NLRB Abused Discretion by Ordering Employer to Provide Union Whole Rather than Relevant Parts of Asset Purchase Agreement: Third Circuit | Practical Law

NLRB Abused Discretion by Ordering Employer to Provide Union Whole Rather than Relevant Parts of Asset Purchase Agreement: Third Circuit | Practical Law

In Crozer-Chester Medical Center v. NLRB, the Third Circuit held that the National Labor Relations Board (NLRB) abused its discretion and imposed a punitive remedy exceeding the scope of the unfair labor practice by ordering an employer to provide the union an entire unredacted asset purchase agreement, rather than only the portions concerning employees' employment terms and conditions and relevant for collective bargaining.

NLRB Abused Discretion by Ordering Employer to Provide Union Whole Rather than Relevant Parts of Asset Purchase Agreement: Third Circuit

by Practical Law Labor & Employment
Law stated as of 20 Apr 2023 • USA (National/Federal)
In Crozer-Chester Medical Center v. NLRB, the Third Circuit held that the National Labor Relations Board (NLRB) abused its discretion and imposed a punitive remedy exceeding the scope of the unfair labor practice by ordering an employer to provide the union an entire unredacted asset purchase agreement, rather than only the portions concerning employees' employment terms and conditions and relevant for collective bargaining.
On September 24, 2020, in Crozer-Chester Medical Center v. NLRB, the Third Circuit held that:
  • The employer, a seller of a healthcare network, unlawfully refused to provide portions of the asset purchase agreement containing information on represented employees' employment terms and conditions at their union's request (to facilitate effects bargaining).
  • The union established that portions of the agreement concerning the employees' employment terms and conditions were relevant for collective bargaining and the employer could not lawfully refuse to provide any part of the agreement on asserted confidentiality grounds.
  • The NLRB abused its discretion and imposed a punitive remedy by ordering the employer to provide the union with the entire unredacted purchase agreement, rather than only the portions the union showed were relevant. The scope of the NLRB's remedy (production of an entire assertedly confidential agreement) exceeded the unfair labor practice (failure to provide portions of the agreement shown to be relevant to collective bargaining).
( (3d Cir. Sept. 24, 2020).)
The practical implication of this case is that the Third Circuit, unlike some NLRB precedent, does not require an employer to provide a requesting union portions of documents the union has not shown to be relevant, if the employer fails to seek a confidentiality accommodation immediately from the requesting union. The Third Circuit's approach would seem to permit an employer to challenge the relevance of the request and assert confidentiality in the alternative, without forfeiting the opportunity to obtain the confidentiality accommodation if its relevance argument fails.

UPDATE:

On remand, a majority of the NLRB identified and ordered the employer to produce specific schedules and attachments to the asset purchase agreement that either concern unit employees and therefore are presumptively relevant or potentially affect unit employees' employment terms and conditions and therefore were sufficiently established to be relevant. The majority noted the limited applicability of its decision given the unusual circumstances of this case and confirmed that the analysis undertaken to effectuate the Third Circuit's directive on remand does not overrule or otherwise call into question long-standing NLRB precedent governing showings of relevance and the relevance of sales agreements generally. Member Ring dissented. (Delaware Cty. Mem'l Hosp., 371 N.L.R.B. No. 129 (Aug. 23, 2022).)

UPDATE:

By unpublished opinion, the Third Circuit denied the employer's petition for review of the NLRB's August 2022 order, finding that the NLRB's relevancy determinations were supported by substantial evidence (Crozer Chester Med. Ctr. v. NLRB, (3d. Cir. Apr. 20, 2023)).