Tri-State Health Svc v. NLRB

United States Court of Appeals
Fifth Circuit
F I L E D
June 21, 2004
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
_______________
No. 03-60498
_______________
TRI-STATE HEALTH SERVICE, INC.,
DOING BUSINESS AS EDEN GARDENS NURSING HOME
Petitioner-Cross-Respondent,
VERSUS
NATIONAL LABOR RELATIONS BOARD,
Respondent-Cross-Petitioner,
_________________________
Petition for Review and Cross-Application for Enforcement
of an Order of the National Labor Relations Board
_________________________
Before GARWOOD, HIGGINBOTHAM, and
SMITH, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Tri-State Health Service, Inc. (“Tri-State”),
seeks review of a decision of the National
Labor Relations Board (“NLRB” or “Board”)
finding that Tri-State lacked a good faith
doubt in the continued majority status of a
union with which it refused to bargain. The
Board pursues a cross-petition for
enforcement. Agreeing with Tri-State that the
decision violates Allentown Mack Sales &
Serv. Corp. v. NLRB, 522 U.S. 359 (1998),
we grant the petition for review and deny the
cross-petition for enforcement.
I.
We consider whether Tri-State committed
an unfair labor practice in violation of § 8(a)-
(1) and (5) of the National Labor Relations
Act (“NLRA”), 29 U.S.C. § 158(a)(1), (5),
when it refused to bargain with the incumbent

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Service Employees International Union.1 Tri-
State is the owner and currently the operator,
of Eden Gardens Nursing Home. Though Tri-
State has owned the facility since it opened in
1975, it has periodically leased it to other man-
agement firms. It was during one such period
in 1996, with the nursing home under the
management of Woodard Health Services, Inc.
(“Woodard”), that the union was certified as
the bargaining representative for the home’s
unskilled labor.2 By the time a collective
bargaining agreement (“CBA”) was success-
fully negotiated in October 1997, Woodard
had subleased operations to Camelot Health-
care, L.L.C. (“Camelot”).3
Camelot’s tenure in charge of the nursing
home was rocky, marked by an inability to pay
contractual wages, the union’s successful pur-
suit of an unfair labor practice charge, and,
eventually, an inability to pay rent. During this
same period, some union members began to
grow dissatisfied with the union’s repre-
sentation.4
Circumstantial evidence of that develop-
ment came in several different forms. For ex-
ample, between early 1998 and the fall of
1999, the number of employees authorizing
automatic deductions of their union dues
(known as dues checkoffs) fell from eleven to
zero. None of the nursing home’s employees
served as a union steward, and the sole
example of union activity consisted of the
posting of a flyer announcing the grievance
being pursued against Camelot.
Anecdotal evidence paints a similar picture.
Wanda Smith, a supervisor at the nursing
home, overheard three nurse’s aides com-
plaining that their union dues had not earned
them meaningful benefits.5 An assistant ad-
ministrator, Suzanne Price, similarly claims to
have been approached by four employees and1 Section 8(a)(5) makes it an unfair labor prac-
tice for an employer “to refuse to bargain collec-
tively with the representatives of his employees.”
29 U.S.C. § 158(a)(5). Generally, any such viola-
tion is also taken to be a violation of § 8(a)(1),
which makes it an unfair labor practice for an em-
ployer “to interfere with, restrain, or coerce em-
ployees in the exercise of the rights guaranteed in
section 157 of this title.” 29 U.S.C. § 158(a)(1).
2 The bargaining unit was comprised of nurse’s
aides, and maintenance, laundry, housekeeping,
and food service workers. At all relevant times,
there were between thirty and forty workers in the
unit.
3 The CBA was effective for only two years but
was renewable through an “evergreen clause” that
required the parties to submit written notice of their
desire to terminate or amend the CBA. The
evidence suggests that the agreement was renewed
in this fashion and therefore continued in force
through the fall of 2000.
4 To the extent there is any causal connection
between Camelot’s actions and the decline in union
support, the Board expressly disavows the notion
that Tri-State, as a successor entity, is thereby
disqualified from asserting it possesses a good faith
doubt concerning the union’s continued majority
status. Cf. Raven Serv. Corp. v. NLRB, 315 F.3d
499, 506 (5th Cir. 2003) (requiring employer to
show that the doubt arose “in a context free of
unfair labor practices that could have reasonably
tended to contribute to employee dissatisfaction
with the union”). We therefore express no opinion
on that question.
5 The probative value of that assertion is lim-
ited, however, because Smith’s testimony was not
introduced for the truth of those complaints, but
only to establish the state of mind of Tri-State’s
administrators when they subsequently refused to
bargain with the union. Cf. FED. R. EVID. 801(c).

