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Adams and Associates, Inc. v. National Labor Relations Board

United States Court of Appeals, Fifth Circuit

September 15, 2017


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

          Before HIGGINBOTHAM, GRAVES, and HIGGINSON, Circuit Judges.

          JAMES E. GRAVES, JR., Circuit Judge

         Adams and Associates, Inc. ("Adams") and McConnell, Jones, Lanier & Murphy LLP ("MJLM") petition for review of an order of the National Labor Relations Board, holding them liable for unfair labor practices in violation of the National Labor Relations Act, 29 U.S.C. § 151 et seq. Adams and MJLM operate a Job Corps Youth Training Center in Sacramento, California, under a contract with the Department of Labor. The allegations in this case arose from Petitioners' successorship to the former contractor, Horizons Youth Services, LLC ("Horizons"). During the period in which it operated the Center, Horizons had a collective-bargaining agreement with Sacramento Jobs Corps Federation of Teachers, AFT Local 4986, American Federation of Teachers (the "Union"). The Board's order found that Adams violated Sections 8(a)(3) and (1) of the Act by discriminatorily refusing to hire five incumbent employees in order to avoid an obligation to bargain with the Union; and violated Sections 8(a)(5) and (1) by unilaterally imposing initial terms and conditions of employment on the unit employees and banning Union president Genesther Taylor from the Center. The Board further found that MJLM and Adams are joint employers and are jointly and severally liable for the aforementioned violations. The Board cross-petitions for enforcement of its order. For the reasons that follow, we deny the petition for review and grant the Board's cross-petition for enforcement of the order.

         I. BACKGROUND

         MJLM and Adams jointly bid for a contract with the Department of Labor ("DOL") to operate the Job Corps Center in Sacramento (the "Sacramento Center" or the "Center"). The Job Corps program administered by the DOL provides academic and vocational training to economically disadvantaged youth, ages sixteen to twenty-four, at residential centers throughout the United States. Both companies have contracts to operate various Job Corps centers across the country. In early February 2014, the DOL awarded the primary contract to MJLM to operate the Center with Adams as its subcontractor for residential, wellness, recreation, counseling, and career services. MJLM has "overall responsibility for management of the Center" and "directly handles education and training, maintenance, finance, and administration." Horizons had been operating the Center since 2009. Its collective-bargaining agreement ("CBA") with the Union covered all bargaining unit employees, which included "[a]ll full-time Residential Advisors (RA), Non-Residential Advisors, and Day Residential Advisors employed at the [Center]." Horizons employed 26 bargaining unit RAs, who oversaw the students residing in the Center's dormitories. The most recent agreement between Horizons and the Union was effective by its terms until June 2013, but had been extended to March 9, 2014.

         Transition Process Begins

         In early February 2014, MJLM and Adams opened a shared transition office in the Sacramento Center. Both Adams and MJLM personnel participated in the transition. From Adams, the transition management team consisted of Executive Director Jimmy Gagnon, Executive Director of Human Resources Valerie Weldon, and Deputy Center Director Kelly McGillis; from MJLM, Partner Sharon Murphy, HR Director Joyce Barrett, and Center Director Erica Evans participated. Adams' CEO Roy Adams ("Roy") and Vice President for Human Resources and General Counsel Tiffinay Pagni provided additional support from Adams' headquarters. Evans had been the Horizons Center Director and was hired by MJLM to fill that same position. McGillis directly reported to Evans.

         On February 11, the Union notified MJLM that it was the exclusive collective-bargaining representative of the unit employees and requested information concerning the hiring process. On February 13, Adams responded to the Union and stated that it would be responsible for hiring and employment of the Center's RAs. That same day, Gagnon met with a group of Horizons RAs to announce the transition and advise them about the hiring process. Former Horizons RA and Union President Taylor attended the meeting. She later testified that Gagnon told the RAs that they had been "doing a really good job" and that "aside from disciplinary issues, he was 99 percent sure that [they] would all have a job" after the transition. Gagnon also stated that Adams planned to reduce the number of RAs from twenty-six to fifteen, but would also hire five people in the new position of Residential Coordinator ("RC"). RCs would have roughly the same job duties as RAs, but would also fill in for dormitory supervisors and shift managers when necessary. The Horizons employees were then invited to apply for up to two available positions and given twenty-four hours to return completed applications. They were permitted to review job descriptions at the meeting, but Taylor's request for copies of the job descriptions was denied. Fourteen incumbent RAs applied for the fifteen available RA positions.

