Reno Hilton Resorts

National Labor Relations Board - Board Decisions

Sep 30, 1998

326 N.L.R.B. 1421 (N.L.R.B. 1998)

RENO HILTON 1421
Reno Hilton Resorts d/b/a Reno Hilton and Interna-
tional Union, United Plant Guard Workers of
America. Case 32–CA–15856
September 30, 1998
DECISION AND ORDER
BY MEMBERS FOX, LIEBMAN, AND BRAME
On June 19, 1998, Administrative Law Judge Gerald
A. Wacknov issued the attached decision. The Respon-
dent and the General Counsel filed exceptions and cross-
exceptions, respectively, and supporting briefs, the Gen-
eral Counsel and the Charging Party filed answering
briefs to the Respondent’s exceptions, and the Respon-
dent filed an answering brief to the General Counsel’s
cross-exceptions and a reply brief in support of its own
exceptions.
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 exceptions1 and briefs and has decided to
affirm the judge’s rulings, findings,2 and conclusions, and
to adopt his remedy and recommended Order as modified
and set forth in full below.
AMENDED REMEDY
We shall modify the judge’s remedy by providing for a
broad cease-and-desist order, in light of the Respondent’s
repeated violations,3 and in conformity with the broad
language contained in his recommended Order and no-
tice. We shall further order the Respondent to rescind its
subcontract for security officers and to cease and desist
from unlawfully entering into such contracts, and we
shall require restoration of the status quo ante by order-
ing the Respondent to reestablish its in-house security
force,4 offering all the unlawfully terminated security
officers immediate and full reinstatement to their former
positions of employment and making them whole for any
loss of wages and other benefits they may have suffered
by reason of Respondent’s discrimination against them
on January 13, 1997, in the manner provided in F. W.
Woolworth Co., 90 NLRB 289 (1950), plus interest as
computed in New Horizons for the Retarded, 283 NLRB
1173 (1987).5

1 We find merit in the Respondent’s exception to the judge’s draw-
ing of an adverse inference from the Respondent’s failure to call former
officials who were involved in the decision to subcontract the security
services. See Irwin Industries, 325 NLRB 796, 811 fn. 12 (1998) (no
adverse inference drawn from a respondent’s failure to call supervisors
who no longer worked for it); Goldsmith Motors Corp., 310 NLRB
1279 fn. 1 (1993) (no adverse inference drawn from failure to call
former business partner). However, we expressly affirm the judge’s
drawing of such an adverse inference from the Respondent’s failure to
adduce testimonial and documentary evidence from Director of Secu-
rity Dave Bennett.
2 The Respondent has excepted to some of the judge’s credibility
findings. The Board’s established policy is not to overrule an adminis-
trative law judge’s credibility resolutions unless the clear preponder-
ance of all the relevant evidence convinces us that they are incorrect.
Standard Dry Wall Products, 91 NLRB 544 (1950), enfd. 188 F.2d 362
(3d Cir. 1951). We have carefully examined the record and find no
basis for reversing the findings
3 In providing a broad cease-and-desist order here, we are mindful of
the Board’s admonition in Hickmott Foods, Inc., 242 NLRB 1357
(1979), that “such an order is warranted only when a respondent is
shown to have a proclivity to violate the Act or has engaged in such
egregious or widespread misconduct as to demonstrate a general disre-
gard for the employees’ fundamental statutory rights.” Applying this
analysis here, we find that a broad order is fully warranted because the
Respondent’s unlawful discharge of its entire security guard force,
some 64 employees, is not only an egregious violation of the Act, but
also demonstrates, as explained by the judge, “Hilton’s proclivity to
violate the Act and its animus toward unionization in general.” (See
ALJD at fn. 14 and accompanying text.) In this regard, we observe that
in Reno Hilton, 319 NLRB 1154 (1995), a case cited by the judge, the
Board adopted the judge’s recommendation that a broad cease-and-
desist order should issue because the Respondent’s numerous violations
of the Act in that case, most of which involved the planning and par-
ticipation of the Respondent’s highest officials, “demonstrated a pro-
clivity to violate the Act and . . . exhibited a general disregard for the
employees’ fundamental statutory rights.” Id. at 1193. We find that the
Respondent’s unlawful discharge of its security guards on January 17,
1997, little more than a year after the Board’s issuance of its decision in
Reno Hilton, supra, further demonstrates the Respondent’s proclivity to
violate the Act and that here, as in Reno Hilton, supra, a broad cease-
and-desist order is fully warranted
ORDER
The National Labor Relations Board orders that the
Respondent, Reno Hilton Resorts d/b/a Reno Hilton,
Reno, Nevada, its officers, agents, successors, and as-
signs, shall
1. Cease and desist from
(a) Interfering with, restraining, and coercing its secu-
rity officers in violation of Section 8(a)(1) of the Act by
contracting out their work and discharging them because
they selected the International Union, United Plant Guard
Workers of America to represent them as their collective-
bargaining representative.
(b) Discriminating against its security officers in viola-
tion of Section 8(a)(3) and (1) of the Act by discharging
them and contracting out their work because they se-
lected the Union.
(c) In any other manner interfering with, restraining, or
coercing employees in the exercise of the rights guaran-
teed them by Section 7 of the Act.
2. Take the following affirmative action which is nec-
essary to effectuate the purposes of the Act.
(a) Reestablish its in-house security force by rescind-
ing and severing all subcontracted security operations.