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3
told that they wished to cancel their dues
checkoffs because they no longer wanted to be
represented by the union.6
The present dispute arises from actions Tri-
State failed to take on its resumption of
control of the nursing home in March 2000,
when Woodard’s lease expired. Tri-State
chose not to inform the union of the change in
management or to respond to the union’s
invitations to negotiate a new CBA.
Tri-State later justified its refusal to bargain
on the ground that it possessed a genuine
doubt as to whether the union continued to
command the support of a majority of the bar-
gaining unit. The union responded by filing a
grievance with the Board. Following a hearing
before an administrative law judge (“ALJ”), it
was determined that Tri-State was a successor
to Camelot within the meaning of NLRB v.
Burns Int’l Sec. Serv., Inc., 406 U.S. 272
(1972), and that Tri-State lacked sufficient
justification for refusing to bargain.
Accordingly, Tri-State was found to be in
violation of NLRA § 8(a)(1) and (5). In his
ruling, the ALJ assigned probative weight only
to Smith’s claim that she had heard three em-
ployees complain about the union. The ALJ
dismissed, for want of credibility, Price’s sim-
ilar claim and found irrelevant the evidence of
declining dues checkoffs and low union
activity. The ALJ also rejected the notion that
Tri-State could rely on the union’s margin of
victory during the certification elections as an
indicator of the union’s low level of support.
The Board affirmed, taking only minor ex-
ceptions to the ALJ’s reasoning.
II.
A.
We must uphold the Board’s finding that
Tri-State violated its duty to bargain if that
decision is supported by substantial evidence
on the record as a whole. Fall River Dyeing
& Finishing Corp. v. NLRB, 482 U.S. 27, 42
(1987); 29 U.S.C. § 160(e). If a reasonable
jury could have reached the Board’s
conclusion, it must be upheld. Allentown
Mack Sales & Serv., Inc. v. NLRB, 522 U.S.
359, 366-67 (1998). Nevertheless, the Board
“is not free to prescribe what inferences from
the evidence it will accept and reject, but must
draw all those inferences that the evidence
fairly demands.” Id. at 378.
B.
An employer is required to bargain with the
representative of its employees, and its failure
to do so constitutes an unfair labor practice.
See NLRA § 8(a)(5), 29 U.S.C. § 158(a)(5).
That requirement, however, attaches only for
so long as the union retains the support of a
majority of employees in the bargaining unit.
To that end, there is a conclusive presump-
tion that the union retains majority support for
one year after its election as the representative
of a bargaining unit. Auciello Iron Works v.
NLRB, 517 U.S. 781, 786 (1996). The union
also is entitled to a conclusive presumption of
majority status during the pendency of a col-
lective-bargaining agreement, up to a
maximum of three years. Id.
Thereafter, the union is entitled to only a
rebuttable presumption of majority status.
NLRB v. Curtin Matheson Scientific, Inc., 494
U.S. 775, 778 (1990). An employer may over-
come this latter presumption and refuse to bar-
gain if it shows either that the union did not
enjoy majority support within the relevant bar-
gaining unit, or that the employer had a
6 That evidence, too, was admitted only for pur-
poses of establishing a state of mind, and the Board
ultimately discredited it.

