17 CIR 229 (2011) Appealed September 19, 2011.

NEBRASKA COMMISSION OF INDUSTRIAL RELATIONS

Entered August 18, 2011 

APPEARANCES:

Before:  Commissioners Blake, Burger, and Lindahl

BLAKE, Commissioner 

NATURE OF THE PROCEEDINGS:

         The Douglas County Health Center Union, (hereinafter, “Petitioner”) filed a Petition pursuant to Neb. Rev. Stat. §48-824(1) and (2)(a),(b),(c),(e) and (f), claiming that the County of Douglas (hereinafter, “Respondent”), committed a prohibited practice by refusing to participate and negotiate the Petitioner’s contracts in good faith, discouraging union membership, and by failing to negotiate the Respondent’s intention to eliminate all positions of the bargaining unit by subcontracting security work to a private security company.  On June 13, 2011, the Respondent filed an Answer denying that the changes made by the Respondent were a prohibited practice.

The Commission of Industrial Relations (hereinafter, the "Commission") ordered the parties to submit a statement of issues to be presented at the Pretrial on July 6, 2011.  The parties both submitted a statement of issues. The issues presented for the Petitioner were as follows:

1.      Whether Respondent refused to participate and negotiate Petitioner’s contracts in good faith in violation of Neb. Rev. Stat. § 48-824(1).

2.      Whether the actions of county representatives were meant to discourage union membership and deny Petitioner’s members the rights afforded to them in violation of Neb. Rev. Stat. § 48-824(2)(a), (c) and (f).

3.      Whether the Respondent’s failure to negotiate with Petitioner the county’s intention to eliminate all positions of the bargaining unit by subcontracting security work to a private security company is a violation of Neb. Rev. Stat. § 48-824(2)(b)(c) and (e). Further, whether such actions are in violation of Neb. Rev. Stat. § 48-824(1).

4.      Whether the actions of the Respondent are to replace the entire bargaining unit.

5.      Whether the replacement of the entire bargaining unit creates a “demonstrable adverse impact on the employees in the unit.” Service Employees International Union, Local Union No. 226, (1978 WL 400460 NE Cir).

6.      Whether the parties have reached an impasse on this issue.

7.      Whether the Petitioner is entitled to an Order requiring the Respondent to enter into negotiations as concerns the issues of subcontracting.

The issues presented for the Respondent were as follows:

1.      Whether the Petitioner has contracted away its right to bargain over whether the security work may be contracted out.

2.      Whether the Petitioner has clearly and unmistakably waived its right to bargain over the Respondent’s decision to contract the bargaining unit work.

3.      Whether the Respondent has acted in good faith and stands ready and willing to discuss the effect on bargaining unit employees of the Respondent’s decision to contract bargaining unit work.

4.      Whether the Respondent’s decision to contract the work is motivated by legitimate reasons and not to undermine the Petitioner or to discriminate against its members.

The Commission then held a Trial on said issues on Monday August 8, 2011.

 FACTS:

            The Commission finds the following facts to be true. The Petitioner’s bargaining unit consists of eight security employees of the Douglas County Health Center. The bargaining unit employees direct visitors and patients that come to the facilities. These security employees are in charge of transporting the deceased to the morgue or the funeral home, as well as inventorying the personal items of the deceased. These bargaining unit employees also do fire inspections, keep the building safe, are available if there is a crisis, and deal with any panic button calls. They also deal with resident problems without resorting to physical restraints.

            This bargaining unit and the Respondent attempted to bargain in 2009 and 2010 for a new contract because the parties’ contract expired on December 31, 2009. Both parties attended several negotiation sessions in 2010.  During these sessions, there was no discussion of outsourcing the bargaining unit work.  The last negotiation was in the fall of 2010. A bargaining unit member testified as to several things Mr. Bloomingdale stated to him which would indicate a clear lack of respect for the Union and the rights of the members in the Union.  However, Mr. Bloomingdale denies making the statements, and there is no corroborative evidence.

