MEMORANDUM DECISION
Petitioner James G. Paulsen is a Regional Director of the National Labor Rela
BACKGROUND
I.
Renaissance owns and operates Flat-bush Gardens, a 59-building complex in the East Flatbush section of Brooklyn, New York, that consists of approximately 2,500 rental apartments. Many of the apartments are rent-stabilized or low-income housing. Service Employees International Union Local 32BJ (the “Union”) represents more than 70 porters, handymen, and boilermen employed by Renaissance at the Flatbush Gardens complex. Following a protracted dispute between Renaissance and the Union over the terms of a Collective Bargaining Agreement (“CBA”), Renaissance instituted a lockout against its unionized employees. In turn, the Union filed a charge of unfair labor practices against Renaissance with the N.L.R.B. Petitioner seeks a preliminary injunction from this Court forcing Renaissance to reinstate the unionized workers pending the N.L.R.B.’s final adjudication of the labor dispute.
The most recent CBA between the Union and Renaissance expired on April 20, 2010. Prior to this CBA’s expiration, Renaissance began signaling a willingness to begin negotiating a new CBA. The Union, however, was busy negotiating with the Realty Advisory Board (“RAB”), which is a large multiemployer association that bargains with the Union on behalf of many local residential owners. The Union did not want to begin negotiating with Renaissance until it had finalized its agreement with the RAB.
In late May, 2010, Renaissance contacted the Union and expressed an urgent financial need to negotiate a new CBA that would allow Renaissance to cut costs. Negotiations began in June, and the parties conducted between six and ten official bargaining sessions across the next three months. At the first official bargaining session, Renaissance reiterated that it was losing money and demanded: 1.) a 30-40% wage reduction; 2.) that healthcare coverage be limited to full-time employees only; and 3.) the unilateral right cut employees’ hours, lay off employees, convert employees from full-time to part-time, and subcontract out union work. Renaissance insisted that these measures were necessary because it was losing millions of dollars per year. When Renaissance presented its last, best, and final offer (the “LBFO”) three months later, each of these terms remained untouched except Renaissance’s healthcare provision. (The parties dispute whether the healthcare provision in the LBFO was better or worse than Renaissance’s initial healthcare provision.)
Despite Renaissance’s pleas of financial hardship, it is undisputed that the Union did not agree to or make a counteroffer that would encompass any decrease in wages. Throughout most of the time that the parties actively bargained, the Union appears to have taken a hardline stance on increased wages and benefits. The Union had achieved an increase in wages in its
Over the course of bargaining, the Union generally accepted Renaissance’s contention that it was operating at a loss but insisted on reviewing Renaissance’s books to determine the extent of the losses.
It is undisputed that Renaissance quickly agreed to let the Union review its books at Renaissance’s offices. The Union sent its Director of Finance and Administration, George Reis, to Renaissance’s offices for two financial review sessions. At the first session, on July 27, 2010, Reis spent between two and four hours at Renaissance. According to petitioner, he was given access to the general ledgers for the years 2007-2010; general payroll records; and invoices of payments made to vendors. At this meeting, Reis requested audited financial statements and detailed payroll records, but he was told that such doeuments did not exist because Renaissance does not prepare audited financial statements and has an outside vendor prepare payroll.
After this meeting, Reis, who is a Certified Public Accountant, informed the Union that the information provided by Renaissance showed that Renaissance was suffering economic losses. He also informed the Union that he still had several unanswered questions regarding Renaissance’s finances and that he had been unable to conduct a thorough assessment without access to audited financial statements or detailed payroll records. The Union and Reis decided to seek tax returns from Renaissance in lieu of audited financial statements.
On August 19, 2010, Reis went back to Renaissance and again spent a few hours at the office. The parties dispute whether, and to what extent, Renaissance’s tax returns were made available to Reis during this meeting. According to petitioner, Reis asked for recent tax returns and was informed that he could not view any full tax returns because the returns contained confidential information regarding entities other than Renaissance. Instead, he was given a one-page summary of a tax return from 2008 and was not permitted to make copies of this document or any of the other documents that he viewed during either review session at Renaissance’s offices.
At the second bargaining session, Renaissance provided the Union with a one-page “Statement of Operations” allegedly prepared by its accounting firm based on a review of Renaissance’s books and records. The Statement of Operations lists Renaissance’s income and expenses for the years
Petitioner also notes that Renaissance’s tax return for 2007, obtained during discovery, showed a property sale of $28,391,653 and a distribution to Renaissance’s partners for the same amount. Petitioner argues that a $2.4 million gain was realized from the sale of this property but was excluded from the Statement of Operations. Renaissance claims that this money was derived from a sale of property that was wholly unrelated to Renaissance. According to Renaissance, some of its partners used this “1031 exchange” (see 26 U.S.C. § 1031) to avoid paying taxes on the sale of the unrelated property, and the $28 million merely reflected a pass-through transaction.
In July, 2010, the Union made a written request for copies of the general ledgers. In response to this request, Renaissance provided four pages of unaudited, uncertified financial summaries. According to petitioner, the Union was unable to verify these summaries without copies of the general ledgers and tax returns. During a hearing in front of the Administrative Law Judge (“ALJ”) whom this labor dispute is currently before, Renaissance’s accountant explained that one of these four pages (the “Balance Sheet Comparison”) did not cover the entire complex, as the Union had believed, but only 60% of the complex’s operations. It is undisputed that Renaissance refused to furnish the Union with copies of the general ledger.
At the hearing before the ALJ, Reis testified that the documents provided by Renaissance did not allow him to meaningfully assess Renaissance’s financial condition. Walter Pocalyko, a Forensic Accountant hired by the Union to review Renaissance’s books, testified that the Statement of Operations “contained material misstatements and inaccuracies and omitted significant financial data that was relevant to the analysis of the operations at Renaissance.”
