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James F. Small, Regional Director of v. Odw-Fmo Avanti Health

October 31, 2011


D.C. No.2:11-cv-01349- Appeal from the United States District Court for the Central District of California Otis D. Wright, District Judge, Presiding

The opinion of the court was delivered by: Reinhardt, Circuit Judge:



Argued and Submitted

August 4, 2011-Pasadena, California

Before: Stephen Reinhardt, Kim McLane Wardlaw, and Marsha S. Berzon, Circuit Judges.

Opinion by Judge Reinhardt



In March 2010, Karykeion Inc. sold Community Hospital to CHHP.*fn1 Three days after the sale became final, CHHP took over ownership of Community. CHHP refused, however, to recognize or bargain with the California Nurses Association, the union that had represented the registered nurses at Community under Karykeion's ownership. James Small, Regional Director of Region 21 of the National Labor Relations Board (the "Director"), sought preliminary injunctive relief in the district court pursuant to § 10(j) of the National Labor Relations Act (NLRA). The Director alleged that CHHP was a successor employer to Karykeion and that a majority of CHHP's registered nurses had been members of the California Nurses Association under Karykeion. The Director therefore alleged that CHHP's continuing failure to bargain in good faith with the chosen representative of its employees violated §§ 8 (a)(1) & 8 (a)(5) of the NLRA.

The district court granted the Director's § 10(j) petition and issued a preliminary injunction. It applied the test established by the Supreme Court in Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008), and held that the Director had established a likelihood of success on the merits and a likelihood of irreparable harm, that the balance of equities tipped in the Director's favor, and that the public interest favored the issuance of the injunction. See id. at 20. We conclude that the district court did not abuse its discretion in issuing the preliminary injunction and therefore affirm its order.



Community Hospital of Huntington Park ("Community") is an acute-care hospital located in Huntington Park, California. Until March 2010, Community was owned by Karykeion, Inc. From 2004 to the end of Karykeion's ownership, registered nurses ("RNs") at Community were represented by the California Nurses Association ("CNA" or "union"). The most recent collective bargaining agreement ("CBA") between Karykeion and the CNA was to be effective from January 1, 2007 to June 30, 2010. In September 2008, Karykeion filed for bankruptcy protection, and attempted to sell Community. CHHP*fn2 sought to buy Community from Karykeion, but required Karykeion to reject the CBA with the CNA before any sale was completed. CHHP also required Karykeion to reject its CBA with the Service Employees International Union ("SEIU"), which represented janitorial employees at Community.

On March 6, 2010, while CHHP was negotiating with Karykeion over the sale of Community, Dinorah Williams, a labor representative from the CNA, sent a letter to CHHP. The letter asserted that CHHP would be a successor employer to Karykeion and would thus be required to recognize and bargain with the CNA. Williams later declared that the union had been told by Daniel Ansel, Karykeion's CFO and Chief Restructuring Officer, that "Avanti didn't want the Union no matter what" and that "Avanti would do whatever was necessary to make[ ] sure they didn't have the Union." Ansel told Williams that CHHP "would only agree to buy the hospital if there wasn't a union."

On March 15, 2010, the bankruptcy court granted Karykeion's motion to reject the CBA between Karykeion and the CNA. The hospital's assets were put up for sale at a public auction and CHHP purchased Community on March 23rd. CHHP was not required to assume the CBA. On March 26th, CHHP officially took control of Community. Araceli Loner-gan, Community's CEO, declared that "[t]he new staff . . . began working effective Friday, March 26, 2010, three days after the sale was finalized." Steven Lopez, Avanti's CFO agreed, and averred that he believed that Community was "fully staffed" on that date.*fn3 Although CHHP did reduce Community's staffing levels, Lopez declared that CHHP "didn't make any major operational changes" when it took over Community, and Community continued "to provide the same health care services."

On March 26th, Lopez met with Richard Kopenhefer, CHHP's labor counsel, and together they undertook efforts to determine whether CHHP was a successor employer to Karykeion and thus obligated to bargain with the CNA. They concluded that the CNA did not represent a majority of its RNs and refused to recognize the CNA or to bargain with it.

The Director disputes CHHP's calculations. On Karykeion's March 25th "Employee Register," every RN is marked with a "union code designation," indicating membership in the CNA. The Director compared this Employee Register to CHHP's payroll for the period from March 26th to April 4th, which shows that CHHP employed a total of 47 RNs. After comparing Karykeion's Register to CHHP's payroll, the Director identified 30 CHHP RNs who were part of the CNA bargaining unit at Karykeion. The Director thus calculated the union incumbency rate as 63.8% (30/47).