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“‘good-faith’ doubt, founded on a sufficient
objective basis, of the union’s majority
support.” Id; see also Raven Serv. Corp., 315
F.3d at 506.7
To claim validly that it possesses a good
faith doubt regarding the union’s majority stat-
us, an employer need not prove that it has a
sincere belief that the union in fact lacks
majority support. Allentown Mack, 522 U.S.
at 367. Rather, it must only substantiate un-
certainty on that score. Id. It is therefore un-
reasonable for the Board to disregard evidence
that would tend to support the inference that
workers do not support the union, even if the
same evidence is capable of supporting other,
more neutral inferences. Id. at 369.8
III.
Tri-State argues that its good faith doubt
about the union’s majority status is supported
by five pieces of evidence. Of these, the ALJ
and the Board credited only one and found it
insufficient, standing alone, to excuse Tri-
State’s refusal to bargain with the union.
The Board erred in refusing to credit two
further items of evidence. Once these
additional data points are factored into the
analysis, it is apparent that the Board’s finding
of an unfair labor practice is not supported by
substantial evidence.
A.
The Board accepted the ALJ’s determina-
tion that Smith’s testimony supports Tri-
State’s claimed good faith doubt, and we
agree. We also concur with the Board that
this evidence is insufficient, by itself, to create
a genuine good faith doubt about the union’s
majority status. Although Smith’s testimony
supports an inference that three employees
shifted their support away from the union, that
inference is countered by the fact that the un-
ion had been certified by a much larger margin.
As a result, the substance of Smith’s testimony
would not cause a reasonable employer to
question whether the union had lost its
majority support.
B.
The Board rejected Tri-State’s contention
that it could look to the decline in union dues
checkoffs as a barometer of the union’s
support. The Board explained:
Employee cancellations of dues-checkoff
authorizations may be attributable to many
factors other than opposition to a union
. . . . [E]mployees may prefer to pay their
dues only at convenient times or in person,
or may even be ‘free riders’ who desire and
accept union representation without joining
the union and paying dues.
7 Although the record suggests the CBA was in
force and in only its third year when Tri-State re-
sumed control of the facility in March 2000, nei-
ther party argues that the union is thereby entitled
to a conclusive presumption of its majority status.
We therefore assume that the presumption relevant
to this case is the rebuttable one.
8 In the wake of Allentown Mack, the Board
has adopted a more restrictive interpretation of the
NLRASSone that it abjectly denied using in its ar-
guments to the Allentown Mack Court. See Levitz
Furniture Co., 333 NLRB No. 105, 2001 WL
314139 (2001). Under the Board’s current
interpretation, an employer can justify a refusal to
bargain with an incumbent union only by showing
that the union has in fact lost the support of a
majority of the bargaining unit. Id. at *11-*12.
The Board concedes, however, that this more re-
strictive standard does not apply to the current
case, which was pending when the Board decided
Levitz.

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5
(Internal quotations omitted.)
This is precisely the sort of reasoning re-
jected in Allentown Mack, 522 U.S. at 369.
There, the Court discussed the significance of
an employee’s statement that could have been
interpreted as reflecting only a desire for better
union representation, but also could have been
interpreted as reflecting a desire to abandon
the union. Id. The Board purported to re-
solve the ambiguity, concluding (as it did here
with the dues checkoffs) that the evidence was
most reasonably interpreted in a manner that
did not cast doubt on the union’s majority stat-
us. Id. Accordingly, the Board determined
that the evidence was not probative of the em-
ployer’s uncertainty.
The Court reversed, reasoning that the ex-
istence of two possible interpretations of the
evidence meant only that it could not establish
the fact of a decline in majority status. Nev-
ertheless, “[t]he statement would assuredly en-
gender an uncertainty whether the speaker
supported the union, and so could not be en-
tirely ignored.” Id. Thus, in evaluating an em-
ployer’s claim of uncertainty, the Board is not
free to choose between two reasonable in-
terpretations of the evidence and prescribe the
one that the employer should have adopted.
So long as the employer’s interpretation is rea-
sonable, and the evidence so interpreted tends
to engender uncertainty as to whether the un-
ion still commands majority support, the evi-
dence is probative and must be considered.
The same principle governs our consid-
eration of the decline in dues checkoffs. The
Board is, of course, correct to note that a de-
cline in checkoffs may be attributable to some
innocent explanation, and an employer
reasonably could conclude that such evidence
does not engender any uncertainty about the
level of support the union enjoys.
Nevertheless, it is equally as reasonable for an
employer to witness a decline in checkoffs and
infer that its current work force is less
supportive of the union than it was just a few
years before, when eleven employees
manifested support for the union by
authorizing direct withdrawal of dues from
their paychecks.
We agree with the only court of appeals to
have considered the issue in the wake of Allen-
town Mack, that “[t]he natural inference is that
the decline reflected a loss of union support,”
and that “[i]n some circumstances, and this is
certainly one of them, membership and dues
checkoff data ‘can unquestionably be probative
to some degree’ of [the employer’s] doubt.”
McDonald Partners, Inc. v. NLRB, 331 F.3d
1002, 1007 (D.C. Cir. 2003) (quoting
Allentown Mack, 522 U.S. at 380).9 To that
9 In support of its claim that this evidence is
irrelevant, the Board relies on a number of
decisions that pre-date Allentown Mack and stand
for the proposition that a decline in dues check-offs
lacks probative value because it is susceptible to
more than one interpretation. See, e.g., People’s
Gas Sys., Inc. v. NLRB, 629 F.2d 35, 40 n.9 (D.C.
Cir. 1980) (averring that although a high level of
dues checkoffs indicates support for the union, the
converse is not true); NLRB v. Wallkill Valley
Gen. Hosp., 866 F.2d 632, 637 (3d Cir. 1989)
(accepting Board’s conclusion that low number of
dues checkoffs is not probative of a decline in
union support). After Allentown Mack, such
reasoning is faulty, for it overstates the Board’s
objective in assessing doubt. The existence of two
possible interpretations is the very essence of
uncertainty, not a rebuttal of it.
Further, in Allentown Mack, 522 U.S. at 379,
the Court stressed that the issue of assessing good
(continued...)