Petitioner also alleges that Renaissance engaged in unfair labor practices by unilaterally subcontracting out bargaining-unit work. Part of the CBA provides that “renovation and major repair work” can be subcontracted out and is not union work. Minor repairs, however, are to be performed by Union employees. According to petitioner, Renaissance clandestinely subcontracted out minor repair work in September, 2010.
Renaissance explains that it subcontracted out Union work when attempting to clear housing code violations issued by the New York City Department of Housing Preservation and Development (“HPD”) during a procedure known as a “mass dismissal request.” When an employer makes a mass dismissal request, the entire building is inspected by HPD at once in
In August, 2010, one of Flatbush Gardens’ principals was placed on a “Worst Landlord Watch List” created by New York City’s Public Advocate. Renaissance became concerned and asked subcontractors to expedite the process of removing the HPD violations in order to be removed from the list. Renaissance argues that “using these contractors was seen as being the fastest way to achieve the goal of getting off the list.” Renaissance also argues that the Union did not object to or file a grievance about the subcontracting until the lockout and that none of the bargaining-unit employees were terminated or had their employment terms modified in order to accommodate the subcontractors.
Petitioner also alleges that Renaissance engaged in bad-faith bargaining by making regressive demands and refusing to accept reasonable compromises offered by the Union. At an off-the-record bargaining session at the end of August, 2010, the Union offered to decrease the number of required bargaining-unit employees, such that Renaissance could pay fewer employees at the RAB rates. Although it is undisputed that the parties could not agree on the number of employees to slash — the Union proposed cutting 10, whereas Renaissance proposed cutting 60 — the parties dispute whether it was the Union or Renaissance that closed the door on these negotiations. At the next bargaining session, on September 1, 2010, Renaissance presented its LBFO.
Following tender of the LBFO, the Union repeatedly asked Ploscowe to schedule additional bargaining sessions. Ploscowe insisted that the parties were “at impasse” and would not schedule bargaining sessions unless the Union made legitimate cost-cutting offers. On September 8, 2010, the Union suggested an alternative proposal which would entail Renaissance hiring bargaining-unit employees to replace subcontractors who were doing renovation work. Ploscowe analyzed the proposal and rejected it via email, asserting that the proposal would actually cost Renaissance more money over the long run.
Toward the very end of the active bargaining period, following Renaissance’s LBFO, the Union proposed a one-year wage freeze. After the one year, wages would increase yearly at the rates outlined in the RAB. In other words, the wages would go up by the same yearly increment as in the RAB, but the total wages would always be less than the RAB wages. The Union indicated that this proposal was contingent on obtaining a waiver of the Most Favored Nations Clause in the RAB agreement. Renaissance agreed to have a bargaining session on October 19, 2010, but rejected this wage-freeze proposal and continued to insist on every term presented in the LBFO. From notes taken by Stephen Ploscowe, Renaissance’s labor counsel, it appears that Renaissance’s decision to reject this wage freeze proposal was solidified before the bargaining session began.
Renaissance served the Union with a notice of lockout on November 18, 2010, which informed the Union that the lockout would begin on November 29, 2010, unless the unionized employees “ratified” the LBFO. A similar notice was sent to the employees. Having heard nothing from the Union by November 29, Renaissance instituted the lockout. Although it is undisputed that this issue was never raised until the Union filed unfair labor practice charges against Renaissance, the Union now argues that Renaissance’s insistence
Petitioner argues that Renaissance’s actions are vastly eroding Union support; undermining the employees’ collective bargaining rights; and putting the employees at risk of losing health care and being evicted. Petitioner therefore seeks an injunction:
1. ) Restraining Renaissance from:
a. Conditioning the terms of the lock-out upon the ratification of the LBFO;
b. Subcontracting out unionized employees’ work;
c. Failing and refusing to bargain in good faith with the Union; or
d. Otherwise interfering with the unionized employees’ rights to bargain collectively.
2. ) Forcing Renaissance to:
a. Reinstate all unionized employees to their former terms and conditions of employment;
b. Restore all subcontracted work to the unionized employees; and
c. Bargain in good faith with the Union.
II.
Renaissance moves to dismiss the petition, arguing that the Board lacks a quorum and therefor may not initiate § 10(j) proceedings. Some background on President Obama’s recent appointments to the N.L.R.B. is necessary to explain Renaissance’s motion. In January of this year, Craig Becker’s term as Board member on the N.L.R.B. expired and the Board was left with two remaining members. The Board, which has a capacity for five members, is statutorily required to maintain a quorum of three members and may not validly act when its membership dips below three. As a result of this quorum requirement, the expiration of Becker’s term left the Board hamstrung.
Ordinarily, the President’s appointments to the N.L.R.B. must comport with Article II, Section 2, Clause 2 of the Constitution, which allows the President to appoint officers of the United States only after receiving the “advice and consent” of the Senate. When Becker’s term expired, however, one of President Obama’s nominees to the Board had been languishing in the Senate for months without receiving confirmation. Although the President has the power, under Article II, Section 2, Clause 3 of the Constitution, to appoint officers without Senate confirmation while the Senate is in recess, the Senate had been conducting “pro-forma ” sessions every three days in order to block the President from exercising his recess appointment power. To sidestep the confirmation process, President Obama took the controversial step of exercising his recess appointment power while the Senate was still conducting “proforma ” sessions.
Pursuant to his recess appointment power, the President appointed three Board members- — Sharon Block, Terence F. Flynn, and Richard Griffin — ostensibly bringing the Board’s membership up to five. According to Renaissance, however, the Board’s membership currently consists of only two validly-appointed members because the Senate was technically in session when the recess appointments were made and the appointments were thus unconstitutional. Renaissance argues that the petition must therefore be dismissed because the Board lacks its statutorily-required quorum and does not have authority to petition this Court for relief.
