Beverly Health & Rehabilitation Services

National Labor Relations Board - Board Decisions

Sep 28, 2001

336 N.L.R.B. 332 (N.L.R.B. 2001)

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 332
Beverly Health and Rehabilitation Services, Inc., its
Operating Regional Offices, wholly owned sub-
sidiaries and individual facilities and each of
them and/or its wholly owned subsidiary Bev-
erly Enterprises-Pennsylvania, Inc. and Penn-
sylvania Social Services Union Local 668, affili-
ated with Service Employees International Un-
ion, AFL–CIO, CLC and District 1199P, Service
Employees International Union, AFL–CIO,
CLC and Service Employees International Un-
ion, Local 585, AFL–CIO, CLC. Cases 6–CA–
28130–1, 6–CA–28130–2, and 6–CA–28130–3
September 28, 2001
ORDER DENYING MOTIONS
BY CHAIRMAN HURTGEN AND MEMBERS
LIEBMAN
AND WALSH
On August 8, 2000, the National Labor Relations
Board issued its Decision and Order in this case,1 finding
that the November 29, 1996 complaint allegation that the
Respondent violated Section 8(a)(1) of the Act by filing
and maintaining a defamation lawsuit against the Charg-
ing Parties and District 1199P President Thomas De-
Bruin should be held in abeyance pending the outcome
of the lawsuit. Additionally, the Board’s Decision and
Order dismissed the allegation in the December 23, 1996
amended complaint to the extent that it alleged that the
Respondent violated the Act by failing to stay its lawsuit
after the General Counsel issued his November 29, 1996
complaint in this case.
On October 6, 2000, the General Counsel and the
Charging Parties filed motions for reconsideration and
supporting memoranda. Subsequently, the Respondent
filed a brief in opposition to the motions, the General
Counsel filed a reply brief, and the Charging Parties filed
a reply memorandum.
The General Counsel’s motion seeks reconsideration
solely of the Board’s finding that the Respondent’s
defamation lawsuit was not preempted by issuance of the
General Counsel’s complaint in this case. The General
Counsel seeks a finding that the lawsuit was preempted
from the time of issuance of the General Counsel’s com-
plaint until the Board issued its decision in this case on
August 8, 2000. The General Counsel, however, does not
request the Board to find that the Respondent’s mainte-
nance of the assertedly preempted lawsuit violated the
Act.
The Charging Parties’ motion also seeks reconsidera-
tion of the Board’s finding that the Respondent’s lawsuit
was not preempted by issuance of the General Counsel’s
complaint. The Charging Parties seek a finding that the
Respondent violated the Act by its continued prosecution
of the lawsuit after the General Counsel’s complaint is-
sued. Additionally, the Charging Parties request recon-
sideration of the Board’s holding in abeyance the com-
plaint allegation that the Respondent violated the Act by
filing and maintaining its lawsuit. The Charging Parties
contend that the Board erred in failing to find that the
lawsuit was baseless and retaliatory and, thus, violated
Section 8(a)(1) from the outset. In particular, the Charg-
ing Parties contend that the Board erred in failing to re-
quire the Respondent to come forward with some evi-
dence supporting each element of each count of its law-
suit.