4 At the compliance stage of this proceeding, the Respondent may
introduce evidence that was not available prior to the unfair labor prac-
tice hearing, if any, to demonstrate that resumption of an in-house
security force would be unduly burdensome. Lear Siegler, Inc., 295
NLRB 857, 861–862 (1989).
5 We shall also modify the recommended Order by requiring the Re-
spondent, if it has gone out of business or closed its facility, to mail
copies of the attached notice to all current employees and former em-
ployees employed by the Respondent at any time since January 13,
1997. Indian Hills Care Center, 321 NLRB 144 (1996); Excel Con-
tainer, Inc., 325 NLRB 17 (1997).
326 NLRB No. 154
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1422
(b) Within 14 days from the date of this Order, offer its
former security officers full reinstatement to their former
positions, without prejudice to their seniority or other
rights and privileges previously enjoyed, and make them
whole, with interest, for any loss of earnings and benefits
each of them may have suffered as a result of the Re-
spondent’s unlawful subcontract on January 13, 1997, as
set forth in the remedy section of this Decision.
(c) Within 14 days from the date of this Order, remove
from its files any reference to the unlawful discharges
and, within 3 days thereafter, notify the discharged secu-
rity officers in writing that this has been done and that
the discharges will not be used against them in any way.
(d) Preserve and, within 14 days of a request, make
available to the Board or its agents for examination and
copying, all payroll records, social security payment re-
cords, timecards, personnel records and reports, and all
other records necessary to analyze the amount of back-
pay due under the terms of this Order.
(e) Within 14 days after service by the Region, post at
its Reno, Nevada facility and mail to each of the in-
volved security officers, copies of the attached notice
marked “Appendix.”6 Copies of the notice, on forms
provided by the Regional Director for Region 32, after
being signed by the Respondent’s authorized representa-
tive, shall be posted by the Respondent and maintained
for 60 consecutive days in conspicuous places including
all places where notices to employees are customarily
posted. Reasonable steps shall be taken by the Respon-
dent to ensure that the notices are not altered, defaced, or
covered by any other material. In the event that, during
the pendency of these proceedings, the Respondent has
gone out of business or closed the facility involved in
these proceedings, the Respondent shall duplicate and
mail, at its own expense, a copy of the notice to all cur-
rent employees and former employees employed by the
Respondent at any time since January 13, 1997.
(f) Within 21 days after service by the Region, file
with the Regional Director for Region 32, a sworn certi-
fication of a responsible official on a form provided by
the Region attesting to the steps that the Respondent has
taken to comply.
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government

The National Labor Relations Board has found that we vio-
lated the National Labor Relations Act and has ordered us to
post and abide by this notice.

6 If this Order is enforced by a judgment of a United States court of
appeals, the words in the notice reading “Posted by Order of the Na-
tional Labor Relations Board” shall read “Posted Pursuant to a Judg-
ment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.”

Section 7 of the Act gives employees these rights.

To organize
To form, join, or assist any union
To bargain collectively through representatives
of their own choice
To act together for other mutual aid or protection
To choose not to engage in any of these protected
concerted activities.

WE WILL NOT interfere with, restrain, or coerce our se-
curity officers by contracting out their work and dis-
charging them because they selected the International
Union, United Plant Guard Workers of America to repre-
sent them as their collective-bargaining representative.
WE WILL NOT discriminate against our security officers
by discharging them and contracting out their work be-
cause they selected the Union.
WE WILL NOT in any other manner interfere with, re-
strain, or coerce our employees in the exercise of rights
guaranteed them by Section 7 of the Act.
WE WILL reestablish our in-house security force and WE
WILL rescind and sever all subcontracted security opera-
tions.
WE WILL, within 14 days from the date of the Board’s
Order, offer our former security officers full reinstate-
ment to their former positions without prejudice to their
seniority or any rights or privileges previously enjoyed,
and make them whole, with interest, for any loss of earn-
ings and benefits they may have suffered as a result of
our unlawful subcontract on January 13, 1997.
WE WILL, within 14 days from the date of the Board’s
Order, remove from our files any reference to the unlaw-
ful discharges of our security officers and WE WILL,
within 3 days thereafter, notify them in writing that this
has been done and that the discharges will not used
against them in any way.
RENO HILTON RESORTS D/B/A RENO HILTON

Virginia L. Jordan, Esq., for the General Counsel.
Joseph E. Herman, Esq. (Morgan, Lewis & Bockius, LLP), of
Los Angeles, California, for the Respondent.
Scott A. Brooks, Esq. and Gregory, Moore, Esq. (Jeakle,
Heinen, Ellison & Brooks & Lane, P.C.), of Detroit, Michi-
gan, for the Union.
DECISION
STATEMENT OF THE CASE
GERALD A. WACKNOV, Administrative Law Judge. Pursuant
to notice a hearing in this matter was held before me in Reno,
Nevada, on March 10, 11, and 12, 1998. The original charge
was filed on December 20, 1996, by International Union,
United Plant Guard Workers of America (the Union). On Au-
gust 21, 1997, the Regional Director for Region 32 of the Na-
tional Labor Relations Board (the Board) issued a complaint
and notice of hearing alleging violations by Reno Hilton Re-
sorts d/b/a Reno Hilton (the Respondent) of Section 8(a)(1) and
(3) of the National Labor Relations Act (the Act). The Re-
RENO HILTON 1423
spondent, in its answer to the complaint, denies that it has vio-
lated the Act as alleged.
The parties were afforded a full opportunity to be heard; to
call, examine, and cross-examine witnesses; and to introduce
relevant evidence. Since the close of the hearing, briefs have
been received from counsel for the General Counsel (the Gen-
eral Counsel), counsel for the Union, and counsel for the Re-
spondent. On the entire record, and based on my observation of
the witnesses and consideration of the briefs submitted, I make
the following
FINDINGS OF FACT
I. JURISDICTION
The Respondent is a Nevada corporation with its office and
place of business located in Reno, Nevada, where it is engaged
in the business of operating a hotel-restaurant-casino complex.
In the course and conduct of its business operations, the Re-
spondent annually purchases and receives goods valued in ex-
cess of $5000 which originate outside the State of Nevada, and
annually derives gross revenues in excess of $500,000. It is
admitted and I find that the Respondent is engaged in com-
merce within the meaning of Section 2(2), (6), and (7) of the
Act.
II. THE LABOR ORGANIZATION INVOLVED
It is admitted and I find that at all material times the Union
has been a labor organization within the meaning of Section
2(5) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Issues
The principal issue raised by the pleadings is whether the
Respondent contracted out its security guard work in violation
of Section 8(a)(1) and (3) of the Act.
B. The Facts
The genesis of this matter is set forth in detail in a Decision
and Order of the Board1 involving the organizational campaign
among the Respondent’s security guards which commenced in
June 1993. Following the filing of a representation petition, an
election was conducted on November 18, 1993. Thereafter,
election objections and unfair labor practice charges were filed
by the Union, and the matters were consolidated for purposes of
hearing. On August 18, 1994, the administrative law judge in
that proceeding issued his decision recommending, inter alia,
that the election be set aside as a result of various unfair labor
practices, infra, committed by the Respondent. During the
pendency of that matter before, the Board the Union filed a new
representation petition which resulted, over the Respondent’s
objection, in a second election which was conducted on Sep-
tember 28, 1995. This election, by a vote of 44 for the Union
and 33 against the Union, culminated in the certification of the
Union as the collective-bargaining representative of the follow-
ing unit of employees:

All full time and regular part-time security personnel, includ-
ing security officers and central dispatch employee, employed
by Reno Hilton Resort Corporation d/b/a Reno Hilton at its
Reno, Nevada facility performing guard duties within the
meaning of Section 9(b)(3) of the Act; excluding all other
1 Reno Hilton, 320 NLRB 197 (1995).
employees, including stage watch employees, security clerks,
officer clerical employees, professional employees, confiden-
tial employees, and supervisors as defined in the Act.