            Due to severe budgetary issues, the County told the Respondent that it needed to cut $1.6 million dollars or a four percent reduction of its budget to meet the County’s budget plan. The Respondent began evaluating its budget. The Respondent determined that to reach the $1.6 million, it would eliminate three respiratory therapist positions, give up future equipment purchases and reduce drug costs. The Respondent realized a savings of over $2 million dollars alone on drug costs through a new software program. The Respondent also determined it would save approximately $160,000 dollars by subcontracting out the Petitioner’s entire security bargaining unit to a private security firm.

The Respondent made its decision to remove this work from Douglas County payrolls and proceeded to its end without any bargaining about the subcontracting of the entire bargaining unit with the Petitioner. The Douglas County Health Care Facility administrators looked to Mr. Bloomingdale as the Union/contract expert and to advise them. The Respondent relied upon the Douglas County Deputy Administrator Patrick Bloomingdale to determine if this procedure of outsourcing was “legal” and “permissible” under the Industrial Relations Act. Mr. Bloomingdale reviewed the expired contract and determined that the “subcontracting” language was enough to fulfill the County’s duty to bargain with the Respondent.  There was no evidence that Mr. Bloomingdale researched case law or relied on anything other than the contract language to make his decision. Upon Mr. Bloomingdale’s advice, the Respondent brought several of the Petitioner’s employees to a meeting, (where those employees thought they were going to discuss a new contract) and told those employees that the Respondent had determined that it was going to outsource the entire bargaining unit to a private security firm and that those employees would be eligible to apply for the new positions and they hopefully would be considered for those private positions.

The announcement that the County would take bids to provide a security service by contract was made in April, and the Petition in this case was filed on May 24.  On June 8, the County published a request for bids, and on June 10 the Commission issued its status quo order.  The County stopped proceeding with the bids at that time.  The County made the decision to stop the bidding.  On further questioning, it was revealed that the County did not make the decision to stop until it was told to do so. As previously determined, the contract employees will save approximately $160,000 per year for the County.  They will not get health insurance, county pension plan benefits, or other county fringe benefits.

The contract has clearly expired and the contract has neither a contract continuation clause nor any subsequent written agreements extending the current contract. Nevertheless, both parties treat it as if it is still in effect.  The County claims that it remains in effect, and the Union did not challenge this.

The record also indicates that no discussions took place about reconvening negotiations until after the Petition was filed. The bids are a matter of public record, and are found in Exhibit 1, showing that the request for bids was first published June 8, 2011. Mr. Bloomingdale declared to the bargaining unit President, Mr. Hernandez, that outsourced security personnel could do it for less cost to the County.  The Petitioner attempted to reason with the Respondent that while private security companies could perform the work for an initially reduced savings, those security firms would not provide similar services.  The parties have not bargained about the subcontracting of bargaining unit work nor have the parties bargained about the effect of the change of the bargaining unit employees.  

DISCUSSION:

The basic issue in this case is whether the Respondent entered into and engaged in a prohibited practice when it determined it did not need to negotiate with the Petitioner over the outsourcing of this bargaining unit work. This issue has been discussed in past Commission cases.  Service Employees Int’l, Local Union No. 226 v. School Dist. No. 17 of Douglas County, 10 CIR 140 (1989) and Service Employees Int’l Union, Local Union No. 226 v. School District No. 66, of Douglas County, Nebraska , 3 CIR 514 (1978).

In Service Employees Int’l, Local Union No. 226, the basic issue in that case was whether the Respondent engaged in bad faith bargaining when it entered into a subcontract for custodial services at the Kiewit Middle School. This Commission had previously held that subcontracting of custodial work can be a subject for bargaining under the Court of Industrial Relations Act. Service Employees Int’l Union, Local Union No. 226 v. School District No. 66, of Douglas County, Nebraska , 3 CIR 514 (1978). The exact language of that ruling is as follows:

Similarly, the issue of subcontracting janitor work which has previously been done by employees in the bargaining unit is primarily related to wages and conditions of employment rather than to the formulation or management of public policy. We hold that such subcontracting is a subject for bargaining under the Court of Industrial Relations Act.

