses of First National plus a management fee.

So, if you lower the out-of-pocket expenses it doesn't help First National.

And I believe that that is a critical point that the dissent in the circuit below makes and in reality is why the presumption is really not a rebuttable presumption.

It's an irrebuttable presumption.

Because, what happened in this very case is the dilemma that the management community would be faced with.

It would be faced with bargaining or making a decision to bargain or not.

And then, with the benefit of hindsight, a court or a board would after the fact look at the case and say, oh, you should have bargained.

And the record itself might not really be complete.

And so I suggest to you that the Ozark rule, the presumption of the the 3rd Circuit in Brockway, the presumption of the 2nd Circuit in First National, all become unworkable.

Better is it to apply the concurring opinion of Judge Stewart in Fibreboard.

Unidentified Justice: Well, it's a court of appeals opinion--

Mr. Pollack: Or the court of appeals opinion in that very case.

Yes, Your Honor.

Unidentified Justice: --But you're not going to apply my opinion?

Mr. Pollack: I have difficulty, Your Honors.

Unidentified Justice: Mr. Pollack, may I ask you a question that Mr. Come's argument raised with me?

If you're correct in your view that this is not a mandatory subject, the decision to close is not, what would your view be about a request by the union, when you sit down to bargain out a new collective bargaining agreement, and they say, we would now like to bargain about the procedure to be out in the contract that shall be followed in the event that the employer faces up to a termination decision.

Would that be mandatory or not?

Mr. Pollack: Your Honor, clearly that would be in my opinion permissive.

However, if the procedure were a procedure which... wide as it... which kept at its core the effects aspect of bargaining, meaning we want to bargain with you concerning the effects of--

Unidentified Justice: No, no, my question is, we want to bargain with you, we want to have notice of any intent to close and a time to try and tell you how we might help you make a different decision?

Mr. Pollack: --Your Honor, I believe the notice requirement goes to effects as well as it does to decisional bargaining, and would be proper and mandatory.

I submit that under the reasoning which I advance, the request in advance would be permissive or mandatory only if it were distinguished as between a termination and/or a continuation of the business in a different nature or subject.

Unidentified Justice: No, let's say there's a fact situation just like this, where--

Mr. Pollack: It would be permissive, Your Honor, and would certainly be bargainable, but it's not the kind of subject that parties can raise to the stature of impact.

Unidentified Justice: --Well, what do you do with the Telegraphers case in the railroad?

Mr. Pollack: Your Honor, the Railway Telegraphers case in my view really concerned the Norris-La Guardia Act and its application in labor disputes as--

Unidentified Justice: Well, it may be, but the Court said it was a mandatory duty of bargaining.

Mr. Pollack: --No, Your Honor, if I may, the Court said it was a legal subject for bargaining and therefore it was not enjoinable.

I don't believe, and I must respectfully suggest, that that Court was aware or even dealt with... this Court... even dealt with the Borg-Warner tripartite approach to legal, mandatory and permissive.

The Court in Telegraph dealt with legal and illegal.

Unidentified Justice: So you think... my real question was, do you think that the rule might be different in the railroad labor cases?

Mr. Pollack: Absolutely not, Your Honor.

Unidentified Justice: So if we happen to disagree with you on how to read the Railway Telegraphers case, you may lose your case?

Mr. Pollack: If you disagree with me, that would be correct, Your Honor.

But I believe that the way this Court treated Fibreboard and Darlington indicates very clearly that they considered Telegraphers in line with what I have described, my belief of the case's holding.

It seems to me incompatible to say, by the Labor Board, that the Labor Board would not require an employer to bargain about his decision to go totally out of business and move to Florida, but would require that employer to bargain about a decision to close his New York plant and continue in a Florida plant that he may have operated before that time.

To me it is incongruous.

It defies both the treatment that this Court has afforded to the doctrines of law and, I suggest, logic.

Thank you.

Chief Justice Burger: Thank you, gentlemen.

The case is submitted.

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