LTTS Charter School, Inc., d/b/a Universal Academy

National Labor Relations Board - Board Decisions

Mar 15, 2018

366 NLRB No. 38 (N.L.R.B. 2018)

366 NLRB No. 38
NOTICE: This opinion is subject to formal revision before publication in the
bound volumes of NLRB decisions. Readers are requested to notify the Ex-
ecutive Secretary, National Labor Relations Board, Washington, D.C.
20570, of any typographical or other formal errors so that corrections can
be included in the bound volumes.
LTTS Charter School, Inc. d/b/a Universal Academy
and Kimberly Free. Case 16–CA–170669
March 15, 2018
DECISION AND ORDER
BY CHAIRMAN KAPLAN AND MEMBERS PEARCE
AND EMANUEL
On June 21, 2017, Administrative Law Judge Robert
A. Ringler issued the attached decision. The General
Counsel filed exceptions and a supporting brief, the Re-
spondent filed an answering brief, and the General Coun-
sel filed a reply.
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has considered the decision and the record
in light of the exceptions and briefs and has decided to
affirm the judge’s rulings, findings,1 and conclusions and
to adopt the recommended Order.
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge, and
the complaint is dismissed.
Dated, Washington, D.C. March 15, 2018
______________________________________
Marvin E. Kaplan, Chairman

1 We affirm the judge’s finding that the Respondent is a political
subdivision exempt from the Board’s jurisdiction under Sec. 2(2) of the
Act because its governing body is responsible to public officials. In
doing so, we note that the Texas Education Code Sec. 12.115(d) explic-
itly grants the Texas Commissioner of Education the authority, in re-
constituting the governing body of an open-enrollment charter school,
to appoint the new members and retain any of the incumbent members.
Moreover, although Texas Education Code Sec. 12.116, cited by the
judge, does not explicitly reference review of the Commissioner’s
decision to reconstitute the governing body, Title 19, Sec. 157.1181(2)
and 157.1184 of the Texas Administrative Code provide that the Com-
missioner’s decision must be upheld by a judge from the State Office of
Administrative Hearings unless it is arbitrary and capricious or clearly
erroneous. Lastly, we distinguish the statutory authority in this case
from the statutory authority considered in Hyde Leadership Charter
School – Brooklyn, 364 NLRB No. 88, slip op. at 7 (2016), in which the
Board found that the respondent’s governing body was not responsible
to public officials. The Texas Education Code specifically grants the
Texas Commissioner of Education the authority to reconstitute the
governing body of an open-enrollment charter school under certain
conditions. In contrast, the statute at issue in Hyde permitted the New
York Board of Regents to remove for malfeasance a trustee of any
corporation it created, which included private educational institutions
that clearly fall under the Act’s jurisdiction.
______________________________________
Mark Gaston Pearce, Member
______________________________________
William J. Emanuel, Member
(SEAL) NATIONAL LABOR RELATIONS BOARD
David A. Foley and Maxie E. Gallardo, Esqs., for the General
Counsel.
Evan B. Lange, Esq. (Rob Wiley, P.C.), for the Charging Party.
Thomas Fuller, Esq. (The Fuller Law Group, PLLC), for the
Respondent.
DECISION
STATEMENT OF THE CASE
ROBERT A. RINGLER, Administrative Law Judge. This hear-
ing was held in Fort Worth, Texas, on May 3, 2017. The com-
plaint alleged that LTTS Charter School, Inc. d/b/a Universal
Academy (the Academy) violated Section 8(a)(1) of the Na-
tional Labor Relations Act (the Act). The Academy’s answer
denied jurisdiction and substantive liability. Regarding juris-
diction, it contended that, as a charter school, it is a political
subdivision of Texas, and, as a result, exempt from the Act’s
jurisdiction. This contention is valid.
On the entire record, including my observation of the wit-
nesses’ demeanors, and after considering posthearing briefs, I
make the following
FINDINGS ON JURISDICTION1
1. “State or Political Subdivision[s]” Test
Under §2(2) of the Act, a “State or a political subdivision” is
an excluded “employer.” Natural Gas Utility District of Haw-
kins County, 167 NLRB 691 (1967), enfd. 427 F.2d 312 (6th
Cir. 1970), affd. as to applicable standard only 402 U.S. 600
(1971). The Supreme Court has defined a “State or political
subdivision” as an entity: (1) created directly by the State to be
a department or administrative government arm; or (2) adminis-
tered by individuals who are responsible to public officials or to
the general public. Id. In order to gauge the Academy’s status,
the Texas Education Code (TEC) must first be explored.
2. Texas Charter School Law2
Charter operators are entities, which have been awarded a
contract by Texas to operate a charter school. TEX. EDUC.
CODE, §12.001 et seq. Entities seeking charters apply via a
competitive process. Id. Charter operators are generally non–
profit corporations. Id.