The Commission reasoned in Service Employees Int’l, Local Union No. 226 case, that the work being removed from the bargaining unit was "janitor work which has previously been done by employees within the bargaining unit." In the second case, the custodial work subcontracted to a private firm was not work which had been previously performed by employees within the bargaining unit.

The Commission also noted that the Industrial Relations Act is similar to the National Labor Relations Act and the Nebraska Supreme Court has held that interpretations of the National Labor Relations Act by the National Labor Relations Board should be considered "helpful" in interpreting the Court of Industrial Relations Act. City of Grand Island v. American Federation of State, County, & Municipal Employees , 186 Neb. 711, 185 N.W. 2d 860 (1971).  

The seminal case for interpretation of the National Labor Relations Act regarding the issue of subcontracting of bargaining unit work is the United States Supreme Court decision in Fibreboard Paper Products Corp. v. NLRB , 379 U.S. 203 (1964). In Fibreboard, just a few days before the collective bargaining agreement expired, the employer representatives notified the union that there was no need for a collective bargaining agreement inasmuch as they had decided to subcontract the maintenance work that was being performed by the members of the bargaining unit. In stating the issue in this case, the Supreme Court said as follows;

...we are concerned here only with whether the subject upon which the employer allegedly refused to bargain -- contracting out of plant maintenance work previously performed by employees in the bargaining unit, which the employees were capable of continuing to perform -- is covered by the phrase "terms and conditions of employment" within the meaning of Section 8(d).

The court then held as follows:

We are thus not expanding the scope of mandatory bargaining to hold, as we do now, that the type of "contracting out" involved in this case -- the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment -- is a statutory subject of collective bargaining under Section 8(d). Our decision need not and does not encompass other forms of "contracting out" or "subcontracting" which arise daily in our complex economy.

Thus, it was clear that the members of the Supreme Court were saying that not all "contracting out" is a statutory subject for collective bargaining. They were only saying that subcontracting which involves "the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment" was a statutory subject for collective bargaining. The key word, of course, was "replacement" and the afore described narrow scope of this decision was confirmed by the following comment from the concurring opinion of Justice Stewart:

The question posed is whether the particular decision sought to be made unilaterally by the employer in this case is a subject of mandatory collective bargaining within the statutory phrase "terms and conditions of employment". That is all the court decides. ...The court holds no more than that this employer's decision to subcontract this work, involving "the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment" is subject to the duty to bargain collectively. Within the narrow limitations implicit in the specific facts of this case, I agree with the court's decision.

Stewart further stated, "I would agree that the employer had a duty to bargain collectively concerning the replacement of his internal maintenance staff by employees of the independent contractor." The basis for the court's decision, according to Justice Stewart, was employment security and the court's judgment involved "the substitution of one group of workers for another to perform the same task." He stated, "no problems in the domestic economy are of greater concern than those involving job security and employment stability."

Subsequent to Fibreboard, the National Labor Relations Board clarified its position on the issue of subcontracting of bargaining unit work. In Westinghouse Electric Corp. and Local 711, International Union of Electrical, Radio and Machine Workers, AFL-CIO , 150 NLRB No. 136 (1965), the Board said Fibreboard "was not intended as laying down a hard and fast new rule to be mechanically applied regardless of the situation involved." It is not " a per se unfair labor practice in all situations for an employer to let out unit work without consulting the unit bargaining representative." The Board then established the following guidelines for bargaining about subcontracting of bargaining unit work:

In sum--bearing in mind particularly that the recurrent contracting out of work here in question was motivated solely by economic considerations; that it comported with the traditional methods by which the Respondent conducted its business operations; that it did not during the period here in question vary significantly in kind or degree from what had been customary under past established practice; that it had no demonstrable adverse impact on employees in the unit; and that the Union had the opportunity to bargain about changes in existing subcontracting practices at general negotiating meetings--for all these reasons cumulatively, we conclude that Respondent did not violate its statutory bargaining obligation by failing to invite union participation in individual subcontracting decisions.