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end, it is inescapable that one of first things an
employee would do, on resolving to leave the
union, is ask the employer to stop taking union
dues out of his paycheck. Although this might
not be the only reasonSSor even the most
common reasonSSan employee asks to cease
participation in the checkoff program, it is
nonetheless a realistic possibility that can
engender some degree of uncertainty in the
mind of the employer. The board erred in
disregarding this evidence altogether.
In considering the weight accorded this evi-
dence, however, we are mindful that some of
the decline in dues checkoffs is the product of
employee terminations. Indeed, according to
an affidavit submitted by one of Tri-State’s su-
pervisors, the final two employees enrolled in
the program had their checkoff authorizations
canceled unilaterally by Camelot in 1999.
At best, therefore, the evidence would lead
a reasonable employer only to believe that un-
ion supporters who lost their job were
replaced by employees who did not manifest
the same degree of outward support for the
union.10 In other words, the evidence tends to
create some uncertainty, but on the facts of
this case it is nevertheless an insufficient basis
for Tri-State’s refusal to negotiate.
C.
The ALJ and the Board discredited the tes-
timony of Price, who claimed to have had con-
versations with four employees who had ex-
pressed their dissatisfaction with the union and
requested cancellation of their dues checkoffs.
The ALJ apparently discredited Price solely on
the ground that her memory of those
conversations was insufficiently detailed to
convince him that they took place. The Board
deferred to the ALJ’s credibility assessment
and asks us to do the same.
Ordinarily, we defer to an ALJ’s finding
that turns on an evaluation of a witness’s cred-
ibility. Brown & Root, Inc. v. NLRB, 333 F.3d
628, 635 (5th Cir. 2003). Nevertheless, no
deference is owed the ALJ or the Board in
their interpretations of the law, J. Vallery
Elec., Inc. v. NLRB, 337 F.3d 446, 450 (5th
Cir. 2003), and the error here is a legal one.
In dismissing the probative impact of
Price’s testimony, the ALJ focused only on
whether it was convincing evidence that the
conversations occurred sometime in 1998.
That is not the relevant inquiry. To the
contrary, since it was neither Price nor the ALJ
who formed the conclusion that Tri-State need
not bargain with the union, it is ultimately ir-
relevant whether the ALJ believed Price was
9(...continued)
faith doubt “is a matter of logic and sound
inference from all the circumstances, not an
arbitrary rule of disregard to be extracted from
prior board decisions.” When reason counsels that
a category of evidence has a logical connection to
the matter in dispute, it is not enough for the Board
merely to string-cite a list of cases in which similar
evidence was found to have no bearing on a dispute
involving different parties and a different set of
operative facts. Rather, the Board is justified in
dismissing evidence outright only if it can show
that it isSSas a matter of logic and
reasonSSunhelpful to the position in support of
which it is proffered. The Board has not done that
here.
10 The employer is not entitled automatically to
assume that all replacement workers oppose the
union, Curtin Matheson., 494 U.S. at 778-79, but
it may rely on objective evidence tending to show
that this is the case, Allentown Mack, 522 U.S. at
369-70.