In the above-mentioned decision, the Board found that the
Respondent committed a panoply of serious violations of the
Act in attempting to thwart the employees’ desire for union
representation, and that certain violations were committed by
high ranking managers, namely Direct of Security Dave Ben-
nett and Administrative Assistant Bob Balentine. The viola-
tions include the following acts and conduct: an extensive cam-
paign of unlawful employee surveillance both by supervisory
personnel and by certain employees who were recruited by the
Respondent as paid campaigners against the Union; unlawful
implied promises of benefits by requesting that the employees
wait months to see what the Respondent could do for them,
after which they could form their own in-house association if
they continued to remain unsatisfied; and the unlawful dis-
charge of an employee.
The Respondent hired an outside labor consulting firm, the
Burk Group, represented by Ward Ruple, to assist it during
each of the two preelection campaigns. Ruple conducted em-
ployee meetings. Former security guard Gary Parillo testified
in the instant proceeding that prior to the second election he
was instructed by management to pick up Ruple at the airport
and bring him to the Respondent’s facility. As he was chauf-
feuring Ruple back to the casino Parillo volunteered to Ruple
that he was on the Respondent’s side because he was concerned
that if the Union got in the jobs of the security guards would be
eliminated. Ruple suggested that they meet at some later date
and discuss what Parillo could do to possibly assist the Re-
spondent in keeping the Union out.
About a week later Parillo, who was campaigning against the
Union, was summoned by Ruple to the office of Chief Bennett,
the director of security. On the back of Bennett’s office door
was a color-coded chart with the names of security guards des-
ignated as being for or against the Union. Parillo was asked by
Ruple if he could help assist in categorizing the guards as yes
or no voters, and Parillo cooperated by designating certain
guards whom he believed would clearly be opposed to the Un-
ion. Ruple attempted to enlist Parillo’s further assistance and
asked if he would be willing to meet again and provide Ruple
with any additional information. Parillo said that he would do
what he could, but thereafter avoided Ruple because, as Parillo
testified, “I didn’t like Mr. Ruple.” Parillo testified that during
the course of this conversation Ruple handed Parillo a one-page
typewritten document containing “numerical figures . . . per-
taining to how much they could save by getting rid of us and
bringing in cheap labor.”
This conversation which took place, according to Parillo,
about a week prior to the second election, caused him to be-
come very concerned with the loss of his job in the event of a
union victory. Parillo testified that he “probably” told other
employees about the conversation, and that he prepared and
posted antiunion posters warning that the jobs of the security
guards would be eliminated if the Union prevailed in the elec-
tion.2
Lee Boekhout , a former security guard, was a very reluctant
witness on behalf of the General Counsel and, while asserting
that he had tried to put the entire unfortunate matter behind him
and could not remember with any degree of accuracy what had
2 I credit the unrebutted testimony of Parillo.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1424
transpired, specifically confirmed the accuracy of what was
contained in his affidavit given to a Board agent and signed by
him on September 23, 1997. Boekhout was strongly antiunion
during the two election campaigns and did not participate in the
strike which occurred in August 1996, infra. Boekhout’s affi-
davit states, inter alia, as follows:

Shortly before the second election I spoke to supervi-
sor Russ Pigni about the whole subject of what was com-
ing up at the Hilton. It was just a general sort of conversa-
tion. I don’t recall which one of us brought up the subject.
Pigni told me that he thought the Union did not have a
chance, but that if it did win the election that things would
really get rough. To the best of my recollection he did not
state specifically what he meant.

Also, shortly after the election I had a conversation
with the administrative assistant to the director of security,
Bob Ballantine. I recall going into the office and discuss-
ing something to do with one other security personnel who
supported the Union. I do not recall who the employee
was or what the situation was. During this conversation
we talked about the union having won the election. Bal-
lantine told me that things were now going to get really
rough, they were just starting now and the longer it went
the rougher it would get. He told me that we would get
through it. I don’t believe these were the exact words but
this was definitely the message I got.

On or about October 25th or 26th, 1996 [sic],3 about a
month or so after the election I was in the security office
when director of security, Dave Bennett, returned from a
meeting upstairs. He waived at me to follow him inside . .
. He told me that they had made a presentation to Jim An-
derson [vice-president of the Hilton corporation and the
Respondent’s chief negotiator in subsequent negotiations]
and the others—he didn’t name who—at the meeting con-
cerning going to contract security and that they had bought
it. He said that they had told him that they could save
more than $500,000. He told me that they had said do it.
He then told me that they may have lost the battle but that
they had won the war. He said that they were gone. I be-
lieve I said oh, shit. Bennett told me not to worry about it,
that my job was protected, that he had managed to save the
10 or 11 of us.

Bennett did not actually say the word subcontracting,
but I knew what he meant when he said they were gone. I
knew he meant the Union. When he referred to the 10 or
12 of us he meant those security officers who supported
the Company and not the Union.

3 As noted above, the second election was held on September 28,
1995 (rather than 1996). I find that this reference to 1996 is a typo-
graphical error and that in fact Boekhout, who affirmed what was con-
tained in his affidavit and who I find was a very reluctant yet highly
reliable witness regarding the accuracy of what was contained in his
affidavit, was truthfully recounting to the Board agent what Bennett
told him. Moreover, Bennett was not called as a witness in this pro-
ceeding to rebut any evidence proffered through Boekhout’s testimony
or his affidavit; nor did Human Resources Director Wright, who did
testify in this proceeding, contradict anything stated by Boekhout re-
garding his conversations with her on the subject of affording special
employment opportunities to those employees who had assisted the
Respondent in combating the Union.
At or about the first week of December 1996 after the
Union had been notified that the Hilton was going to sub-
contract the security work I went to Dave Bennett’s office
to talk to him. It was just the two of us. I asked him
where I stood. He told me not to worry, that he had us
guys covered. He said at least that was one thing he had
managed to do to protect us. He said our jobs were pro-
tected.