Petitioner maintains that the Senate was not actually in session and President Obama’s recess appointments were constitu
The [N.L.R.B.] anticipates that in the near future it may, for a temporary period, have fewer than three Members of its full complement of five Members. The Board also recognizes that it has a continuing responsibility to fulfill its statutory obligations in the most effective and efficient manner possible. To assure that the Agency will be able to meet its obligations to the public to the greatest extent possible, the Board has decided to temporarily delegate to the General Counsel full authority on all court litigation matters that would otherwise require Board authorization.... This delegation shall be effective during any time at which the Board has fewer than three Members and is made under the authority granted to the Board under sections 3, 4, 6, and 10 of the [N.L.R.A.]. Accordingly, the Board delegates to the General Counsel full and final authority and responsibility on behalf of the Board to initiate and prosecute injunction proceedings under section 10(j)
N.L.R.B. — Order Contingently Delegating Authority to the General Counsel, 76 Fed. Reg. 69768, 697768 (Nov. 9, 2011) (emphasis added).
Renaissance argues that the Board cannot delegate its § 10(j) powers to the General Counsel and that, even if it could, this particular delegation is invalid because it does not take effect until the Board’s membership falls below a quorum. Renaissance further argues that this Court must decide the constitutional issue regardless of whether the Board validly delegated its § 10(j) powers to the General Counsel.
DISCUSSION
I.
In 1947, Congress passed the Labor Management Relations Act (popularly known as the Tafk-Hartley Act), which amended the N.L.R.A. See Pub.L. No. 80-101, § 3(a)-(b), 61 Stat. 136, 139 (1947). The purpose of the Taft-Hartley Act (the “Act”) was to expand the N.L.R.B. and structure the agency in a way that separated its prosecutorial functions from its adjudicative functions. See NLRB v. United Food & Commercial Workers Union, Local 23,
The Tafk-Hartley Act also gave the N.L.R.B. the ability to petition a district court for injunctive relief pending administrative review of charges of unfair labor practices. Section 10(j) states that the “Board shall have power, upon issuance of a complaint ... charging that any person has engaged in or is engaging in an unfair labor practice, to petition any United States district court ... for appropriate temporary relief.” 29 U.S.C. § 160(j). Although § 10(j) grants this power to “the Board,” the Tafk-Hartley Act also states that the General Counsel has “final author
Immediately following the passage of the Taft-Hartley Act, the Board and the General Counsel entered into an unpublished “memorandum of understanding” under which the General Counsel had complete authority to initiate and prosecute injunctions pursuant to § 10(j). See Evans v. Int’l Typographical Union,
Since 1950, the Board has delegated its power to authorize § 10(j) petitions to the General Counsel at various times that the Board anticipated losing its quorum. The first of these delegations was in 1993. See N.L.R.B. — Order Delegating Authority to the General Counsel, 58 Fed.Reg. 64340, 64340 (Dec. 6, 1993). The Board subsequently made similar delegations in 2001, 2002, 2007, and again in November of 2011. It is the November, 2011, delegation that Renaissance challenges in the instant case.
Renaissance argues that the Act gives the power to petition for § 10(j) relief exclusively to “the Board,” and that the Board may not delegate this power to the General Counsel. Renaissance further argues that, even if the Board may delegate its § 10(j) powers to the General Counsel in the ordinary course, such a delegation would not survive the Board’s loss of a quorum.
A. The Board’s Ability to Delegate its § 10(j) Powers
When asked to interpret a statute governing an administrative agency, the Second Circuit follows the analytical framework set forth by the Supreme Court in Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc.,
At step one, we consider whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. To ascertain Congress’s intent, we begin with the statutory text because if its language is unambiguous, no further in*345 quiry is necessary. Only if we determine that Congress has not directly addressed the precise question at issue will we turn to canons of construction and, if that is unsuccessful, to legislative history to see if those interpretative clues permit us to identify Congress’s clear intent.
If, despite these efforts, we still cannot conclude that Congress has directly addressed the precise question at issue, we will proceed to Chevron step two, which instructs us to defer to an agency’s interpretation of the statute it administers, so long as it is reasonable.
N.Y. State Office of Children & Family Servs. v. U.S. Dep’t of Health & Human Servs. Admin. for Children & Families,
Chevron’s first step requires this Court to determine whether Congress has “directly spoken to the precise question at issue,” beginning with the statutory text. Id. But the TafNHartley Act’s text does not unambiguously permit or prohibit delegation of the Board’s § 10(j) powers to the General Counsel. On one hand, § 3(d) states that the Board can delegate certain “duties” to the General Counsel and does not rule out any particular kind of duties. Since the statute grants significant powers to the General Counsel, such as investigating and prosecuting complaints of unfair labor practices, it is reasonable to take a broad reading of the word “duties,” encompassing substantial tasks such as authorizing § 10(j) actions. See Evans,
This is especially true because § 3(d) gives the General Counsel “final authority” to issue complaints of unfair labor practices and, in the same sentence, gives the General Counsel “such other duties as the Board may prescribe.” 29 U.S.C. § 153(d) (emphasis added). Congress’s use of the word “other” strongly implies that the issuance of complaints was also considered to be a “duty.” Since the Act describes the ability to issue complaints as a “power” in § 10(b), Renaissance’s assertion that “duties” under § 3(d) are different from a “power” under § 10(j) is not persuasive. Instead, § 3(d) is sensibly read as saying, in effect, “the General Counsel has the power to prosecute complaints of unfair labor practices, and has any other related powers as the Board may delegate.” Petitioning for injunctive relief is a task that goes hand-in-hand with investigating and prosecuting an unfair labor practice complaint, and would clearly be covered by the statute under this reading. The text of § 10(j) also lends support to this broad reading because it gives the Board “the power” to petition for injunctive relief but does not mandate any particular procedure. When the Ninth Circuit recently addressed this issue, for example, the Court observed that “[s]ection 10(j)’s silence speaks loudly enough that we might end the matter there.” Frankl v. HTH Corp.,
On the other hand, a narrower reading of the Taft-Hartley Act’s text could lead to the conclusion that the Board may not delegate its § 10(j) powers to the General Counsel. First and foremost, if Congress had intended to permit the Board to delegate its § 10(j) powers to the General Counsel, it could have done so expressly. For example, § 10(b) discusses the power to issue complaints of unfair labor practices, and grants this power to “the Board, or any agent or agency designated by the Board for such purposes.” The Board’s ability to delegate this power to the General Counsel is made even more clear by § 3(d), which expressly gives the General Counsel “final authority” over the issuance of complaints. Congress could have treated § 10(j) the same way, but did not.