1 Unless otherwise stated, factual findings arise from joint exhibits,
stipulations and undisputed evidence.
2 Judicial notice has been taken of the TEC. San Manuel Indian
Bingo and Casino, 341 NLRB 1055, 1055 fn. 3 (2004).
2 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
a. Applications and Charter Amendments
A charter is a contract with the Texas Education Agency
(TEA), and can be amended, subject to the approval of the
Commissioner of Education (the Commissioner). TEX. ADMIN
CODE, §100.1001 et seq. Charters may be amended to add a
campus, grade or enrollment.
b. School Boards
Unlike elected independent school district boards, charter
boards are appointed. Id. Charters publicize their boards in an
annual governance report, and on their website. Id. They must
comply with the Public Information Act, and hold public board
meetings. Id.
c. Funding and Student Enrollment
Charters are funded by state and federal funds.3 TEX. EDUC.
CODE, §12.106 et seq. They serve students living within a
school district’s boundaries, but, lack taxing authority. They
cannot charge tuition, with the narrow exception of pre-K pro-
grams. Id. at §11.158(a). They charge the same limited fees
that traditional public schools charge. Id. They are open en-
rollment, which means that they must accept any applicant, as
long as they are in the appropriate grade and geographic
boundary. In order to receive full funding, charters, like public
schools, must provide a minimum total amount of instruction
time. They are not, unlike public schools, subject to minimum
student-teacher ratios, and class-size caps. TEX EDUC. CODE,
§§25.111, 25.112. Their charters, instead, set student-teacher
ratios, and class-size caps.
d. Educators
Open-enrollment charter teachers possess bachelor’s de-
grees, unless they hold special education, bilingual, or ESL
slots.4 They also hold state certifications.5
e. Charter Revocation and Discharging Board Members
The TEA can revoke a charter, or replace its governing
board, as follows:
CHARTER REVOCATION OR MODIFICATION OF
GOVERNANCE.
(a) Except as provided by Subsection (c), the commissioner
shall revoke the charter of an open-enrollment charter
school or reconstitute the governing body . . . if the
commissioner determines that the charter holder:
(1) committed a material violation of the charter …;
(2) failed to satisfy generally accepted accounting
standards …;
(3) failed to protect the health, safety, or welfare of the
students …;
(4) failed to comply … [an] applicable law or rule;
(5) failed to satisfy … performance … standards …; or

3 They are funded by per–pupil allotments from Texas’ general fund,
which represents their sole revenue stream.
4 “ESL” means “English as a Second Language.”
5 A charter’s board can set their teacher qualifications beyond Texas’
threshold standards.
(6) is imminently insolvent ….
(b) The action … take[n] … under Subsection (a) shall be
based on the best interest of the … students, the severity
of the violation, any previous violation[s] … , and …
accreditation status ….
(c) The commissioner shall revoke the charter … if:
(1) the charter holder has been assigned an unaccepta-
ble performance rating … , for the three preceding
school years;
(2) the charter holder has been assigned a financial ac-
countability performance rating … , indicating fi-
nancial performance lower than satisfactory for the
three preceding school years; or
(3) the charter holder has been assigned any combination
of the ratings described by Subdivision (1) or (2) for
the three preceding school years….
TEX. EDUC. CODE, §12.115. The Commissioner’s decision to
revoke a charter, or reconstitute its board, is subject to review
by the State Office of Administrative Hearings under an “arbi-
trary and capricious or clearly erroneous” standard. Id. at
§12.116.
3. Academy Operations
In 1997, the Academy was incorporated as a nonprofit cor-
poration.6 (Jt. Exh. 1; GC Exh. 2). In 1998, it applied to be-
come a charter school; it was sponsored by the Unity Church of
Christianity. (Jt. Exh. 1; GC Exh. 3). On May 18, 1998, it
entered into a Contract for Charter for an Open-Enrollment
Charter School with the TEA.7 (Jt. Exh. 1). It now has two
campuses, i.e. in Coppell and Irving, Texas. (Jt. Exh. 1).
The Academy holds periodic meetings with parents and oth-
er stakeholders. (GC Exh. 3). Students, who come from varied
backgrounds, undergo interviews, and are admitted on a first–
come, first–served basis.8 (Id.).
The Academy’s founding co-administrators are CEO Dianne
Harris and CAO Megan Doren. (GC Exh. 3). It is governed by
a 9-person Board (the Board) consisting of: Harris; Doren; 2
parents; 2 Unity Church of Christianity Board members; legal
counsel; financial counsel; and a local banker.9 (Jt. Exh. 1; GC
Exh. 3). Board members are selected by a review committee.
(GC Exh. 3 at 4). The Board makes staffing decisions. (GC
Exh. 3 at 5). Staff is hired by, and reports to, Harris and Doren.
(GC Exh. 3 at 5). Teachers hold Texas teaching licenses, and
participate in Texas’ Teacher Retirement System. (GC Exh. 3;
Jt. Exh. 1).
4. Analysis
The Academy is a “State or a political subdivision,” which is

