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Southcoast Hospitals Group, Inc. v. National Labor Relations Board

United States Court of Appeals, First Circuit

January 20, 2017

SOUTHCOAST HOSPITALS GROUP, INC., Petitioner/Cross-Respondent,
NATIONAL LABOR RELATIONS BOARD, Respondent/Cross-Petitioner.


          Joseph D. Whelan, with whom Matthew H. Parker and Whelan, Corrente, Flanders, Kinder & Siket LLP were on brief, for Petitioner/Cross-Respondent.

          Barbara Sheehy, Counsel, with whom Robert J. Englehart, Supervising Attorney, Matthew Bruenig, Attorney, Richard F. Griffin, Jr., General Counsel, Jennifer Abruzzo, Deputy General Counsel, John H. Ferguson, Associate General Counsel, and Linda Dreeben, Deputy Associate General Counsel, were on brief, for Respondent/Cross-Petitioner.

          Before Thompson and Kayatta, Circuit Judges, and Barbadoro, [*] District Judge.


         Southcoast Hospitals Group, Inc. was created through a merger of three hospitals. One of the hospitals has a union workforce, and the union's collective-bargaining agreement grants its members a hiring preference when filling union positions. In an effort to produce more even-handed hiring practices across its three hospitals, Southcoast adopted a policy that grants nonunion employees a similar hiring preference for nonunion positions. The union challenged the nonunion hiring policy, contending that it discriminates against union members in violation of section 8(a)(3) and (1) of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 158(a)(3), (1). A divided three-member panel of the National Labor Relations Board ("Board") determined that the policy was invalid because it was not supported by a legitimate and substantial business justification. We vacate the Board's order and remand the case for further proceedings consistent with this opinion.

         I. BACKGROUND

         A. Southcoast's Hiring Policies

         Southcoast was created through a 1996 merger of St. Luke's Hospital, Charlton Hospital, and Tobey Hospital. Only employees at Tobey are represented by a union. The union, 1199 Service Employees International Union United Health Care Workers East ("1199 SEIU"), represents approximately 215 technical, clerical, service, and maintenance employees out of a total of 550 employees at Tobey.[1] St. Luke's has approximately 2, 700 nonunion employees, and Charlton has approximately 2, 100 nonunion employees.

         Union members have enjoyed a hiring preference when applying for union jobs at Tobey since at least the time of the merger. The union's 2011 collective-bargaining agreement, which was in effect during the relevant time period, provides in section 8.2 that "[v]acancies in bargaining unit positions [i.e., union positions] . . . shall be filled on the basis of available qualified applicants. Among such qualified applicants, the most senior qualified applicant shall be selected." Section 8.1 defines seniority in terms of time spent in union positions. When these provisions are read together, they bar Southcoast from considering any nonunion applicant for a union position unless all union applicants are unqualified for the position.

         Southcoast developed its current policy for filling vacancies in nonunion positions in 1999. That policy - HR 4.06 - divides applicants into two broad categories. "Internal Applicants" include all nonunion, regular-status employees, all temporary and per diem employees, and union members who belong to a union that "provides reciprocal opportunity to employees who are not members of the union for open positions at the unionized site." All other applicants are treated as "External Applicants." Among Internal Applicants, HR 4.06 provides that regular-status employees "will be given first consideration for job postings providing the regular status employee's qualifications substantially equal the qualifications of external candidates." Temporary and per diem applicants are considered after regular-status employees but before External Applicants. The policy bars Southcoast from recruiting or considering any External Applicant for a nonunion position until all qualified Internal Applicants have been interviewed. Because the union's collective-bargaining agreement includes a hiring preference for union members, they are treated as External Applicants under HR 4.06.

         Southcoast's actual practice when filling vacancies in nonunion positions differs somewhat from the process specified in HR 4.06. Job openings are posted and advertised for all applicants at the same time. Applications are screened and qualified applicants are placed into one of three groups by the company's human resources department. Nonunion, regular-status applicants are considered in the first round. If no one is selected from the first round, union applicants are considered together with temporary and per diem applicants in the second round. All other applicants are considered in the third round if no one is selected from the first two rounds.

         David DeJesus, a human resources official at Southcoast, was responsible for creating HR 4.06. DeJesus claims that he had received complaints from unnamed employees about union hiring preferences both while working at Southcoast and in a prior job at another company where union members enjoyed a similar preference. He asserts that the company adopted HR 4.06 as a "matter of equity." From his perspective, if the union excludes nonunion employees from the first round of consideration for union positions at Tobey, then "it should work the same way in the other direction."

         B. Enforcement of HR 4.06

         Christopher Souza, a union worker employed at Tobey, applied for a building superintendent position at St. Luke's in May 2011. The following month, human resources coordinator Lucilia Darosa notified Souza that Southcoast had chosen another applicant. When Souza inquired as to why he had not been selected for an interview, Darosa provided a citation to HR 4.06 and explained that "[Southcoast] would not be able to consider you for the first round interviews as you currently work at Tobey in a [bargaining-unit] ...

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