Neither the broad interpretation nor the narrow interpretation that I have just described is unambiguously correct. It thus cannot be said that Congress’s intentions are clearly discernible in the statutory text; Chevron therefore directs this Court to turn to the Act’s legislative history. See Snell,
As other courts have noted, the TaftHartley Act’s legislative history evinces the drafters’ intent to create a division between the N.L.R.B.’s prosecutorial functions and its adjudicative functions. See Local 23,
The comments of the TafG-Hartley Act’s drafters go a long way in explaining Congress’s intended separation of powers between the Board and the General Counsel. To the extent that the statutory text confuses its readers by granting powers to “the Board” under § 10 and then assigning the same tasks to the General Counsel under § 3, the legislative history shows that the statute took its tortuous structure because its drafters were attempting to graft an independent prosecutorial body onto an existing agency. But despite the Act’s occasional opacity, the legislative history clearly demonstrates Congress’s intent to place prosecutorial duties within the General Counsel’s purview. As many courts have noted, petitioning for a preliminary injunction is a decidedly prosecutorial function. See Frankl,
Renaissance urges that petitioning for injunctive relief must be an essential Board function because the purpose of a § 10(j) proceeding is “to protect [the] Board’s adjudicatory and remedial authority.” Many courts agree that the drafters intended § 10(j) to serve this function. See, e.g., Chester ex rel. NLRB v. Grane Healthcare Co.,
Having found that the legislative history evinces Congress’s intent to allow the Board to delegate its § 10(j) powers to the General Counsel, my inquiry could end here. See Chevron,
Since the passage of the Tafb-Hartley Act, the N.L.R.B. has reasonably interpreted the Act to permit delegations of § 10(j) power to the General Counsel. Although the N.L.R.B. has typically required the General Counsel to seek authorization from the Board prior to bringing a § 10(j) petition, it is clear that the N.L.R.B. viewed this procedure as discretionary, rather than mandatory, under the statute. For example, pertinent language in § 10(e) is identical to § 10(j) — it states that the Board “shall have power” to petition a Court of Appeals for enforcement of a final order-and the N.L.R.B. has always interpreted this language to permit the Board to delegate this power to the General Counsel. Since 1950, the power to petition the Court of Appeals under § 10(e) for enforcement of the Board’s orders has been delegated entirely to the General Counsel, who need not seek prior authorization from the Board. See N.L.R.B., General Counsel — Description of Authority and Assignment of Responsibilities, 15 Fed.Reg. 6924, 6924 (Oct. 14, 1950); Frankl,
B. Survival of a § 10(j) Delegation Once the Board’s Membership Falls Below a Quorum
Having concluded that the Board may ordinarily delegate its § 10(j) powers to
The reasoning behind Renaissance’s argument has been rejected by the Supreme Court and the Second Circuit, as well as the Fifth, Eighth, and Ninth Circuits. Some background on these cases will be helpful to explain the flaw in Renaissance’s position.
In 2007, the Board anticipated that its membership would be reduced below a quorum because two of its members’ terms were set to expire. The Board therefore made two delegations effective as of midnight on December 28, 2007. See New Process Steel, L.P. v. NLRB, — U.S. -,
In the next two years, Liebman and Schaumber decided nearly 600 cases as a two-member Board. Id. at 2639. Many of these decisions were challenged on the ground that the Board lacked the power to adjudicate cases because the delegation to the three-member panel was invalid or lost its validity once the Board lost its quorum. This particular delegation issue was decided by the Second; D.C.; Seventh; First; Fourth; and Tenth Circuits. See Snell,
In Laurel Baye, the D.C. Circuit struck down the delegation for two reasons. First, the Court analyzed the issue purely from the perspective of statutory interpretation, and held that “the Board cannot by delegating its authority circumvent the statutory Board quorum requirement, because this requirement must always be satisfied.” Laurel Baye,
After Laurel Baye, the Second Circuit considered the 2007 delegation to the two-member delegee group and rejected the
In New Process Steel,
Following New Process Steel, the Eighth, Ninth, and Fifth Circuits each adjudicated challenges to the 2007 delegation of § 10(j) powers to the General Counsel. See Osthus v. Whitesell Corp.,
I agree with these Circuits’ interpretation of New Process Steel. The Supreme Court’s decision hinged on the fact that the
In the instant case, it is undisputed that the Board had a duly-constituted quorum when it delegated its § 10(j) powers to the General Counsel. The delegation of prosecutorial duties to the General Counsel does not perpetuate the Board’s existence and therefore does not implicate the primary concerns raised by the New Process Steel Court. Although Congress has structured the N.L.R.B. such that the General Counsel appears to derive his power to prosecute charges of unfair labor practices from the Board, this structure was created in order to “avoid the cumbersome device of establishing a new independent agency,” not because Congress saw the General Counsel’s power as completely derivative of the Board’s power. Instead, Congress created the post of General Counsel to ensure that certain prosecutorial functions operate without regard to the Board. The General Counsel’s validly-delegated power to initiate § 10(j) petitions therefore does not vanish when the Board loses its quorum.