1 331 NLRB 960.
The Respondent contends that the Board’s decision
was correct and that the General Counsel’s and Charging
Parties’ motions should be denied. The Respondent ar-
gues that the Board correctly followed applicable Su-
preme Court precedent in finding that its defamation
lawsuit was not preempted by the General Counsel’s
issuance of the complaint in this case. Additionally, the
Respondent contends that the Board properly applied the
reasonable basis test in finding that the complaint allega-
tion that the Respondent violated the Act by filing and
maintaining its lawsuit should be held in abeyance.
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
Having duly considered the matter, we deny the Gen-
eral Counsel’s and Charging Parties’ motions for recon-
sideration for the following reasons.
1. First, the Charging Parties claim that the Board
erred in holding in abeyance the complaint allegation that
the Respondent violated the Act by filing and maintain-
ing its defamation lawsuit. Their arguments were fully
considered in the underlying case, 331 NLRB 960, in
accordance with the framework set out in Bill Johnson’s
Restaurants v. NLRB, 461 U.S. 731 (1983), and we see
no reason to reconsider them.
2. Second, the General Counsel and the Charging Par-
ties contend that the Board erred in finding that issuance
of the General Counsel’s complaint did not preempt the
Respondent’s defamation lawsuit. Our resolution of this
issue is necessarily circumscribed by the Supreme
Court’s analysis in both Bill Johnson’s and Linn v. Plant
Guard Workers, 383 U.S. 53 (1966). We read those
cases as curbing our ability to enjoin prosecution of a
defamation suit, unless and until we have determined that
the suit lacked a “reasonable basis” under Bill Johnson’s.
And, contrary to the General Counsel and the Charging
Parties, we do not view the Court’s decision in Sears
Roebuck & Co. v. Carpenters, 436 U.S. 180 (1978), and
336 NLRB No. 25
BEVERLY HEALTH & REHABILITATION SERVICES 333
the Board’s decision in Loehmann’s Plaza, 305 NLRB
663, 670 (1991),2 as authorizing the Board to do more.
The governing caselaw makes clear that different consid-
erations apply to defamation suits, as opposed to trespass
suits.
In Linn, the Supreme Court held that, where a party to
a labor dispute circulates allegedly defamatory state-
ments, a State court defamation suit is not preempted by
the Act “if the complainant pleads and proves that the
statements were made with malice and injured him.” 383
U.S. at 55.3 For the plaintiff to prevail, he must prove
not only defamation under State law, but also the Federal
overlay of actual malice and damages. Under Bill John-
son’s, in turn, “the Board may not halt the prosecution of
a state-court lawsuit, regardless of the plaintiff’s motive,
unless the suit lacks a reasonable basis in fact or law.
Retaliatory motive and lack of reasonable basis are both
essential prerequisites to the issuance of a cease-and-
desist order against a state suit.” 461 U.S. at 748–749.
Bill Johnson’s itself involved a State court libel suit.
The Court acknowledged that the Board may order a
respondent to cease and desist from prosecuting a lawsuit
that is preempted by Federal labor law. Id. at 737 fn. 5.
However, the Court emphasized that the case before it
involved a libel claim, which was not preempted:
[W]hat is involved here is an employer’s lawsuit that
the federal law would not bar except for its allegedly
retaliatory motivation. We are not dealing with a suit
that is claimed to be beyond the jurisdiction of the state
courts because of federal-law preemption. [Id.]

Rather, to enjoin the libel lawsuit, the Court held, the Board
would have to find that it was baseless. The Court summa-
rized its holding as follows:

The Board’s reasonable-basis inquiry must be struc-
tured in a manner that will preserve the state plaintiff’s
right to have a state court jury or judge resolve genuine
material factual or state-law legal disputes pertaining to

2 Supplemented by 316 NLRB 109 (1995), review denied sub nom.
Commercial Workers Local 880 v. NLRB, 74 F.3d 292 (D.C. Cir.
1996), cert. denied sub nom. Teamsters Local 243 v. NLRB, 519 U.S.
809 (1996).
3 In San Diego Building Trades Council v. Garmon, 359 U.S. 236
(1959), the Court announced the general preemption principle that
“state courts must defer to the exclusive competence of the National
Labor Relations Board in cases in which the activity that is the subject
matter of the litigation is arguably subject to the protections of section 7
or the prohibitions of section 8 of the National Labor Relations Act.”
In Linn, the Court found that lawsuits for malicious defamation are not
preempted by the Act, “as a State’s concern with redressing malicious
libel is ‘so deeply rooted in local feeling and responsibility’ that it fits
within the [preemption] exception specifically carved out by Garmon.”
383 U.S. at 62, quoting Garmon, 359 U.S. at 248.

the lawsuit. Therefore, if the Board is called upon to
determine whether a suit is unlawful prior to the time
that the state court renders final judgment, and if the
state plaintiff can show that such genuine material fac-
tual or legal issues exist, the Board must await the re-
sults of the state-court adjudication with respect to the
merits of the state suit. . . . In short, then, although it is
an unfair labor practice to prosecute an unmeritorious
lawsuit for a retaliatory purpose, the offense is not en-
joinable unless the suit lacks a reasonable basis. [Id. at
749.]