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telling the truth when she claimed to have
heard four employees express a desire to aban-
don the union. All that matters is whether the
ALJ had reason to believe that Tollie
Bordeaux, the owner and President of Tri-
State ultimately responsible for the refusal to
bargain, either did not believe, or should not
have believed Price’s claims when she related
them to him.
It is Bordeaux’s mind set, and the level of
doubt and uncertainty lingering therein, that is
of ultimate consequence. Indeed, the ALJ ad-
mitted Price’s testimony over a hearsay
objection only because it was offered to prove
not the truth of her assertions, but Bordeaux’s
state of mind when he decided not to bargain.
Accordingly, the ALJ based his credibility de-
termination on an irrelevant ground, and we do
not defer to it.
At oral argument, the Board conceded that
the evidence shows Price communicated the
substance of her testimony to Bordeaux before
he charted a course of refusing to negotiate.
Rather than contest that fact, the Board took
the untenable position that even if Price told
Bordeaux that these conversations occurred,
and he acted in reliance on that representation,
the ALJ was free to disregard the evidence if
Price’s assertions later proved to be untrue.
That is to say, even if Price genuinely
convinced Bordeaux that employees were
dissatisfied with the union, and he had no
reason to doubt her veracity, he could rely on
that evidence only at his peril, because a
subsequent showing that Price lacked
credibility worked to undermine his use of the
evidence, too.
That position is unsound as both a logical
and a doctrinal matter. If adopted, the
position advanced by the Board would be less
one of good faith doubt than of strict liability.
Any time an employer acted on an uncertainty
that was later resolved against it, it would be
subject to a finding of an unfair labor practice
merely because it lacked the prescience to an-
ticipate subsequent developments.
It would be a different matter altogether if
the evidence relied on was so lacking in indicia
of reliability that any reasonable employer
would doubt its veracity. We know that is not
the case here, however, because the type of
evidence Tri-State relied on is nearly identical
to that the Court sanctioned in Allentown
Mack. There, the Court required the Board to
credit, as supporting a good faith doubt,
statements by individual employees claiming to
speak for a larger group of employees, even
where the larger group’s views were not sub-
stantiated in any other form:
Unsubstantiated assertions that other
employees do not support the union
certainly do not establish the fact of that
disfavor with the degree of reliability
ordinarily demanded in legal proceedings.
But under the Board’s enunciated test . . .
it is not the fact of disfavor that is at issue
. . . but rather the existence of a reasonable
uncertainty on the part of the employer
regarding that fact. On that issue, absent
some reason for the employer to know that
[the declarant] had no basis for his
information, or that [the declarant] was
lying, reason demands that the statement be
given considerable weight.
Allentown Mack, 522 U.S. at 369-70. There
is nothing in the record even tending to show
that Bordeaux should have believed Price was
lying to him. The Board therefore erred in
failing to consider this evidence.

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Once Price’s testimony is factored into the
analysis, Tri-State’s showing of a good faith
doubt is more than sufficient to justify its re-
fusal to bargain with the union. This is
because Price’s testimony amplifies and
reinforces the inference that the decline in dues
checkoffs corresponds with a decline in union
support. Because Bordeaux was entitled to
draw a connection between the two events,
and to combine those two factors with Smith’s
claim that an additional three employees ex-
pressed their dissatisfaction with the union, he
had good cause to be uncertain whether the
union continued to have majority support.11
We therefore GRANT the petition for re-
view, VACATE the Board’s opinion,
DISMISS the charges against Tri-State, and
DENY the cross-petition for enforcement.
11 The Board also erred in ignoring altogether
evidence of the union’s margin of victory in the
most recent election. This court’s decision in
NLRB v. A.W. Thompson, Inc., 651 F.2d 1141,
1145 (5th Cir. Unit A Sept. 1981), does not stand
for the proposition that election results are
categorically irrelevant to an assessment of the
employer’s doubt, but only that such evidence has
no tendency to show a decline in union support fol-
lowing the election.
Even so, election results can give the employer
an indication of the extent to which union support
needs to erode before there is any uncertainty as to
whether it continues to possess majority support.
Surely the Board would not dispute that an
employer needs more substantial evidence of a de-
cline in support before it refuses to bargain with a
union that had recently been certified by a margin
of 99 to 1, than it does if the union only won by a
measure of 51 to 49. Substantial evidence does
support, however, the Board’s determination that
there was not a notable absence of union activity at
the plant.

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