            In the instant case, we will not interpret or construe a contract.  We have no authority to do so.  See Transport Workers of America v. Transport Authority of the City of Omaha , 205 Neb. 26, 286 N.W.2d 102 (1979). In this case, the Commission is merely reading a contract that is clear and unambiguous. The parties’ contract does provide that the Respondent can outsource, but this cannot be construed to be an agreement to override or negate the duty to bargain before doing away with the bargaining unit itself. The parties’ contract does provide that contracting out the work cannot be used to undermine the Union. The Commission simply cannot read the bargaining agreement, in good faith, to read that it provides an unlimited right to contract out the entire bargaining unit by replacing all eight employees with a private security firm.

Fixing the budget woes is no doubt a crucial issue for most public employers today, and clearly this problem has hit Douglas County head-on.  However, the public policy and law of this State recognize collective bargaining rights and obligations.  Fixing the budget cannot violate these rights and responsibilities unless and until the laws change. While perhaps not initially realized, the Respondent is saving substantial dollars in reducing drug costs.

An evil motive, such as “I hate unions” is not required in order to show undermining the Union.  Instead, it must be found in the circumstances.  In this case, the County’s action was based upon a valid budget concern, but the response to that concern and how to deal with it was not valid.  The decisions of the Commission establish that this is a matter of mandatory collective bargaining.  There is no explanation for the County’s action other than it was for the very purpose of undermining the Union.  It may have been worthy goal of saving the public money, but it was an unlawful means of doing so.  It is hard to imagine how the County might expect to eliminate the Union without undermining it. We do not decide the wisdom of the County’s effort, only the legality in the context of a duty to bargain in good faith with the Union and to not act to undermine the Union. The decision to cut the Union was made in April of this year.  The actions of the County were unlawful and constituted a prohibited practice.  One is challenged to think of an effort which would go further to undermine the Union than simply announcing that the unit was being done away with.

REMEDIAL AUTHORITY:

In the event of an industrial dispute between an employer and an employee or a labor organization when such employer and employee or labor organization have failed or refused to bargain in good faith concerning the matters in dispute, the Commission may make any such order or orders as may be appropriate to govern the situation pending such bargaining. The Commission shall require good faith bargaining concerning the terms and conditions of employment of its employees by any employer.

Additionally, Neb. Rev. Stat. § 48-819.01 provides:

Whenever it is alleged that a party to an industrial dispute has engaged in an act which is in violation of any of the provisions of the Industrial Relations Act, or which interferes with, restrains, or coerces employees in the exercise of the rights provided in such act, the Commission shall have the power and authority to make such findings and to enter such temporary or permanent orders as the Commission may find necessary to provide adequate remedies to the injured party or parties, to effectuate the public policy enunciated in Section 48-802, and to resolve the  dispute.

Furthermore, Neb. Rev. Stat. § 48-823 states:

The Industrial Relations Act and all grants of power, authority, and jurisdiction made in such act to the Commission shall be liberally construed to effectuate the public policy enunciated in Section 48-802. All incidental powers necessary to carry into effect the Industrial Relations Act are hereby granted to and conferred upon the Commission.

The Respondent shall return the parties to the status quo ante and the parties shall recommence good faith negotiations over these issues within thirty (30) days.