C. The Constitutional Question
Having determined that the Board’s November, 2011, delegation to the General Counsel was valid, this Court will not make any pronouncements on the constitutionality of President Obama’s recess appointments to the N.L.R.B. In the interest of judicial restraint, the Supreme Court has counseled that a court should not decide a constitutional question unless the question is absolutely necessary to the court’s decision. See Wash. State Grange v. Wash. State Republican Party,
This is so because there are only two possible answers to the constitutional question and each answer leads to the conclusion that the § 10(j) petition was validly brought. If the recess appointments were constitutional and the Board
Renaissance urges this Court to decide the constitutional issue in order to determine whether this action was brought pursuant to the Board’s authority or pursuant to a delegation of the Board’s § 10© power to the General Counsel. Renaissance advocates against a “belt-and-suspenders” approach and argues that “there is no avoiding the question of which view is correct.” To the contrary, the appropriate course is for this Court to avoid expounding on a constitutional issue that has no power to change the outcome of this case.
Renaissance also argues that the constitutional question must be answered because this Court may not issue § 10© relief if the President’s appointments were unconstitutional. In support of this contention, Renaissance cites to Second Circuit precedent stating that § 10© relief may issue only upon a finding of “reasonable cause to believe that a Board decision finding an unfair labor practice will be enforced by a Court of Appeals.” Kaynard v. Mego Corp.,
Although Renaissance has correctly recited the standard for § 10© relief, it has misinterpreted the Second Circuit’s language. The § 10© standard refers to the Second Circuit because district courts within the Second Circuit are bound by its precedents. Since a district court adjudicating a § 10© petition must determine whether there is “reasonable cause” to believe that an unfair labor practice has been committed, see Hoffman ex rel. NLRB v. Inn Credible Caterers, Ltd.,
Certainly, the Mego standard does not instruct a district court to speculate as to the Board’s future make-up or whether the General Counsel will attempt to enforce the Board’s final order with the Second Circuit. The General Counsel could choose not to seek enforcement of the Board’s order with the Second Circuit, and the Board’s membership could change between now and the Board’s final adjudication of this case. Particularly, the Senate could confirm the President’s recent “recess” appointments and moot Renaissance’s constitutional argument. Indeed, it is even conceivable that the parties could resolve their differences, as the Administrative Law Judge urged them to, and the matter would never reach the Circuit. The question of whether the Second Circuit would find the recess appointments unconstitutional is therefore not ripe. See Texas v. United States,
Lastly, Renaissance avers that this Court’s equitable powers simply cannot be invoked to “aid an adjudicative process that necessarily will end without any valid adjudication.” Putting aside the issue of whether the Board will “necessarily” consist of recess appointees by the time this case is brought to the Second Circuit for enforcement — because no one can say for sure — Renaissance has conceded that the purpose of an injunction under § 10(j) is to protect the Board’s “adjudicatory and remedial authority.” The purpose of an injunction issued by this Court would therefore be served regardless of whether the Second Circuit subsequently enforced a final order from the Board.
II.
Section 10(j) provides that a district court “shall have jurisdiction to grant to the Board ... temporary relief or restraining order as it deems just and proper.” Id. In the Second Circuit, a two-pronged test is used to determine whether to grant an injunction under § 10(j): “First, the court must find reasonable cause to believe that unfair labor practices have been committed. Second, the court must find that the requested relief is just and proper.” Hoffman,
When factual or legal disputes arise in a § 10(j) proceeding, courts within the Second Circuit are required to give substantial deference to the position of the Regional Director. Courts often intone that § 10(j) relief should be denied only if the court is “ ‘convinced that the NLRB’s legal or factual theories are fatally flawed.’ ” See, e.g., Mattina v. Ardsley Bus. Corp.,
Renaissance paints injunctive relief under § 10(j) as an “unusual and extreme remedy” to be used only in “extraordinary” circumstances. Although it is black-letter law that injunctive relief is reserved for extraordinary circumstances, there is limited authority from the Second Circuit supporting this characterization of § 10(j) injunctions. In 1982, the Second Circuit commented on “the extraordinary nature of the injunctive remedy” and noted that § 10(j) injunctions are no exception to that principle. Silverman v. 40-41 Realty Assocs., Inc.,
Most obviously, “reasonable cause to believe that unfair labor practices have been committed” is a more forgiving standard than “likelihood of success on the merits.” Less obviously, § 160(j) does not impose a more stringent burden for obtaining a mandatory (as opposed to prohibitory) injunction. Cf. Tom Doherty Assocs. v. Saban Entm’t, Inc.,60 F.3d 27 , 34 (2d Cir.1995) (“[A] mandatory injunction should issue only upon a clear showing that the moving party is entitled to the relief requested, or where extreme or very serious damage will result from a denial of preliminary relief.”). Indeed, the relief requested here — an order requiring an employer to bargain with a union pending a final determination by the NLRB that it is required to do so^ — is clearly mandatory in nature, but is frequently granted without any alteration to the usual § 160(j) standards. See, e.g., Inn Credible Caterers,247 F.3d at 364 .
Blyer ex rel. NLRB v. One Stop Kosher Supermarket, Inc.,
A. Reasonable Cause
The Second Circuit has stressed that a Court may find “reasonable cause” under the first prong of this test without making an ultimate determination on the merits of the petition. See Hoffman,
Petitioner alleges that Renaissance violated sections 8(a)(1), (3), and (5) of the N.L.R.A. According to § 8(a)(1), an employer shall not “interfere with, restrain,
Petitioner’s chief allegations are that Renaissance engaged in surface bargaining; provided incomplete and misleading financial information to the Union during negotiations; unlawfully conditioned the lockout on ratification of employment terms that are not subject to mandatory bargaining; and unilaterally subcontracted out work that is reserved to the unionized employees under the CBA.