         The following day, the Union demanded that Adams recognize and bargain with it as the representative of the RAs. Adams did not respond. Also on that day, Taylor visited the transition office to submit her employment application. She again requested copies of the job descriptions and asked Gagnon additional questions about the transition. Gagnon said that he was unable to provide copies or answer any of her questions and directed her to contact Pagni. Taylor also asked McGillis for a blank employment application for a Horizons RA on medical leave. McGillis referred Taylor to Weldon.

         The Hiring Process

         The transition period was put on hold for two weeks during a contract appeal and resumed in late February. Although Adams led the hiring process, both Adams and MJLM personnel interviewed applicants and made hiring recommendations. Gagnon made the final hiring decisions. In filling RA positions, Adams was required to follow Executive Order 13495 Non-Displacement of Qualified Workers under Service Contracts ("EO 13495"). EO 13495 incorporated a right of first refusal for displaced employees and required successor contractors to offer employment to all "qualified" incumbent employees of the predecessor contractor. EO 13495 also required the successor to issue employment offers no later than 10 days prior to the commencement of operations. To comply with EO 13495, Adams, through Pagni, created a "Justification for Disqualification of Potential Employment" form ("Disqualification Form"), which the transition team used to document the reasons for not hiring any incumbent applicants.

         It is Adams's practice in such transitions to hire management personnel first, in part so that they can provide input on the performance of incumbent employees. A new contractor is typically not given access to the former contractor's personnel records and that was the case at the Sacramento Center. Horizons, however, did provide a list of all its current employees, including their job titles and hire and seniority dates ("Horizons List I").

         After Adams hired former Horizons dorm manager, Lee Bowman, McGillis shared Horizons List I with Bowman and sought her feedback on RA applicants.[1] Bowman placed an asterisk next to the names of incumbent RAs she recommended for hire and a dot next to those whom she did not recommend hiring. McGillis also annotated the list with Bowman's comments. Horizons List I was later copied with Bowman's dots and asterisks, but not McGillis' annotations, into another list ("Horizons List II"). McGillis testified that the purpose of duplicating the list was to eliminate a comment regarding an employee on medical leave, out of concern that it violated the individual's privacy rights under the Health Insurance Portability and Accountability Act. Gagnon rewrote McGillis' other annotations into Horizons List II, which McGillis signed with the original date. Horizons List I no longer existed at the time of trial.

         Based on Bowman's comments, McGillis completed Disqualification Forms for five incumbent applicants, whom Adams did not hire: Genesther Taylor, Shannon Cousins-Kamara, Andre Lang, Macord Nguyen, and Azaria Ting. According to McGillis, the forms did not automatically disqualify the applicant, but were simply one piece of information Adams considered in hiring. Adams completed Disqualification Forms for nine of the fourteen incumbent RA applicants. The transition team nonetheless interviewed all fourteen. For each applicant, interviewers filled out an Interview Evaluation Form and submitted it to Gagnon and Weldon. Applicants were rated in nine categories on a scale of one to four, with one being excellent and four being unsatisfactory.

         McGillis interviewed Taylor on February 28 and recommended that she not be hired. McGillis admitted that sometime after the interview, she amended Taylor's Interview Evaluation Form, downgrading several of Taylor's interview scores from 2 (average) to 3 (below average). According to McGillis, she made the changes because she realized after interviewing other applicants that she had scored Taylor "much higher than she deserved."

         McGillis also interviewed Cousins-Kamara. McGillis testified that Cousins-Kamara provided a lot of information, including that she had been "awarded a dorm of the month recognition month after month and was employee of the month, " which "sounded almost too good to be true." Former RA Andre Lang, however, testified that he had worked with Cousins-Kamara in the Shasta dorm and that all the information Cousins-Kamara related was true. McGillis completed an Interview Evaluation Form for Cousins-Kamara, but after speaking with Bowman, she shredded the initial form and replaced it with a second form recommending against hiring.

         By late February or early March, when there were only a few RA positions left to fill, Gagnon and Weldon had a conversation about four RA applicants for whom Disqualification Forms had been completed, but who interviewed well and received good scores: Diane Calahan, Andre Lang, Vincente Moran, and Jill Ostrowski. Weldon testified that she told Gagnon, "We can't not hire these employees . . . just because they are part of the Union." Gagnon decided to extend offers to all four, although later rescinded the offer to Lang after a background check indicated a potential discrepancy in employment dates for a position he held before working at Horizons.