6 It is exempt under I.R.C, §501(c)(3). (GC Exh. 3.)
7 Its Contract for Charter was renewed in 2012, and is effective until
July 31, 2022. (Jt. Exh. 1; GC Exh. 6.)
8 Students live within the confines of the Coppell and Irving Inde-
pendent School Districts. Those with documented criminal histories
are excluded from consideration. (GC Exh. 3.)
9 The Board has three voting members: Harris, Doren and their ap-
pointee. (GC Exh. 3 at 4.)
LTTS CHARTER SCHOOL, INC. D/B/A UNIVERSAL ACADEMY 3
exempt from the Act’s definition of a covered §2(2) “employ-
er.” An entity is a “State or political subdivision,” when it is
either (1) created directly by the State to constitute a depart-
ment or administrative arm of the Government, or (2) adminis-
tered by individuals responsible to public officials or the gen-
eral public. Hawkins, supra. Although the Academy fails to
meet the first “created directly by the State” prong, it meets the
second prong because its Board can be removed by the TEA.
a. The Academy was not “Created Directly by the State”
It does not satisfy the first prong of the Hawkins test. The
Board has held that:
In order to determine whether an entity is a political subdivi-
sion under the first prong of the Hawkins … test, [it must first
be assessed] … whether the entity was created directly by the
state, such as by a government entity, a legislative act, or a
public official. If it was, [it must then be evaluated] …
whether the entity was created so as to constitute a department
or administrative arm of the government. Both … subparts
need to be met for the employer to be exempt ….
[E]mploying entities [are routinely found] to be exempt polit-
ical subdivisions where they were created by legislation … to
discharge a state function …. The … first prong of Hawkins
… [is also] satisfied where the … entity was created by an act
of the judiciary …. [E]ntities created by private individuals as
nonprofit corporations are not exempt under the first prong
…. Furthermore, an entity is not exempt simply because it re-
ceives public funding or operates pursuant to a contract with a
governmental entity …. The Board routinely asserts jurisdic-
tion over [such] private employers ….
Pennsylvania Virtual Charter School, 364 NLRB No. 87, slip
op. at 8 (2016) (citations and footnotes omitted).
The Academy is not exempt under the first Hawkins prong.
It was created as a nonprofit corporation by private individuals,
who filed and drafted applications, operating documents and
by-laws.10 Although the Academy would not exist without
TEA approval, the Board has found that this circumstance is
insufficient, in isolation, to make an entity a state creation.
Pennsylvania Virtual Charter School, supra, 364 NLRB No.
87, slip op. at 9; Hyde Leadership Charter School—Brooklyn,
364 NLRB No. 88, slip op. at 8 (2016). I find, accordingly, that
the Academy was not directly created by Texas,11 and fails the
first Hawkins prong.12