1. Surface Bargaining
Under § 8(a)(5), an employer must make bona-fide, good-faith attempts to compromise with its unionized employees. An employer that attends bargaining sessions and goes through the motions of bargaining without making authentic efforts to compromise is said to have engaged in “surface bargaining.” See, e.g., Bryant & Stratton Bus. Inst., Inc. v. NLRB,
The Second Circuit has held that an employer engages in surface bargaining when it attends bargaining sessions with no genuine intention to compromise, see Bryant & Stratton,
According to petitioner, Renaissance engaged in surface bargaining by proposing, and subsequently refusing to budge from, draconian demands that would have allowed Renaissance to eviscerate the Union’s presence in the workplace. The record demonstrates that nearly all of the provisions of Renaissance’s final offer were identical to Renaissance’s first offer. Furthermore, these provisions permitted Renaissance to lay off the bargaining-unit employees at will and replace them with subcontractors.
On the other hand, Renaissance argues that these provisions were necessary in order for the business to stay afloat. Renaissance further argues that the Union hampered the bargaining process by continuously demanding wages in line with the RAB agreement. From Renaissance’s point of view, since the Union offered no concessions other than a reduction of 10 employees (which Renaissance believes would have had limited economic effect), it was essentially being asked to negotiate with itself. Renaissance was permitted to insist upon “shrewd or tough bargaining positions.” NLRB v. Am. Nat’l Ins. Co.,
However, according to petitioner’s version of the facts, Renaissance could have explored the option of a RAB waiver and could have countered the Union’s wage-freeze offer by proposing to lighten some of the LBFO’s provisions in exchange for reduced wages. Under this reading of the facts, Renaissance’s failure to explore the RAB waiver casts a shadow on its earlier
It is all a matter of perspective. One could argue that the Union’s refusal to make a counter-proposal that included meaningful cuts was just as extreme as Renaissance’s request for enormous cuts in the first place. Certainly, the Union negotiators were not in any hurry to present a package of cuts to their membership, as there is little glory in that kind of negotiated result. Neither party wanted to budge much if at all.
In a situation like this, I believe a court is required to defer to the perspective adopted by the N.L.R.B. I admit to not being entirely comfortable with that. I did not get the impression from the oral argument or briefing that the N.L.R.B. had made an in-depth study of which side had the more reasonable perspective. It appeared, rather, to simply adopt the Union’s position and dismiss that of Renaissance. My concern is exacerbated by the fact that, as is evident from the discussion in this decision of Renaissance’s motion to dismiss, there is a not-so-subtle undercurrent in this case that would suggest that petitioner has been politically compromised, and that the full force of the federal government is effectively being brought to bear in favor of organized labor against this employer; such politicization would be antithetical to the basis for affording deference to what should be the neutral perspective of an administrative agency. Nevertheless, there is certainly a rational basis for petitioner’s view on this record, and I therefore conclude that there is evidence “sufficient to spell out a likelihood” that Renaissance engaged in surface bargaining by continuing to insist on the terms of its initial proposal while rejecting alternative proposals without meaningful consideration. See Hoffman,
2. Failure to Provide Complete and Accurate Financial Information
“[Pjatently improbable justifications for a bargaining position” are suggestive of bad-faith bargaining. Glomac Plastics, Inc. v. NLRB,
Under the N.L.R.B.’s interpretation of Truitt, an employer that claims an inability to pay a requested wage increase must always substantiate this claim by providing financial information to the union. See Nielsen Lithographing Co., 305 N.L.R.B.
It is undisputed that Renaissance claimed an inability to maintain the wage rates set forth in the parties’ expired CBA. In emails between Ploscowe and the Union during early stages of bargaining, Ploscowe stated that Renaissance “may not survive” unless it could make “significant changes in the costs of its operations.” Renaissance therefore had a duty to provide financial information to the Union that was sufficiently detailed and complete to give the Union a meaningful understanding of Renaissance’s financial position.
The N.L.R.B. has held that a wide variety of materials must be provided by the employer under this duty to substantiate a claim of financial hardship, provided the materials are “necessary for, and relevant to,” a union’s performance of its duties as collective bargaining representative. TNT Logistics N. Am., Inc.,
Furthermore, under petitioner’s version of the events, Reis was not allowed to make photocopies of the general ledgers or any other document except the four or five pages of unaudited summaries created by Renaissance. The N.L.R.B. has taken the position that when records are so voluminous that the information is essentially useless to the union without photocopies, an employer who refuses to allow photocopying exhibits bad faith in violation of § 8(a)(5). See Stella D’oro Biscuit Co., 355 N.L.R.B. No. 158, at *6-*7 (2010); Abercrombie & Fitch Co.,
According to petitioner, Renaissance also provided the Union with misleading financial summaries. Renaissance has provided a reasonable explanation for each of the discrepancies — for example, Renaissance explains that the $28 million was part of a “1031 exchange” and that the loan modification application gave a prospective estimate of losses, whereas the Statement of Operations listed actual losses. However, petitioner contests the veracity of these excuses.
Once again, it is a matter of perspective. It suffices to note that the efforts the Union undertook to obtain this information were no more herculean than Renaissance’s efforts to provide it. Sending in one accountant for two visits totaling seven hours is not a great way to get a handle on a $25 million business with no audited financials. It may well be that the Union did not really want to see this information any more than Renaissance wanted to give it, because if fully digested, Renaissance’s financial condition may have compelled Union leadership to present its members with the need to accept cuts.