Attorney Fees 

The Petitioner argues that attorney fees are appropriate in this case. The Respondent argues that attorney’s fees in a prohibited practice case are appropriate only where the employer’s misconduct was flagrant, aggravated, persistent, and pervasive. The NLRB also awards attorney’s fees in cases where it finds a party has bargained in bad faith. Alwin Mfg. Co. (Alwin I), 314 NLRB 564 (1994), enfd. 78 F.3d 1159 (7^th Cir. 1996). In awarding litigation costs, the NLRB relies on both Section 10(c) of the Act and the NLRB’s inherent authority to control their own proceedings through an application of the “bad-faith” exception to the American Rule. Frontier Hotel & Casino, 318 NLRB 857 (1995), enf. denied in part sub nom. Unbelievable, Inc. v. N.L.R.B., 118 F.3d 795 (D.C. Cir. 1997). Furthermore, the United States Supreme Court has sanctioned awards of attorney’s fees where a party exhibits bad faith in actions leading to the lawsuit or in the conduct of litigation. See Lake Holiday Associates, 325 NLRB 469 (1998).

The Commission addressed the issue of attorney’s fees in Hall County I and Hall County II, See United Food and Commercial Workers District Local 22 v. County of Hall, 15 CIR 55 (2005) and United Food and Commercial Workers District Local 22 v. County of Hall, 15 CIR 167 (2006). We are mindful that in Nebraska the Supreme Court has stated that the general rule in this jurisdiction is that attorney’s fees may be recovered only when provided by statute, or where the uniform course of procedure has been to allow recovery. See Quinn v. Godfather’s Investments, 217 Neb. 441, 348 N.W.2d 893 (1984).

The Commission has discussed the award of attorney fees in recent cases involving Douglas County as a remedy for a violation of bad faith bargaining. See Fraternal Order of Police, Lodge No. 8 v. Douglas County and Jeffery L. Newton, 16 CIR 401 (2010) and Employees United Labor Organization v. County of Douglas, 17 CIR 195 (2011).; We have taken notice of our past decisions, which recently include other actions involving Mr. Bloomingdale and the County of Douglas attempting to make unilateral decisions based upon strained construction of a collective bargaining agreement.  The facts of this case would indicate a flagrant disregard for the Union and the bargaining rights of the members of the bargaining unit.  These facts combined with the pattern of practice which has been established before the Commission, and award of attorney fees in this case is an appropriate remedy, and will be so ordered. 

The only remedy that directly addresses the impact to the Petitioner of the Respondent’s refusal to bargain in good faith appears to be reimbursement of costs, including attorney fees, incurred as a direct result of the County’s actions. The Petitioner is directed to submit within ten (10) days of this order an affidavit of costs, expenses, and fees incurred by Petitioner. The Petitioner’s affidavit should reflect the costs, work, time, fees, rates, reasonableness of such rates, and expenses claimed by Petitioner in sufficient detail to be reviewed by the Commission. It should be executed by a person with personal knowledge of the facts, which may include counsel for the Petitioner, if necessary, and will be received in evidence solely for the purpose of determining an appropriate remedy. Opposing counsel shall be served with a copy, and it shall be treated as a motion to be ruled upon subsequently by the Commission. This filing shall be treated as a motion under Rule 20, and ruled upon in a supplemental order without further hearing unless a hearing is requested by Petitioner or Respondent in the manner provided by Rule 20.

IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED that:

1.                  The parties shall recommence good faith negotiations over these issues within thirty (30) days and shall negotiate in good faith until an agreement has been reached or further order of the Commission.

2.                  Pending receipt of an affidavit from the Petitioner outlining the costs and fees incurred by them, the Commission will enter a subsequent order of reimbursement for expenses, including reasonable attorney fees, caused by the refusal of Petitioner to bargain in good faith.

 a.  Reimburse the Petitioner the costs and expenses incurred by them in the investigation, preparation, presentation, and conduct of this proceeding, including reasonable counsel fees, transcript and record costs, printing costs, travel expenses and per diems, and other reasonable costs to be determined in a subsequent order.

All panel commissioners join in the entry of this order.