I also remember what I believe is another conversation
I had with Ballantine shortly after the second election in
1995. It is possible that it happened during the conversa-
tion I related, in paragraph four above, but I think it’s as
separate conversation.

During this conversation he mentioned the possibility
of subcontracting. He told me that this was a long, drawn-
out procedure and the Company would have to go through
the process. I think he used another word, but I can’t re-
member now. He meant the collective-bargaining process
and all the meetings for getting a collective-bargaining
agreement. He said it was going to get rough.

Boekhout’s affidavit goes on to relate that he had various
conversations with Ballantine and with Director of Human
Resources Lynn Wright regarding the matter of changing the
job titles of those security guards who were loyal to the Re-
spondent in order to keep them employed after the subcontract-
ing of the security guard work eliminated the others. Wright
told him that there were a lot of things that the Respondent
could do in this regard. Later, shortly prior to the termination
of all the security guards, infra, Bennett told him that he had
been advised by upper management that he was unable to save
the loyal security guards from discharge as this would give the
Union grounds for a lawsuit.4 Bennett told Boekhout that he
had “blown up” at Anderson as a result of this and was very
upset and apologized to Boekhout and said he was very sorry.
The Respondent elected not to file election objections to the
second election and some 5 weeks later, on November 7, 1995,
preparatory to the commencement of contract negotiations, an
introductory meeting took place between Eugene McConville,
the Union’s International president, Terry Fowler; the Union’s
regional director, and James Anderson; vice president of the
Hilton corporation, the Respondent’s parent organization. At
this meeting Anderson identified four areas of concern regard-
ing the upcoming negotiations, including wages and contracting
out of the security guard work. McConville testified that wages,
of course, was always a contract issue, but he was surprised
when Anderson raised the matter of contracting out as a signifi-
cant matter because, to his knowledge the Respondent had
never previously raised this as a possibility in its preelection
campaigning.
Thereafter, during a 9-month period between the dates of
November 27, 1995, and August 6, 1996,5 there were 15 nego-
tiating meetings between the parties, sometimes with a Federal
4 The Union’s charge, filed on December 20, 1996, contained, inter
alia, the allegation that the Respondent was discriminating against
union members by permitting nonunion members to transfer to other
jobs, thus enabling them to retain employment with the Respondent.
5 On December 19, 1995, the Board issued its above-mentioned de-
cision in the underlying matter, and on February 2, 1996, during the
course of contract negotiations, the Respondent posted the requisite
notice and thereafter otherwise complied with the Board’s Order.
RENO HILTON 1425
mediator. McConville was the chief negotiator for the Union,
and Anderson was the chief negotiator for the Respondent.
From the outset of bargaining each of the Respondent’s con-
tract proposals included a provision reserving for itself the un-
fettered right to contract out the security guard work. Through-
out the course of bargaining the Respondent never deviated
from this proposal and continued to insist upon it. This was of
very serious concern for the Union, and throughout negotiations
the Union presented various counterproposals to the Respon-
dent’s subcontracting proposal: to eliminate it entirely; to mod-
ify it by making it applicable only in certain extraordinary cir-
cumstances such as, for example, inability to pay because of
financial hardship; to consider it or permit the Respondent to
hire new security guards at a lower tier of wages in return for
an agreement to retain all the current security guards without
loss of pay or benefits; and to permit such a contract provision
at some time down the road after a hiatus of between 6 months
to a year in order to give the parties some experience in dealing
with each other under a union contract.
The Respondent would not agree to such counterproposals
despite the fact that Anderson, according to McConville, on
numerous occasions, said that the Respondent had no present
intention to contract out the bargaining unit work, but only
wanted the “flexibility” that such an option afforded the Re-
spondent in the event that sometime down the road contracting
out became economically feasible and the Respondent elected
to do so.
Although subcontracting was a frequent topic of discussion,
the parties had agreed that negotiations on wages would be
deferred until other items had been either resolved or stale-
mated. At the meeting on May 29, 1996, the Respondent pre-
sented the Union with a wage survey of security guards in ten
casinos in the Reno area, including the Flamingo Hilton, an-
other Hilton property. The survey showed that the wages of the
Respondent’s security guards were much higher than those of
security guards at any other area hotel/casino. For example, the
highest wages paid to Respondent’s security guards was $12.62
per hour, $2 per hour higher than the highest wages of security
guards at the Flamingo Hilton who earned $10.61 per hour.
Moreover, of the approximately 64 security guards in Respon-
dent’s employ, some 45 of them were at or near the top rate of
pay.6
McConville testified that at the May 29, 1996 meeting, as it
did not appear worthwhile to unduly extend negotiations when
no progress was being made, he suggested that the Respondent
present its final offer at the next meeting, scheduled for June
24, 1996. At this time no proposal on wages had been made by
the Respondent.
At the June 24, 1996 meeting the Respondent presented its
initial wage proposal, providing for a wage freeze with the right
to subcontract. This offer was unacceptable to the Union. The
Respondent did present another “final offer” proposing a top
rate of $10.43 per hour, lower than the $10.61 amount that the
highest paid security officers at the Flamingo Hilton-Reno were