However, if that was the case, Renaissance allowed itself to be outmaneuvered. It was Renaissance’s burden to prove the extent of the cost reductions it needed from the Union, and at the very least, it opened itself up to the unfair labor charge that it now faces. Nothing prevented it from making a copy of the documents and delivering them to the Union’s doorstep. True, that would have been expensive, but less expensive than this litigation. Since there is a rational basis for petitioner’s view, I again must find reasonable cause to believe that an unfair labor practice occurred.
S. Conditioning the Lockout on Ratification
Courts and the N.L.R.B. have interpreted § 8(a)(5) to mandate collective bargaining only over certain critical employment terms, such as rates of pay and hours of employment. See, e.g., NLRB v. Wooster Div. of Borg-Warner Corp.,
I. Subcontracting Out Union Work
An employer commits an unfair labor practice under § 8(a)(5) if, “without bargaining to impasse, it effects a unilateral change of an existing term or condition of employment,” even when a CBA has expired and the parties are negotiating new terms. Litton Fin. Printing Div. v. NLRB,
It is undisputed that Renaissance did not bargain to impasse with the Union before using subcontractors to conduct repairs in preparation for the mass dismissal request. According to petitioner, the subcontractors performed certain minor repair work that the CBA designates as bargaining-unit work. Renaissance does not dispute that it subcontracted out minor repair work in order to deal with the mass dismissal requests. Instead, Renaissance argues that this work fell under a modification made to the CBA in 2008 that allowed Renaissance to temporarily subcontract out “renovation work and major repairs.” Renaissance further argues that the subcontracting was necessary to deal with the mass dismissal request, and im
If this Court were deciding the merits of this labor dispute, Renaissance’s unilateral subcontracting would present yet another close call. On one hand, the mass dismissal requests required Renaissance to fix a huge number of HPD violations in a short period of time and it is conceivable that this task would have been beyond the bargaining unit’s capacity. The Union’s failure to raise this issue with Renaissance prior to filing the unfair labor practice charge is telling, and again raises a question of whether the Union had a sincere concern over this issue before drafting the charge. However, the parties dispute whether the 2008 modification to the CBA allowed Renaissance to subcontract out this type of work, and since both readings of the CBA are reasonable, this Court is required to defer to petitioner’s reading. Petitioner has therefore presented “reasonable cause” to believe that Renaissance’s unilateral subcontracting of union work violated § 8(a)(5) of the N.L.R.A.
B. Just and Proper
The Supreme Court has not articulated a standard for determining when an injunction under § 10(j) is “just and proper.” In the Second Circuit, however, an injunction is deemed to be “just and proper” when it is “necessary to prevent irreparable harm or to preserve the status quo.” Hoffman,
An injunction forcing Renaissance to bargain in good faith with the Union and reinstate the locked-out employees is clearly “just and proper” under the Second Circuit’s standard. The bargaining-unit employees have been unemployed since the lockout began nearly sixteen months ago. Although the employees received interim health care coverage from the Union, this benefit ran out on January 31, 2012. Affidavits submitted by petitioner demonstrate that multiple locked-out employees have pressing health needs. When employees have lost healthcare as a result of an unlawful lockout, an injunction ending the lockout is “just and proper” to prevent irreparable harm to the employees. See Mattina ex rel. NLRB v. Kings-bridge Heights Rehab., No. 08-CV-6550,
Furthermore, many of the locked-out employees reside at Flatbush Gardens and have been unable to make their rent payments. This situation is likely to be exacerbated, as their unemployment benefits expired on February 29, 2012. Although Renaissance has promised not to evict the employees until after the ALJ’s decision, Renaissance might proceed with the evictions following the ALJ’s decision. It would be difficult, if not impossible, to
Finally, a preliminary injunction mandating good-faith bargaining and ending the lockout is “just and proper” in this case to prevent irreparable harm to the Union’s position at Renaissance and the locked-out employees’ right to bargain collectively. As affidavits submitted by petitioner establish, the employees’ support for the Union during their prolonged period of unemployment has waned. Fewer and fewer employees are participating on the picket lines or attending Union meetings. The erosion of support for the Union presents a threat of irreparable harm that justifies injunctive relief. See Hoffman, 247 F.3d at 368-69.
Renaissance cites Third Circuit precedent for the proposition that “small and intimate” bargaining units are less susceptible to erosion as a result of an employer’s unfair labor practice. See Kobell v. Suburban Lines, Inc.,
Renaissance also argues that an injunction ending the lockout is not “just and proper” because it has offered to reinstate the employees under the terms and conditions provided in the LBFO. But the LBFO gave Renaissance the unilateral right to reduce employees’ hours below full-time and stop providing health care; of course, the LBFO also gave Renaissance the unilateral right to simply lay off any number of the bargaining-unit employees. The LBFO therefore provides cold comfort to this Court’s concerns regarding healthcare and homelessness. Furthermore, instituting Renaissance’s LBFO would do little to preserve the Union’s position with the bargaining-unit employees pending the administrative proceedings; to the contrary, if the LBFO were instituted, the employees would likely view the Union as completely ineffective.