         Adams ultimately hired nine incumbent RAs for the fifteen available positions. Adams filled the remaining RA positions with non-bargaining unit Horizons substitute RAs and a Horizons custodian. Four of the five substitute RAs had been employed by Horizons for only a few months. Because Adams had hired a majority of former bargaining unit employees, it incurred an obligation to bargain with the Union.

         Post-Hiring Events

         On March 4, after it became clear that Adams had incurred a bargaining obligation, Roy sent an email to hiring committee members, including Pagni, Gagnon, and Weldon, which stated: "Unfortunately, we hired the majority of the union members at Sacramento and we, therefore, must negotiate a Collective Bargaining Agreement and incur other associated union legal costs." The following week, Roy visited the Sacramento Center and pulled Weldon aside to ask her what happened. She related her conversation with Gagnon regarding the four incumbent RAs whose interviewers had recommended hiring. Weldon testified that Roy "was very angry and he said that we screwed up. The Union was now involved and he was not happy."

         In late March, Weldon was sent back to Sacramento to gather additional information about various non-hires because Pagni felt that the documentation of their disqualification may not have been sufficient to comply with EO 13495. While Weldon was there, she received an email from Pagni with instructions for gathering supplemental information. Pagni wrote that the information provided by Evans was not "really helpful" and that she "also mentioned the union in her comments. Union involvement was not questioned or used as a DQ'ing factor for these individuals and cannot be used in these further supporting documents. We need to take any mention of union out."

         On March 22, Roy sent a "Memorandum for Personnel Files of Tiffinay Pagni and Valerie Weldon" to Pagni. The memorandum, titled "Significant Performance Concerns, " stated that Roy was "very concerned about the performance of Executive level Human Resource staff with oversight responsibility for the transition at the Sacramento Job Corps Center." Among the priorities for the transition that were not achieved, he listed "[w]ithin compliance guidelines, avoid union recognition" and "[p]rotect the company from expensive union-related costs." The memorandum concluded:

Despite repeated direction, guidelines, forms, discussions, HR staff experience, qualifications, 10 years of union avoidance responsibility and, quite frankly, common sense, the company HR department failed to achieve minimum performance at the Sacramento transition.

         On March 27, Pagni sent an email to Weldon, forwarding Roy's Memorandum and providing additional performance feedback. Pagni stated that "[w]e were . . . expected to assure disqualification information was well-documented and defensible and to avoid union recognition in order to protect the company from significant union related expenses and challenges. Neither of these things happened[.]" Pagni further commented that "[i]n preparing a recent summary of individuals who applied versus those who were hired, there are ample incumbent Sub RA's on the list. These incumbent employees could have been used to fill the RA positions without acknowledging the union. Roy raised this issue repeatedly." On April 25, Pagni presented Weldon with a Final Written Warning, copying Roy and Adams President of Operations Susan Larson. One of the performance concerns raised was that Weldon had failed to conduct "Union Avoidance activities pursuant to policy, including training[.]"

         Commencement of Operations and Changes to Employment Terms and Conditions

         Petitioners began operating the Center on March 11. Staff were employed under new terms and conditions. Specifically, Petitioners had ceased to give effect to the CBA's progressive discipline, just cause, and grievance provisions; implemented at-will employment, new disciplinary policies and procedures, and a mandatory arbitration policy for employment-related disputes; modified the terms of the existing probationary period; replaced existing health benefits with a new plan; and changed some RAs' schedules from fixed shifts to rotating shifts. Adams also assigned RA work to employees in the new RC position, which was not part of the bargaining unit. Adams notified new hires of these changes in their offer letters and employment agreements.

         Between April and September, Adams discharged four RAs: Sheila Broadnax, Rolando Aspiras, Bienvenido Viloria, and Vincente Moran. They were discharged without recourse to the CBA's progressive discipline process. Adams did not notify the Union about the discharges.

         Union Negotiations

         On March 11, the Union renewed its demand for recognition and bargaining. On March 28, Adams recognized the Union as the bargaining representative for RAs and agreed to bargain. Adams, however, refused to allow Taylor access to the Center to attend bargaining sessions. As a result, the first three bargaining sessions were held at the Union's office. After the third session, Adams agreed to allow Taylor access to the Center. The fourth session took place there.

         Procedural ...

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