10 There is no evidence that Texas ever sought to amend its charter
or otherwise rejected its formation plan.
11 Although the Academy contends that Texas’ authority to revoke
its charter makes it a state entity, the Board has rejected this contention.
Pennsylvania Virtual Charter School, supra, 364 NLRB No. 87, slip
op. at 10 (“power to revoke a charter is analogous to a state’s decision
to cease subcontracting …. [and] does not convert the contractor into a
state entity.”); Research Foundation of the City Univ. of New York, 337
NLRB 965, 968 (2002).
12 Given that the Academy was not created directly by Texas, it is
unnecessary to also assess whether it is an administrative arm or gov-
ernment department. Pennsylvania Virtual Charter School, supra, slip
op. at 9 (upon finding that employer was not created by the State, it can
only be exempt under the second Hawkins prong, i.e., “only if officials
b. The Academy is Administered by Individuals Responsible
to Public Officials
The Academy meets the second Hawkins prong, inasmuch as
it is administered by individuals responsible to public officials.
Under the second Hawkins prong, the controlling inquiry is
whether an entity’s administrators are appointed, and subject to
removal, by public officials or the electorate.13 If the “ap-
pointment-and-removal method yields a clear answer” as to the
second Hawkins prong, the “analysis properly ends.” Id., slip
op. at 13.
In the instant case, although the Academy’s Board was ap-
pointed by private actors, the TEA, a public agency, retains full
authority to reconstitute its Board. TEX. EDUC. CODE, §12.115.
The TEA can, as a result, remove the Board for a host of rea-
sons, including: charter violations; fiscal malfeasance; student
health and welfare concerns; violations of applicable laws or
rules;14 breaches of performance standards; and insolvency. Id.
In addition, the TEA’s decision to reconstitute a board is sub-
ject to a fairly deferential standard of judicial review by the
State Office of Administrative Hearings. Id at §12.116 (“arbi-
trary and capricious or clearly erroneous” standard).15 I find, as
a result, that the TEA’s broad, and practically unreviewable,
authority to reconstitute the Board renders the Academy a
“State or political subdivision” under the second Hawkins
prong, inasmuch as it is administered by individuals who are
responsible to public TEA officials.16 See, e.g., Regional Med-
ical Center at Memphis, supra (no jurisdiction under second

who are responsible to public officials or to the general electorate ad-
minister it”).
13 See, e.g., Pennsylvania Virtual Charter School, supra, slip op. at
13 (“Where an examination of the appointment-and-removal method
yields a clear answer to whether an entity is ‘administered by individu-
als who are responsible to public officials or the general electorate’ the
Board’s analysis properly ends”); Regional Medical Center at Mem-
phis, 343 NLRB 346, 358–359 (2004) (reiterating that an entity is “ad-
ministered” by individuals responsible to the general electorate when
the individuals are appointed, and subject to removal, by public offi-
cials). Cf. Cape Girardeau Care Center, 278 NLRB 1018, 1019 (1986)
(employer not exempt under the second Hawkins prong because its
directors were not appointed or removed by the county).
14 Given the extensive regulation of public and charter schools, this
standard is, for practical purposes, quite broad, and grants the TEA a
wide array of valid justifications to reconstitute its Board.
15 Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168
(1962) (scope of review under the “arbitrary and capricious” standard is
narrow, and a court cannot substitute its judgment for that of the agen-
cy).
16 Although the General Counsel’s brief states that the TEA’s re-
moval authority should be discounted as a “rarely exercised emergency
power . . . to intervene where a charter school has wantonly failed in its
responsibility,” this argument is unpersuasive. First, it is conjecture,
given that there is no record evidence that it is solely a “rarely exer-
cised emergency power.” Second, the TEA’s authority to reconstitute a
board is not just an “emergency power.” In truth, it is a broad and
practically unreviewable power to discharge the Board for a host of
nonemergencies. Finally, even assuming arguendo that this removal
power is “rarely exercised,” the infrequent exercise of a valid power
does not make it illusory. On the contrary, many state powers are rare-
ly utilized (e.g., capital punishment, impeachment, eminent domain),
but remain vital. In sum, counsel’s contention is invalid.
4 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
prong where employer was administered by publicly removable
officials); Oklahoma Zoological Trust, 325 NLRB 171, 172
(1997). Cf. Pennsylvania Virtual Charter School, supra. (juris-
diction where board was not appointed or subject to removal by
public officials); Research Foundation, supra, 337 NLRB 969–
70; St. Paul Ramsey Medical Center, 291 NLRB 755 (1988).
CONCLUSION OF LAW
The Academy is not an employer engaged in commerce
within the meaning of §2(2), (6), and (7) of the Act. It is, there-
fore, not subject to the Board’s jurisdiction.
On these findings of fact and conclusions of law, and on the
entire record, I issue the following recommended17
ORDER
The complaint is dismissed in its entirety on jurisdictional
grounds.
Dated Washington, D.C. June 21, 2017

17 If no exceptions are filed as provided by §102.46 of the Board’s
Rules and Regulations, the findings, conclusions, and recommended
Order shall, as provided in §102.48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all pur-
poses.