Petitioner also requests an injunction from this Court barring Renaissance from insisting upon ratification of the LBFO or subcontracting out the unionized employees’ work to deal with mass dismissal requests. Neither injunction is warranted here. With respect to ratification, petitioner has not established “reasonable cause” to believe that Renaissance ever insisted on this term to begin with; there is thus no reason to enjoin Renaissance from insisting on the term in the future. This is especially so because Renaissance does not contest petitioner’s assertion that conditioning the lockout on ratification would have amounted to an unfair labor practice. With respect to subcontracting, petitioner argues that an injunction is “just and proper” in order to “restore[ ] the lawful bargaining power between the parties.” It is true that an injunction can sometimes be warranted in order to allow the parties to “salvage some of the important bargaining equality that existed before the ... unfair labor practices were committed.” Silverman v. MLB Player Relations Comm., Inc.,
C. Petitioner’s Delay
Renaissance argues that injunctive relief is not warranted in this case because petitioner waited fourteen months from the day the initial charges were filed to petition this Court for temporary relief. Courts generally find that the Regional Director’s delay in commencing a § 10(j) action does not undermine the case for injunctive relief. According to the Second Circuit, the Board “does not take lightly the commencement of a § 10(j) action,” and it is acceptable for months to pass between the allegedly unfair labor practices and the Regional Director’s decision to commence a § 10(j) action. Kaynard v. MMIC, Inc.,
The fourteen-month delay in this case appears to be typical in § 10(j) proceedings, and courts have granted § 10(j) injunctions despite even longer delays. See Frankl,
D. Terms of the Injunction
For the reasons stated above, Renaissance will be enjoined from interfering with the unionized employees’ rights to bargain collectively. Renaissance must commence bargaining in good faith with the Union. Renaissance also must reinstate the bargaining-unit employees to their former terms and conditions of employment, except with respect to the employees’ wages.
With respect to wages, petitioner has made no showing that it would be “just and proper” for this Court to force Renaissance to resume paying the wages that Renaissance has persistently contended it cannot afford. Although there is “reasonable cause” to believe that Renaissance did not make a good-faith effort to prove the extent of its financial distress to petitioner, this does not mean that Renaissance’s claims were meritless. The record raises questions as to the extent of Renaissance’s losses, but there is no evidence in the record that Renaissance is a profitable company or that it can afford to pay the wages petitioner demands. Thus, even though a Regional Director is entitled to “assume facts and draw inferences in favor of the charging party.” see Danielson v. Int’l Org. of Masters, Mates & Pilots, AFL-CIO,
During the bargaining period, the Union’s chief negotiator conceded that Renaissance was losing money but continued to demand wage increases in line with the RAB agreement. In an email to Renaissance following tender of the LBFO, the Union argued: “You are well aware of the wage and benefit standards for the residential building service industry in NYC. These standards also apply to many other
Renaissance continues to strenuously argue that it “may very well cease to exist altogether” if it is mandated pay the wage rates in the CBA. Obviously, the irreparable harm to the employees that is present in this case would be exacerbated if a preliminary injunction from this Court were to force Renaissance into bankruptcy. Moreover, as Renaissance notes, the purpose of a preliminary injunction under § 10(j) is to prevent hardship to the charging party in order to preserve the Board’s power to effect relief, rather than to punish the charged party for the allegedly unfair labor practices'.
In determining that the employees should be reinstated at a reduced wage, the Court is fulfilling its obligation to balance the equities between the parties and not create a situation that worsens rather than facilitates a resolution of this acrimonious labor dispute. The one point that is undoubtedly obvious to both the Union and the petitioner in the wake of this case is that the Union’s next contract with Renaissance is not going to be as rich as its last contract. If Renaissance is going to stop losing money, it is going to have to cut wages, benefits, or both in its next contract with the Union. Because of that, reinstatement of the expired agreement in unaltered form would constitute a form of windfall to the Union, incentivizing it to rely on this Court’s injunction for as long as possible instead of reaching an economically-based agreement with Renaissance. See Mego,
As noted, petitioner has made no effort to undertake an economic determination of what a fair and equitable interim remedy would be while the ALJ and ultimately the Second Circuit decide the merits of the dispute. It has, instead, reflexively embraced a position of reinstatement that would continue to cause Renaissance to lose money, while giving the employees more than we all know they are going to get when a new agreement is reached, thus making a resolution of the dispute before the case reaches the Second Circuit considerably less likely. After balancing Renaissance’s claims of financial distress with the evidence that Renaissance may have exaggerated the extent of its hardship, I find that a 20% wage reduction on the rates set forth in the CBA is appropriate.
CONCLUSION
Renaissance’s motion to dismiss is denied. The petition for a preliminary injunction is granted in part and denied in part. By separate order, Renaissance will be directed to refrain from interfering with the unionized employees’ rights to bargain
SO ORDERED.
Notes
. At oral argument in this case, the Union’s counsel argued that "it’s not agreed ... and it’s never been agreed” that Renaissance is losing money. This position is contradicted by the record. For example, the Union’s chief negotiator, Ron Raab, testified before the ALJ that he "acknowledged,” at a bargaining session with Renaissance, "that they were incurring a loss ... [although he] wasn’t sure how great the loss was.”
. The redacted manual is available at http:// www.nlrb.gov/sites/default/files/documents/44/ redacted — 1 Oj — manual—5.0 reduced.pdf. Last visited March 15, 2012.
. Although Renaissance repeatedly notes that the November, 2011, delegation only takes effect once the Board loses its quorum, Renaissance fails to explain the legal significance of this distinction or why this makes the instant delegation "far worse” than the delegation considered by the New Process Steel Court. The delegation at issue in New Process Steel was qualitatively different than the delegation at issue here and raised entirely different concerns.
. In a footnote toward the end of Renaissance’s reply memorandum in support of its motion to dismiss, Renaissance argued that, while there is “no reason to look behind Petitioner’s representation that the Acting General Counsel independently authorized this 10(j) proceeding," this Court should nevertheless grant Renaissance discovery into "whether that authorization was truly 'independent’ and the extent to which the recess appointees ... influenced the decision.” Renaissance was careful to note, however, that it was only requesting this discovery if the Court were to find that the General Counsel’s authorization of this proceeding "allows the Court to avoid the recess appointment issue.” This is the first time Renaissance has mentioned discovery and it is the first time Renaissance has suggested that the Board has improperly influenced the General Counsel. Renaissance provides no facts to support this suggestion and, in any event, fails to explain how this allegedly improper influence could affect the outcome of its motion to dismiss. The request for discovery is therefore denied.