6 The Respondent purchased the property from Bally’s; Bally’s had
purchased the property from the MGM Grand. The Respondent re-
tained all of Bally’s security guards, many of whom had begun their
employment with the MGM Grand, and credited the security guards
with their prior seniority while employed by MGM and/or Bally’s.
Thus, at all times material, some 27 security guards had between 12 and
18 years of seniority although it appears that security guards could
reach the top rate after about 6 years.
receiving, and that the wages of all security guards who were
earning more that this amount be reduced.7 It arrived at this
figure by averaging the high rates of all the Reno area proper-
ties surveyed. Further, it proposed that if the Union accepted
this wage reduction, the Respondent would agree not to con-
tract out the security guard work during the first year of a 3-
year contract, but retained the unfettered right to contract out
the work thereafter. These proposals were unacceptable to the
Union.
The next meeting was held on July 24, 1996. The Respon-
dent proposed to freeze all wages with the understanding that it
retain the right to contract or subcontract any work. The Union
countered with an offer to freeze wages for those employees
earning more than $11.50 per hour and proposed certain other
wage changes for new employees and those earning less than
$11.50 per hour, provided that the Respondent agree not to
subcontract out for the entire period of a 1-year agreement.
This was unacceptable to the Respondent.
On July 29, 1996, the Union formally rejected the Respon-
dent’s proposal and voted to strike. The strike began that after-
noon and lasted some 2 weeks, until August 12, 1996. Ap-
proximately 30 unit employees continued working during the
strike, and the Respondent additionally utilized temporary em-
ployees and security personnel from other Hilton hotels in place
of the striking workers.
The parties met again on August 6, 1996. The Respondent
submitted the same final proposal that was rejected by the Un-
ion previously. It appears that some 40 employees were enti-
tled to incremental increases sometime prior to August 12,
1996, and the Union, after insisting that it would remain on
strike if the employees were denied these increases, agreed
upon a contract containing a wage freeze as of August 12,
1996. The 1-year contract, extending from August 12, 1996,
through August 11, 1997, gave the Respondent the uncondi-
tional right to contract or subcontract any work.
McConville, while fearful that the Respondent would indeed
exercise its right to contract out the work, nevertheless was
hopeful that it would not do so in deference to the many em-
ployees who elected not to join the strike, as this would result
in their termination. Further, he thought that perhaps after a
period of adjustment a satisfactory relationship would be de-
veloped and the Respondent’s animosity toward the Union
would be ameliorated.
By letter dated November 1, 1996, the Respondent advised
the Union that it had “had an opportunity to explore, in detail,
avenues for providing cost effective and qualitative security
services through the utilization of an outside contractor,” and
requested a meeting at the earliest possible date to discuss this
matter. Thereafter, on November 19, 1996, the Respondent
sent a cost comparison to the Union indicating that it was able
to contract out the security work for a base wage of $7.50 per
hour.
The parties met on November 25, 1996. The Respondent
demonstrated that by contracting out the work at $7.50 per hour
it could save over $500,000 per year. It thereupon proposed to
reduce the wages of its security guards to $7.75 an hour, which
included the wage rate of $7.50 an hour and an additional 25-
cent an hour to account for the profit margin that the Respon-
dent would be paying the security firm, American Protective
7 This would have reduced the wages of all but 11 security guards.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1426
Services (APS).8 McConville presented various arguments
against the efficacy of contracting out the work, including loss
of immediate supervision of the workforce; the replacement of
dedicated and proven security officers with transitional workers
who were likely to be dissatisfied with the low wages and
would be looking for more remunerative jobs elsewhere; and
the distinct probability that APS would soon be seeking higher-
rates on renegotiation of its initial contract.
At this meeting McConville told Anderson that it was clear
that the Respondent was motivated by union animus and simply
wanted to get rid of the Union, as during negotiations it had
offered a wage rate of $10.43 per hour with no contracting out
for a year, and now it was offering nearly $3 per hour less.
Anderson denied that this was the Respondent’s motive and
said that the Respondent “just recently found out that now we
can get it cheaper than what we thought.” Anderson stated that
the Respondent intended to contract out the work.
By letter dated December 2, 1996, the Respondent’s presi-
dent, Feren Szony, advised the Union that the Respondent in-
tended to subcontract the work of the security officers, includ-
ing direct supervision of those officers, effective at 12 midnight
on January 13, 1997. McConville replied by letter dated De-
cember 17, 1996, stating, inter alia, “that it was clear that Hil-
ton wanted to replace the security officers strictly in retaliation
for the officers having the courage to organize and then to
strike the Reno Hilton when a reasonable agreement could not
be reached.”
Thereafter, the Union filed the instant charges and engaged
in bargaining over the effects upon the workers of the Respon-
dent’s determination to contract out the work. During the
course of “effects” bargaining, in addition to paying the em-
ployees accrued vacation pay, the Respondent stated that it was
willing to also provide a severance package amounting to a
total cost of between $160,000 and $200,000, premised upon
employee longevity. However, this severance package was
conditional and was offered only in exchange for the with-
drawal of all pending legal matters including, apparently, the
instant matter, and the agreement by the Union and the employ-
ees not to sue the Respondent for any claims arising out of their
termination. This was unacceptable to the Union. On January
13, 1997, all the Respondent’s security guards were dismissed
and were replaced with employees of APS.
Michael Caryl is director of finance for Hilton Gaming in
northern Nevada. Hilton Gaming is comprised of the Respon-
dent and the Flamingo Hilton-Reno. Caryl testified that the
Respondent had incurred a decline in net revenues from 1995 to
1996 of over $10 million (from $136 to $126 million). The
financial statement introduced into evidence by the Respondent
also shows that its operations were profitable and that it earned
over $7.6 million before taxes in 1996.
Caryl further testified that in November 1996 he was advised
by Feren Szony, president of the Respondent, and Lynn Wright,
director of human resources, that the Respondent was consider-
ing subcontracting its security force. He was given subcon-
tracting data by Wright and asked to analyze the financial costs
of subcontracting this work; he calculated that the Respondent
would experience an annual savings of $562,733 and reported
this to management.

