Unpublished Disposition, 881 F.2d 1084 (9th Cir. 1984)

MEMORANDUM^* 

This is a petition to enforce a decision of the National Labor Relations Board that the employer, Community Living, engaged in two unfair labor practices against its employees. The Board found that Community Living's imposition of unilateral changes in the terms and conditions of employment during contract negotiations without engaging in bargaining with the union constituted an unfair labor practice in violation of the National Labor Relations Act, 29 U.S.C. §§ 158(a) (1) and (a) (5) (1982). The Board also found that Community Living engaged in an unfair labor practice when it failed to provide the union with information about its operations that the union requested for bargaining purposes, also in violation of 29 U.S.C. §§ 158(a) (1) and (a) (5).

Community Living initially challenges the jurisdiction of the Board, alleging that Community Living's contacts with interstate commerce were insufficient to accord the Board jurisdiction under the National Labor Relations Act, 29 U.S.C. §§ 152(7) and 160(a) (1982). This contention is without merit. The parties stipulated that Community Living's total annual revenue exceeded $500,000. Under 29 U.S.C. §§ 152(7) and 160(a) the National Labor Relations Board has jurisdiction over employers who engage in unfair labor practices "affecting commerce." The statute cedes to the Board "the fullest jurisdictional breadth constitutionally permissible under the Commerce Clause." NLRB v. Reliance Fuel Oil Corp., 371 U.S. 224, 226 (1963) (emphasis in original). " [T]he Board's jurisdiction is not dependent upon any particular volume of interstate commerce." NLRB v. Carpenters Local No. 2133, 356 F.2d 464, 465 (9th Cir. 1966). Community Living was well within the Board's statutory jurisdiction.

Community Living also contends that the Board has abused its discretion in exercising jurisdiction over it. However, Community Living has not alleged any discriminatory or other impermissible motive on the part of the Board. Community Living has not established that the exercise of jurisdiction over it violates any declared Board policy. "The extent to which the Board chooses to exercise its statutory jurisdiction is a matter of administrative policy within the Board's discretion ... it is not a question for the courts ... in the absence of extraordinary circumstances, such as unjust discrimination." NLRB v. Southeast Ass'n for Retarded Citizens, 666 F.2d 428, 431 (9th Cir. 1982) (quoting NLRB v. Carroll-Naslund Disposal, Inc., 359 F.2d 779, 780 (9th Cir. 1966) (per curiam)). The Board has not abused its discretion by exercising jurisdiction over Community Living.

Community Living further contends that the Board lacks jurisdiction over it because Community Living is entirely funded by an exempt governmental entity, the Washington State Department of Social and Health Services. The Board's determination that it has jurisdiction over a private employer funded by an exempt governmental entity will be upheld as long as it has a reasonable basis in the evidence and is not contrary to law. Museum Associates v. NLRB, 688 F.2d 1278, 1280-81 (9th Cir. 1982) (per curiam).

Community Living easily meets the requirement established by the Board that the employer be able to bargain meaningfully over the core group of subjects that establish levels of employee compensation. Here the State Department of Social and Health Services does not directly impose limitations on Community Living's control over its labor relations. The only state-imposed limitations on Community Living's control over its labor relations are (1) limits imposed by the overall level of funding of Community Living by the state; and (2) the state's requirements that a certain minimum percentage of the total funding allocated be spent on staff salaries and benefits. Within the range established by the state-imposed minimum required allocation to wages and benefits, and the maximum imposed by the total level of funding, Community Living has complete discretion over its structuring of salaries and benefits. Community Living therefore meets the criteria established by the Board for jurisdiction.

On the merits, Community Living asserts that it was justified in unilaterally reducing employee benefits during bargaining without notice to the union because of economic necessity. Under the Act, 29 U.S.C. § 158(d), both the employer and the certified bargaining representative of the employees have a "mutual obligation ... to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment." After a union is duly certified as the collective bargaining agent of its employees, an employer's unilateral alteration of existing terms and conditions of employment without notice to the union or an attempt to bargain over the change constitutes a violation of the duty to bargain in good faith, unless the parties have reached an impasse in bargaining, or the union has waived the right to bargain. NLRB v. Katz, 369 U.S. 736, 743-48 (1962); see also Alfred M. Lewis, Inc. v. NLRB, 587 F.2d 403, 411-12 (9th Cir. 1978).

Community Living's failure to bargain over the changes it imposed on employee benefits was not justified by economic necessity. Community Living acknowledges that it had notice of reductions in its funding by the state legislature by December of 1983 at the latest. Rather than bargaining over changes that such cuts would make necessary in employee benefits, Community Living's board of directors considered and rejected the collective bargaining agreement that had been ratified by the union membership, and in February, 1984 adopted an expense reduction package designed to make up the corporation's 1983 deficit. On February 7, 1984 the executive director issued a memo to employees stating that Community Living had rejected the proposed contract for economic reasons, had chosen to implement a reduction and expenditures package rather than cease operations, and was "most cognizant that an unfair labor practice [charge] will most likely be filed against the corporation for changing previously established working conditions."

The benefit reductions went into effect retroactively as of February 1, 1984. Under the circumstances, a delay in those changes to allow some period of bargaining with the union over them would not have caused the immediate cessation of Community Living's operations. Imposition of the unilateral changes without any bargaining was not justified by economic necessity.

The record also does not support Community Living's contention that the parties had bargained to impasse. The parties had continued to bargain up to the point at which Community Living imposed the unilateral changes in benefits. In fact, during the meeting in which the board of directors adopted the changes in benefits, it also considered and rejected a contract which the union membership had previously ratified. Community Living's failure to bargain over the unilateral changes in benefits was not justified by a bargaining impasse.

The Board also found that, by failing to provide requested financial information about its operations to the Union, Community Living violated its duty to provide relevant information to the Union for purposes of bargaining. Community Living contends that it was under no duty to provide the information, because it had either already been provided or was irrelevant. This contention is meritless.

In NLRB v. Truitt Mfg. Co., 351 U.S. 149, 153 (1956), the Supreme Court held that an employer's duty to bargain in good faith also includes a duty to provide supporting information for its claims of an inability to pay a wage increase. Accordingly, a refusal to provide substantiation for such claims constitutes an unfair labor practice under the Act. See NLRB v. Pacific Grinding Wheel Co., 572 F.2d 1343, 1348 (9th Cir. 1978).

The Union requested the financial information about Community Living's 1982 and 1983 operations for purposes of bargaining over the unilateral changes to the terms of employment implemented by Community Living in 1984. While Community Living had previously provided some information about its operations through July, 1983, Community Living's asserted justification for the 1984 unilateral changes was a $47,171.48 deficit for 1983 which had not been reflected in the Union's audit in July, 1983. The information requested in 1984 was clearly relevant to the new bargaining issue of Community Living's inability to pay even the benefits it had previously been paying, and the information about the organization's finances during the last six months of 1983, at least, had never been provided.

Finally, Community Living challenges the remedy proposed by the Board for the two unfair labor practices. The Board's proposed remedy for Community Living's unfair labor practices includes restitution of the benefits lost to employees as a result of Community Living's imposition of the unilateral changes in benefits. The Board has substantial discretion in fashioning remedies for unfair labor practices, and the Board's choice of remedy will be upheld absent a clear abuse of that discretion. Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 215-16 (1964); General Teamsters Local No. 162 v. NLRB, 782 F.2d 839, 844-45 (9th Cir. 1986). There has been no showing that the restoration of the status quo ante is inappropriate in this case. The amount of restitution has yet to be determined.

The petition of the Board is GRANTED.