On December 1, 2010, the CNA filed a charge with the National Labor Relations Board (the "Board" or the "NLRB") against CHHP alleging violations of §§ 8(a)(1), (3) and (5) of the NLRA. 29 U.S.C. § 158(a)(1), (3) and (5). On December 27, the Acting General Counsel of the NLRB filed a complaint against CHHP alleging violations of §§ 8(a)(1) and (5) of the NLRA. Section 8(a)(1) makes it unlawful for an employer "to interfere with, restrain, or coerce employees in the exercise of the rights [to join labor unions and bargain collectively]." Scott ex rel. NLRB v. Stephen Dunn & Assocs., 241 F.3d 652, 662 (9th Cir. 2001) (quoting 29 U.S.C. § 158(a)(1) (brackets in original)), abrogated on other grounds as recognized by McDermott v. Ampersand Pub., LLC, 593 F.3d 950, 957 (9th Cir. 2010). Section 8(a)(5) makes it unlawful for an employer "to refuse to bargain collectively with the representatives of his employees." 29 U.S.C. § 158(a).

On February 14, 2011, the Director, on behalf of the NLRB, petitioned the district court for a preliminary injunction against CHHP pursuant to § 10(j).*fn4 The Director alleged in his petition that CHHP had violated and was continuing to violate §§ 8(a)(1) and (5) of the NLRA by refusing to recognize and bargain with the CNA despite CHHP's status as a successor employer to Karykeion. On March 28, 2011, the district court applied the preliminary injunction standard set forth in Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008), and determined that an injunction was warranted. The district court ordered CHHP to cease and desist from "[f]ailing and refusing to recognize and bargain collectively and in good faith with the California Nurses Association . . . as the exclusive bargaining representative" of CHHP's RNs. The district court also ordered CHHP to affirmatively recognize and bargain in good faith with the CNA and "if an understanding is reached, embody that understanding in a signed agreement."

CHHP timely appealed the district court's order. CHHP also moved for an emergency stay pending appeal, but a motions panel of our court denied the stay. 9th Cir. Dkt. 9, 16.

On June 14, 2011, an NRLB Administrative Law Judge ("ALJ") issued a decision based on four days of hearings held in mid-March. 9th Cir. Dkt. 35 (hereinafter "ALJ Decision") at 1-2.*fn5 Like the district court, the ALJ concluded that on March 26, 2010, Community employed 47 RNs. Id. at 5-6. Of these 47 RNs, the ALJ found that 30 were in the CNA bargaining unit at Karykeion, and thus that a majority of RNs in the unit were union incumbents. Therefore, the ALJ determined that CHHP was obligated to recognize the CNA and bargain with it in good faith. Id. at 5, 10. The ALJ ordered nearly identical relief to that ordered by the district court.*fn6

The ALJ's decision is not part of the record below because it was issued after the district court's opinion; however, we may take judicial notice of it pursuant to Federal Rule of Evidence 201. See Overstreet v. United Bhd. of Carpenters and Joiners of Am., Local Union No. 1506, 409 F.3d 1199, 1204 (9th Cir. 2005). We do so here. CHHP does not argue that we should not. Although it is beyond dispute that the ALJ's ruling does not "foreordain[ ] the Board's decision," id. at n.12, three other circuits have looked to ALJ decisions in reviewing the grant or denial of § 10(j) petitions. In Bloedorn v. Francisco Foods, Inc., 276 F.3d 270, 288 (7th Cir. 2001), the Seventh Circuit relied on an ALJ opinion when reviewing a district court's refusal to grant a § 10(j) injunction, even though the ALJ decision was not issued until two months after the district court's order. It did so because:

[a]ssessing the Director's likelihood of success calls for a predictive judgment about what the Board is likely to do with the case. The ALJ is the Board's first-level decisionmaker. Having presided over the merits hearing, the ALJ's factual and legal determinations supply a useful benchmark against which the Director's prospects of success may be weighed.


We find the Seventh Circuit's rationale compelling, but in this case, we need not decide how much weight to give to the ALJ's decision. As discussed below, the Director has demon- strated a likelihood of success even in the absence of the ALJ's determination. Therefore, we need not rely on the ALJ's decision, although we note that if we did rely on it, the ALJ's ruling would provide additional support for our decision.


We review the grant of an injunction pursuant to ยง 10(j) of the NLRA for an abuse of ...

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