Third Circuit Holds That Good Faith Bargaining Requires Production of Presumptively Relevant Information, Not A Concession To Overbroad Requests

Third Circuit Holds That Good Faith Bargaining Requires Production of Presumptively Relevant Information, Not A Concession To Overbroad Requests

 

By Kristine V. Ryan, Esq., October 2, 2020

A basic tenet of the National Labor Relations Act (“NLRA”) requires an employer to bargain in good faith with a union by providing all information relevant to the union’s bargaining obligations. See 29 U.S.C. § 158.  This requirement extends to “effects bargaining” – the situation where an employer is required to bargain with the union over the effects of certain management decisions including, as in this case, the sale of a business.  On September 24, 2020, a divided panel of the Third Circuit held that the employer violated the NLRA when it failed to cede, at least in relevant part, to the union’s demand for the complete asset purchase agreement (“Agreement”) for its multi-million dollar acquisition – a one hundred page long contract with seventy-seven exhibits and schedules that touched on the employer’s most sensitive information.  See Crozer-Chester Med. Ctr. v. Nat’l Labor Relations Bd., No. 18-1640, 2020 WL 5667742 (3d Cir. Sept. 24, 2020).

Soon after entering into the Agreement, but before it received regulatory approval, Crozer-Keystone Health System told its five unions of the sale.  It advised them through a letter, which included an attached list of more than 30 answered “frequently asked questions,” that key terms and conditions of its members’ employment would remain the same.  Shortly thereafter, the Pennsylvania Association of Staff Nurses and Allied Professionals (the “Union”) demanded the entire Agreement for purposes of “effects bargaining”.  The Union never articulated why it needed the entire Agreement.

Crozer objected.  It stated that the entire Agreement was not relevant for effects bargaining over the terms and conditions of employment of the Union’s members, was largely confidential and proprietary and contained a confidentiality provision.  The Union did not budge from its position and Crozer never provided those portions of the Agreement it deemed relevant.  The Union filed a charge.

The Board affirmed the ALJ’s decision that Crozer violated the NLRA by failing to provide the relevant parts of the Agreement to the Union.  It ordered Crozer to disclose the entire Agreement, including information the Union never established as relevant.  Crozer appealed the decision and the Union sought to enforce it.

The Third Circuit held that substantial evidence in the record — including documents and testimony from Crozer executives — supported the finding that at least some of the Agreement contained presumptively relevant information, although the ALJ was unclear regarding what portions of the Agreement were presumptively relevant.  The Court found unpersuasive the fact that the Union did not specify its relevance to Crozer, which had a duty to furnish at least part of the Agreement where the need to move quickly to bargain in a period of transition is “readily apparent”.   The Court also discounted the confidentiality argument, holding that Crozer failed to meets its burden of establishing a legitimate and substantial confidentiality interest in the entire Agreement.

While holding that substantial evidence supported the Board’s conclusion that Crozer violated the NLRA by failing to provide the Union with presumptively relevant information in the Agreement, the Court also held that the Board abused its discretion by imposing a punitive requirement that Crozer produce the entire Agreement, including those portions that Union failed to establish as relevant.  Accordingly, the Court remanded for the Board to determine which portions of the Agreement were sufficiently relevant and within the Union’s right to receive.  Notably, the Union had long since obtained the body of the Agreement, which Crozer had filed with its petition to obtain approval for the sale in the Delaware County Court of Common Pleas, as well as two of its schedules, due to the intervention of the Pennsylvania’s Attorney General.  Accordingly, the Board’s determination is limited to the remaining exhibits and schedules not yet disclosed.

The NLRA’s duty to bargain in good faith runs both ways.  Here, both sides faltered.  The Union cast an overbroad request and refused to move or otherwise indicate which parts of the Agreement it deemed relevant.  The employer’s offers to consider “any alternative requests” from the Union rang hollow in the face of its failure to produce even that information its own employees deemed relevant.   This stalemate — which now has spanned nearly five years — ended where it should have begun:  with an agreement to produce relevant information required for good faith bargaining.

 

 

 

 

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