8 Initially, the Respondent contacted and received information from
Vanguard Protective Services which subsequently merged with Ameri-
can Protective Services.
Caryl testified to other cost savings jointly undertaken by the
two properties. In the latter part of 1994 the separate laundry
departments for each property were consolidated into one de-
partment located at the Respondent’s facility. This consolida-
tion resulted in wage savings of $120,000 annually and the
layoff of certain laundry department employees of Flamingo
Hilton-Reno. And in early 1995, the separate bakeries for each
property were consolidated, the Respondent retaining its bakery
and the Flamingo Hilton-Reno laying off its bakery employees;
this cost savings amounted to $53,000 annually.9 Further, in
1996 the separate accounting departments were consolidated to
some degree, resulting in an annual cost savings of $100,000
and the elimination of certain jobs. Finally, according to Caryl,
the managerial operations of the two properties’ respective gift
shops have been combined, and the bowling pro shop at the
Respondent’s facility has been leased out.
Caryl testified that the security officers at the Flamingo Hil-
ton-Reno are not unionized and that their work has not been
contracted out; nor have their wages or benefits been reduced.
Jeff Eaton is director of food and beverage and has been
working for the Respondent since about 1993. Eaton testified
that his department currently employs approximately 520 em-
ployees and in January 1997 the employee complement was
between 580 to 590 employees. According to Eaton, expense
reduction is a continuing concern. He prepared a document
showing that 12 cocktail server positions were eliminated in
January 1996, for a total savings of $110,905.60; that 12 bus
person positions were eliminated in the Grand Canyon Buffet in
October 1995, for a total savings of $160,652.70; that 14 em-
ployees were eliminated from Marco Polo’s, an Asian restau-
rant that the Respondent decided to close for lack of business in
December 1995, for a total savings of $322,684.94; and stream-
lining of the managerial staff in the food and beverage depart-
ment resulted in the elimination of three managers in March
1997, for a total savings of $135,645. At the time of the hearin,
no aspect of the food and beverage department has been sub-
contracted, nor have the wages or benefits of any food and
beverage employees been reduced.
Charles Barry is the vice president of gaming surveillance
and internal security for the Hilton Hotels Corporation, and has
held this or a similar position since 1985. He is responsible for
security operations at all of the Hilton’s gaming properties: the
Las Vegas Hilton, Bally’s Las Vegas, the Flamingo Hilton,
Flamingo Laughlin, O’Sheas, the Flamingo Hilton-Reno, the
Reno Hilton (the Respondent), Bally’s Park Place in Atlantic
City, the Atlantic City Hilton, and two properties in Australia.
None of the security officers at any Hilton casino, other than
those of the Respondent here, have ever been represented by a
labor organization.
9 In Flamingo Hilton-Reno, 321 NLRB 413 (1996), enfd. 141 F.3d
1177 (9th Cir. 1998), the Board found that that respondent, by refusing
to bargain with the newly elected collective-bargaining representative
of its laundry workers and bakery workers, and by closing the laundry
and bakery and laying off the workers and transferring the work to the
Respondent here was, inter alia, conduct violative of the Act. It should
be noted that the Respondent’s bakery and laundry workers have not
been unionized. The Board, inter alia, ordered that the Flamingo Hil-
ton-Reno reopen its laundry and bakery operations and offer the laid-
off employees immediate reinstatement to their former positions with
back pay. In Flamingo Hilton-Reno, supra, the Ninth Circuit Court of
Appeals enforced the Board’s order in full.
RENO HILTON 1427
Barry testified that he first became aware that the Respon-
dent was considering subcontracting its security force “at some
point prior to November 1st, 1996.” When asked at the hearing
by counsel, “What was your view of the possibility of subcon-
tracting the Reno Hilton security services,” Barry testified as
follows:

In my opinion a proprietary guard service is better than
subcontracting. It is due to the fact that I had some con-
cerns about the integrity of an outside guard service as far
as the type of background investigation conducted on the
officers, the quality of officers, what type of control we
would have over those officers, how would disciplinary
actions be held, or be handled, and things of that nature.

Barry testified that he changed his mind about contracting
out when, on November 1, 1996, he participated in a meeting
on that date at the Respondent’s premises during which APS
was invited to give a written and verbal presentation outlining
the security services it would provide. Prior to this occasion
Barry recalls only one conference call during which the eco-
nomics of subcontracting was preliminarily discussed between
corporate personnel including Barry, Anderson, and Bud Seely,
president of Hilton’s Nevada gaming operations, together with
Respondent’s president, Szony, Dave Bennett, director of secu-
rity; and Lynn Wright, human resources director; according to
Barry, no decision of any kind was made during this phone call.
Those present at the November 1, 1996 meeting were: Feren
Szony, the Respondent’s president, Mark Rittorno, the Respon-
dent’s general manager, Dave Bennett, Respondent’s director
of security, and Jim Anderson, senior vice president of human
resources for Hilton Hotels.
Barry testified that during the meeting, which lasted ap-
proximately one-half hour, he had certain concerns that were
addressed, “such as what type of background investigations
[APS] conducted on their security officers, whether or not their
security officers held work cards, the turn over rate for their
company, things that had been concerns of mine.” Barry testi-
fied that his concerns were answered satisfactorily, and he be-
came a supporter of the feasibility of subcontracting to APS.
However, at no time did he make an independent investigation
of APS, nor does he know whether anyone else made an inde-
pendent investigation of APS.
At the end of the meeting there was no decision made to con-
tract with APS, and Barry did not recall any meeting thereafter
between management personnel where subcontracting was
discussed. He does not know who made the decision to subcon-
tract, nor does he have any idea of who was in on the subse-
quent deliberations. Barry testified that he was not the person
who made the final decision to contract with APS; and, in fact,
even if he had vetoed the idea, he could have been overruled by
corporate management.
Barry testified that to his knowledge, the subcontracting has
“worked out very well”: there have been substantial cost sav-
ings and no significant operational problems of which he is
aware.
Barry testified that no other president of any other Hilton
gaming property in Nevada has proposed that the security offi-
cers be contracted out. Further, even after becoming knowl-
edgeable regarding the savings that could be realized from con-
tracting out, he did not contact the presidents of other Nevada
properties to suggest to them that they, too, look into subcon-
tracting as a cost-savings measure; nor has he considered con-
tacting any security service to investigate this option on behalf
of any other Hilton properties over which he has authority.
Specifically, regarding the possibility of contracting out the
security guard work at the Flamingo Hilton-Reno, Barry testi-
fied that, “My understanding that the salary level of security
officers at the Flamingo Hilton-Reno are in line with the rest of
the community as far as the security officers at other properties
are concerned,” and therefore there would be no cost advantage
to contracting out.10 For the same reason, namely, that “there
wouldn’t be any potential cost savings” due to fact that the
wage rates of the other properties are in line with general area
wage rates, Barry has declined to consider contracting out for
any other properties.
Lynn Wright has been the director of human resources for
the Respondent since July 1993. Wright previously had held
the same position at the Flamingo Hilton-Reno. Wright testi-
fied that while she was working for the Flamingo Hilton-Reno
the Hilton corporation had initiated a nationwide program,
called the Profit Enhancement Program (PEP), designed to
enhance profitability through cost savings by analyzing all
expenditures, both personnel and non-personnel related at all
Hilton properties throughout the country. The Respondent took
over the operations of Bally’s, in 1992, and shortly thereafter
the Hilton PEP program was implemented at that facility. At
each property a team of supervisory and non-supervisory indi-
viduals from each department was established to “brainstorm”
ideas for efficiency and cost savings and make recommenda-
tions to a steering committee. Implementation of cost efficien-
cies resulting from such recommendations continued thereafter.
Wright testified that Dave Bennett, director of security, was
one of the members of the PEP committee from the Respon-
dent’s security department. All ideas emanating from each
department were presented to the then president of the Respon-
dent, Bill Sherlock, who was the head of the Respondent’s PEP
steering committee. The PEP records show that the security
department alone presented 33 cost-reduction ideas and 44
service improvement ideas (ideas which would not necessarily
reduce costs, and sometimes required increased costs, but
which would improve service or efficiency) to the steering
committee; each idea was acted upon by being designated as
“go” or “no go.”
Of the 33 cost reduction ideas submitted by the security de-
partment representatives, none suggested a wage reduction of
any kind or of subcontracting out the entire security depart-
ment. Several ideas did recommend the elimination of certain
security guard jobs. It appears that these ideas were proposed
and recommended by Bennett and were thereafter approved,
with the resulting net reduction in the in-house security force of
some 8 individuals (12 individuals were apparently dismissed,
however 4 supervisors were apparently hired to replace some of
them).
Three ideas, however, did deal with the issue of subcontract-
ing certain security officer work. Thus, idea 117 suggested that
the Respondent “Contract outside security to patrol lobby and
Front desk area.” This, according to the recommendation form,
would have resulted in the dismissal of three security guards
and the contracting out of their work at a lower rate, resulting in
a savings of $24,000. Bennett recommended “no go” on this