We read Bill Johnson’s and Linn together to preclude
the Board from finding that the General Counsel’s issu-
ance of a complaint against a defamation lawsuit pre-
empts the State court suit, pending litigation on the
“baselessness” issue. To enjoin the libel suit as pre-
empted when the complaint issues, would be contrary to
Linn, which held that where the plaintiff has alleged and
can prove actual malice and damages, the defamation suit
is not preempted. It would also be contrary to Bill John-
son’s, which held that unless a State court suit is pre-
empted, the Board cannot enjoin it unless and until the
Board determines that it lacks a reasonable basis and is
retaliatory. In short, contrary to the moving parties’ ar-
gument, the defamation suit cannot be enjoined as soon
as the complaint issues, because no determination has yet
been made, by the Board, on the baselessness issue.
The General Counsel and Charging Parties argue that a
different result is compelled by the Supreme Court’s de-
cision in Sears, supra, and the Board’s later decision in
Loehmann’s Plaza, supra. We cannot agree.
In Sears, the Court found that a State court trespass
lawsuit seeking to enjoin peaceful union picketing on the
employer’s property was not preempted by the Act. The
principal reason was that “the party who could have pre-
sented the [Section 7] protection issue to the Board [i.e.,
the union] ha[d] not done so and the other party to the
dispute [i.e., the employer] ha[d] no acceptable means of
doing so.”4 Id. at 201. The Court was thus unwilling to
find the trespass suit preempted, leaving the employer
without a forum in which to adjudicate its dispute with
the union. The Court, however, indicated that, had the
trespass dispute been presented to the Board in an unfair
labor practice proceeding, the lawsuit would have been
preempted.5
4 Thus, unlike Linn, the Sears finding of nonpreemption was not
based on the Garmon exception regarding conduct that touches inter-
ests deeply rooted in local feeling and responsibility. See fn. 3, above.
5 The Justices disagreed about the precise point at which preemption
would occur—when the unfair labor practice charge was filed or when
the General Counsel issued his complaint. See 436 U.S. at 208–212
(Blackmun, concurring), 436 U.S. 212–214 (Powell, concurring).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 334
The preemption holding in Loehmann’s Plaza fol-
lowed from this proposition. Loehmann’s Plaza involved
a complaint alleging that a State law trespass suit against
union handbilling and picketing violated Section 8(a)(1).
The Board held that when the General Counsel issues a
complaint alleging that a lawsuit constitutes unlawful
interference with protected activity, the requirements for
establishing preemption are met. After the point of pre-
emption, the active pursuit of a state court lawsuit seek-
ing to enjoin protected peaceful picketing tends to inter-
fere with Section 7 rights thereby violating Section
8(a)(1) of the Act. The reason is that when the General
Counsel issues a complaint—“[w]ith regard to the law-
suits of the kind in issue [in Loehmann’s Plaza],” 305
NLRB at 670—he has made a determination that suffi-
cient evidence has been presented to demonstrate a prima
facie case that the union picketing or handbilling is ar-
guably protected by the Act; that determination then sat-
isfies the substantive requirement for preemption under
Sears,6 because an unfair labor practice is committed
only by interference with activity that the Act protects.
Contrary to the moving parties, we do not believe that
Sears and Loehmann’s Plaza compel the conclusion that,
once a complaint is presented to the Board involving a
state court defamation suit, the suit should be preempted.
The Sears court clearly drew a distinction between pre-
emption principles in trespass cases arising out of union
picketing or handbilling and defamation cases. As it
stated:
The Court has held that state jurisdiction to enforce its
laws prohibiting violence, defamation, the intentional
infliction of emotional distress or obstruction of access
to property is not pre-empted by the NLRA. But none
of those violations of state law involves protected con-
duct. In contrast, some violations of state trespass laws
may be actually protected by § 7 of the federal Act.”
[436 U.S. at 204; footnotes omitted.]7

6 As the Board discussed in Loehmann’s Plaza, the Court in Sears
announced the following guidelines:
(1) where arguably protected activity is involved, preemption does not
occur in the absence of Board involvement in the matter, and (2) upon
the Board’s involvement, a lawsuit directed at arguably protected ac-
tivity is preempted by Federal labor law. It is clear that under Sears
preemption does not occur before an unfair labor practice charge is
filed, at least so long as the landowner has communicated to the tres-
passers a demand that they leave before filing the trespass suit. It is
also clear under Sears that when the Board issues a decision finding
the conduct protected, the Board’s decision and remedy preempts any
state court action. [305 NLRB at 669 (footnotes omitted).]
7 The General Counsel, citing fn. 29 of Sears, argues that the deci-
sion “explains that once the Board’s jurisdiction over arguably pro-
tected conduct is invoked, preemption must occur until the Board rules,
because if the conduct is eventually found to be actually protected, the
Accord: Longshoremen ILA v. Davis, 476 U.S. 380, 392–
393 fn. 10 (1986) (discussing exceptions to Garmon pre-
emption and describing Linn as involving regulated conduct
touching “interests . . . deeply rooted in local feeling” and
Sears as involving “conduct that is arguably protected under
§ 7 where the injured party has no means of bringing the
dispute before the Board”).
Of course, absent a finding that the picketing and
handbilling on private property is protected, a lawsuit to
enjoin that activity is not unlawful. The determination
whether that conduct is protected is within the exclusive
province of the Board. As Linn makes clear, however,
that is not so with an alleged defamation. Further, the
Board made clear in Loehmann’s Plaza (involving a
trespass case) that the situation there was different than
that in Bill Johnson’s (involving a defamation case):
“[A]t the point of preemption, the special requirements
of Bill Johnson’s do not apply.” 305 NLRB at 671.8
For all of these reasons, we conclude that the Board
may not order the Respondent to cease and desist from
pursuing its defamation lawsuit unless and until it is de-
termined by the Board to be baseless under a Bill John-
son’s analysis.9 We recognize that, as the General Coun-

state court is clearly ousted of all jurisdiction.” G C Br. at 8. In fact,
this principle applies—as Sears makes clear—only where the Garmon
doctrine is “applicable.” 436 U.S. at 199 fn. 29. In defamation cases,
of course, an exception to Garmon applies. Linn, 383 U.S. at 62.
8 The Charging Parties argue that “[t]here is no difference between
trespass actions and defamation actions relevant to the Loehmann’s
Plaza analysis,” because “[n]either type of action is wholly preempted
by federal law.” Charging Parties’ Memorandum at 12-13. We recog-
nize, as we stated in our original decision, that Bill Johnson’s makes
clear that in defamation cases arising out of labor disputes, federal law
superimposes a malice requirement that is a “heavy burden.” 331
NLRB 960, 964–965. But, as pointed out above, the Court in Bill
Johnson’s also emphasized that the defamation action before it was not
“a suit that is claimed to be beyond the jurisdiction of the state courts
because of federal-law preemption.” 461 U.S. at 737 fn. 5. Given that
statement, we see no basis for even the sort of “jurisdictional hiatus”
that the Charging Parties urge (Charging Parties’ Memorandum at 14),
though we certainly recognize—as did the Court in Bill Johnson’s—
that allowing the State court litigation to proceed may burden the union
defendants. 461 U.S. at 740–741.
9 However, nothing in our decision precludes the Board from author-
izing the General Counsel to seek a court order, under Sec. 10(j) of the
Act, to prevent an allegedly baseless defamation lawsuit from going
forward in State court. Thus, the Board may decide to grant such 10(j)
authorization where it appears that the lawsuit lacks a reasonable basis
and is retaliatory. Therefore, although issuance of an unfair labor prac-
tice complaint alleging that a defamation lawsuit violates the Act does
not preempt the suit, the General Counsel may nevertheless seek a
temporary halt to such a suit under Sec. 10(j).
Chairman Hurtgen does not agree that Sec. 10(j) presents a viable
means for stopping the lawsuit. Sec. 10(j) is designed to provide in-
terim relief pending completion of proceedings before the Board. In
such cases, it is anticipated that the Board will complete its proceedings
as soon as possible. By contrast, in the instant case, the Board proceed-
ings are being held in abeyance and 10(j) proceedings to stop the law-
BEVERLY HEALTH & REHABILITATION SERVICES 335
sel claims, the existence of concurrent proceedings be-
fore both the Board and state court on the defamation
claims may present some risk of inconsistent results.10
For example, it is theoretically possible that the Board,
proceeding under a Bill Johnson’s theory, could find a
party’s state defamation suit to be baseless and retalia-
tory in violation of Section 8(a)(1), while the State court

suit would be contrary to the Board’s Order. Although his colleagues
also assert that 10(j) relief is available while the General Counsel liti-
gates his case before the Board, Chairman Hurtgen notes that in a fu-
ture case like the instant case the General Counsel would presumably
follow Board law and refrain from issuing a complaint, and thus would
not litigate the case before the Board. Further, to enjoin the lawsuit
pending the completion of Board proceedings would be contrary to the
Linn-Bill Johnson’s rationale of the instant Board decision. That is,
under Linn-Bill Johnson’s the Board permits the lawsuit to go forward.
10 Chairman Hurtgen does not agree with this sentence. In the first
place, there will not be concurrent proceedings. The Board is essen-
tially staying its proceeding until the lawsuit is completed. Secondly,
the risk of inconsistent results is more theoretical than real. That is, it is
most unlikely that the NLRB would find a defamation suit baseless,
i.e., without a colorable basis, if the courts have found the suit to be not
only colorable but meritorious.
could simultaneously find the suit meritorious. But cf.
Bill Johnson’s, supra, 461 U.S. at 749 fn. 15 (suggesting
possibility of deference to state court ruling “on the ques-
tion whether the lawsuit presents triable factual issues,”
absent reason not to defer). This possibility, however, is
an inevitable consequence of the fact that both the Board
and the State courts have appropriate roles to play in
cases like this one. In recognizing the role of the State
courts, of course, we are in no way abdicating the
Board’s responsibility (as the Charging Parties contend).
As Justice Brennan observed in his concurring opinion in
Bill Johnson’s:
[A]s the Court makes clear . . . the Board’s ability to
enjoin prosecution of a state suit is not the measure of
its ability to determine that such prosecution constitutes
an unfair labor practice or of its ability to provide other
remedies to vindicate federal labor policy. [Id. at 753.]
Accordingly, the motions for reconsideration are de-
nied.