10 The record shows that in 1996 the average wage for security offi-
cers at the Flamingo Hilton-Reno was $8.80, and in 1997, after a wage
increase, the average wage increased to $8.92 per hour.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1428
idea. As set forth in the Idea Evaluation Sheet, the adverse
consequences were stated as follows: “Would have to train in
Hilton policy and procedure; Would not be as professional a
Hilton Security Officers,” and the idea, under the heading of
“Implementation considerations” was considered to be “High
Risk” in terms of “Liability.”
Similarly, idea 118 was as follows: “Contract with outside
Security Agency to Patrol Hotel.” This, according to the rec-
ommendation form, would have eliminated 12 of the Respon-
dent’s in-house security guards and would have resulted in the
contracting of such work at a net savings of $96,000. For the
same reasons as noted for idea 117, and the additional imple-
mentation consideration denoted as “Hilton Standards,” Bennett
recommended “no go” and this idea was not implemented.
Finally, idea 119 was as follows: “Contract with outside Se-
curity Agency to patrol property.” This, according to the rec-
ommendation form, would have eliminated six of the Respon-
dent’s security guards and would have resulted in the contract-
ing out of the work at a net savings of $48,000. For the same
reasons as noted above for idea 118, Bennett recommended
“no go” and this idea was not implemented.
According to Wright, the terminology “High Risk” referred
to “whether or not there was any effect on the operation,
whether it materially changed the operation” or impacted other
financial, customer relation or liability considerations; “Hilton
Standards” referred to the fact that the idea “would be unique to
Hilton standards, because we don’t have any other…properties
that have subcontracted services”; and further, that the change
may affect “brand name” customer satisfaction if customers do
not receive the same quality of service from one property to
another.
Wright testified that none of the ideas that were ultimately
adopted by the Respondent’s security department were consid-
ered to be “High Risk.” Further, Wright was unable to recall
any specific statements by Bennett, during discussions among
the Respondent’s mangers, wherein Bennett explained his rea-
sons for changing his mind about the efficacy of subcontracting
the Respondent’s security force.
Wright testified that only six Hilton properties worldwide
have unionized security departments, and none of these are
gaming properties. Further, prior to the Respondent’s elimina-
tion of its in-house security force, the Respondent was the only
gaming property in the Hilton chain with a unionized security
department.
Wright testified that during negotiations the Respondent’s
insistence on an unconditional subcontracting provision was
extremely important in order to insure that the Respondent
would have the flexibility to implement cost savings at any
time. Thus, Wright testified that, “We realized that the ex-
penses of our security services were far greater than those of
our competitors in the area, and we needed to have a competi-
tive edge.” Wright testified that it was not until after the collec-
tive-bargaining agreement was signed that the Respondent
made a “detailed study” of subcontracting which, according to
Wright, it had not made prior to the execution of the agreement.
Wright testified that the Respondent routinely conducts area
wage surveys on an annual basis, and that it had completed an
area wage survey of certain gaming properties in the Reno,
Nevada area in by October 1995. The survey, introduced into
evidence, is entitled, “Security Survey-October 1995,” and was
in the Respondent’s possession before the first bargaining ses-
sion with the Union.
Wright testified that there had been informal discussions
about subcontracting the security force with Szony and Bennett
“since I first got there” which, as noted above, was in July
1993. Bennett, who continues to be employed by the Respon-
dent as director of security, did not testify in this proceeding.
According to Wright, Bennett is the individual who first made
contact with any outside security contractors, and Wright never
talked with, interviewed, or investigated any potential contrac-
tors.
Wright testified that immediately after the November 1, 1996
meeting with the APS representatives, the Respondent’s man-
agers (she does not recall whether Barry was present) met and it
was decided that if the Respondent intended to proceed with the
idea of subcontracting it would be helpful to notify the Union
and give them the opportunity to match the offer of APS.
Wright said that she was impressed with the presentation of
APS, as the APS representatives were able to satisfactory re-
spond to the questions concerning recruiting of personnel and
staffing.11 Thereafter, according to Wright, she participated in
the decision to enter into a contract with APS. Those involved
in making the decision were, in addition to Wright, Barry,
Szony, Bennett, Rittorno, and Seely, whom Wright referred to
as the “big boss” as he was then president of Hilton Gaming
Corporation and in charge of all of Hilton’s gaming operations
world-wide. Seely is no longer employed by Hilton. Wright
testified that the final decision to subcontract was made on
approximately November 15, 1996, and that Szony was the
person responsible for making the final decision.
Wright testified that at the November 25, 1996 meeting the
Union was given the opportunity to match the savings resulting
from contracting out. McConville accused the Respondent of
attempting to eliminate the Union, and Anderson responded
that the Respondent’s motivation was not to rid itself of the
Union, but to run its security services in the most cost-efficient
and effective fashion.
The subcontracting took effect on January 13, 1997. Prior to
this time the Respondent had utilized subcontracting for secu-
rity services only for “outside venues in our amphitheater” to
augment the existing staff for conferences and exhibits and
events that would require 24-hour security coverage
At the time the Respondent took over the operation of
Bally’s, it inherited Bally’s approximately 2500 employees. In
1996, at the time when it was decided to contract out the secu-
rity work, the Respondent’s employee complement had been
reduced to approximately 2000 employees. One hundred and
ten positions were eliminated in 1996–1997, including the 64
security guards. In 1996 the average wage for security officers
at the Flamingo Hilton-Reno was $8.80, and in 1997, after a
wage increase, the average wage increased to $8.92 per hour.
Wright testified that the Respondent’s maintenance mechan-
ics are currently represented by the Stationary Operating Engi-
neers, and the International Association of Stage and Theatrical
Employees represents the stage hands and related employees.
By memorandum dated February 26, 1996, to Feren Szony
entitled, “Cost Savings of Contract Security,” with copies to
Barry and Wright, Bennett states as follows:

I have recently met with representatives of Vanguard Security
Services and Pinkerton Security Services to obtain pricing in-

11 It is clear that APS would have to recruit and hire the necessary
security guards, and did not have a ready complement of security
guards in its employ to send to the Respondent.
RENO HILTON 1429
formation of implementing an outside security service for the
Reno Hilton. The preliminary figures along with administra-
tion advantages makes this a program we should explore.

. . . . .

NOTE: Attached are the two bids from the security services
companies and some ideas as to why a contract security com-
pany can better serve us than in-house security.12

Neither Seely, Szony, nor Ballentine are currently employed
by the Respondent or any Hilton entity. Bennett, as noted
above, continues to be employed by the Respondent in the same
position as director of security. None of the above-mentioned
individuals testified in this proceeding.
C. Analysis and Conclusions
The General Counsel has presented a strong prima facie
showing that the Respondent’s contracting of its entire security
force, resulting in the dismissal of some 64 security officers,
was motivated by considerations proscribed by the Act. Thus,
most of its security guards were long-time employees of the
Respondent and its two predecessors, and were highly paid in
relation to the security guards employed by the other area casi-
nos. The Respondent has been well aware of the fact for many
years that it could realize very substantial savings by contract-
ing out its security officer work. Yet despite annual wage sur-
veys showing that its security officers were by far the highest
paid in the Reno area, it never sought to freeze or reduce their
wages to comparable levels or to contract out their work until
immediately after the Union prevailed in the election as the
employees’ their collective-bargaining representative.
What this shows is that until the Union became the employ-
ees’ collective-bargaining representative, the Respondent
highly valued its security guards and was willing to pay them a
substantial premium, compared to the other Reno properties,
including their own sister property, the Flamingo Hilton-Reno,
for their services. It must be presumed that the Respondent
believed they were worth what they were receiving. Finally,
the Respondent has elected not to contract out the nonunion
security guard work at its other properties even though it claims
it has had favorable experience with the subcontracting here,
and even though its additional savings would be considerable.
It was not until after the Union prevailed in the election that
the Respondent began to investigate the possibility of contract-
ing out such work. Thus, the same individual, Director of Secu-
rity Bennett, who vetoed the idea of contracting out on prior
occasions with an unequivocal “no go,” was instrumental in
advocating the idea upon the Union’s certification as the em-
ployee’s collective-bargaining representative. As noted above,
in 1993, in conjunction with the ongoing profit enhancement
program, which was specifically designed to identify methods
of enhancing profitability through cost savings, the Respondent
decided that although it could have saved a total of $168,000
annually by eliminating 21 security guards (ideas 117, 118, and
119, supra )13 it determined that such cost savings were not

12 At the hearing the parties stipulated that this memorandum was
furnished to the General Counsel pursuant to a subpoena request for
such documents, and that the Respondent sought the “attachments”
from all individuals who should have received a copy of them; how-
ever, the Respondent was unable to locate the said attachments.
13 This amounts to a savings of $8000 per security guard. This sav-
ings of $8000 per security guard in 1983 is very comparable to the
sufficient to outweigh what the Respondent then perceived as
controlling negative factors.
As noted above, I have credited the account of Boekhout, a
former security guard, who related in an affidavit his conversa-
tions with certain management representatives, including Ben-
nett. It is very revealing that sometime in October 1995, about
a month after the September 28, 1995 election and shortly prior
to the commencement of bargaining on November 7, 1995,
prior to the time the Respondent could have been aware of
whether the Union would agree to wage concessions, Bennett
candidly advised Boekhout, whom Bennett knew to be
staunchly antiunion, that the decision had already been made
that the Respondent intended to contract out the work. Boek-
hout’s testimony is worth recounting here:

I was in the security office when director of security, Dave
Bennett, returned from a meeting upstairs. He waived at me
to follow him inside. He told me that they had made a presen-
tation to Jim Anderson and the others—he didn’t name
who—at the meeting concerning going to contract security
and that they had bought it. He said that they had told him
that they could save more than $500,000. He told me that
they had said do it. He then told me that they may have lost
the battle but that they had won the war. He said that they
[the Union] were gone. I believe I said oh, shit. Bennett told
me not to worry about it, that my job was protected, that he
had managed to save the 10 or 11 of us. [Emphasis added.]

Bennett’s remarks strongly indicate that the decision to contract
out was a reaction to and the immediate result of the unioniza-
tion of the Respondent’s security force.
Thereafter, shortly after the decision to contract out was an-
nounced, both Bennett and Wright apologetically told Boek-
hout that, contrary to the Respondent’s initial intention, in fact
there would be no way for the Respondent to provide other jobs
to employees who assisted it in combating the Union. By such
statements the Respondent established that its mindset at the
time was to protect those employees whom it considered loyal,
and to discharge the others, thus reaffirming the animus that it
harbored from the outset of the Union’s organizational cam-
paign as found by the Board in the above-cited case. Further
decisions demonstrate Hilton’s proclivity to violate the Act and
its animus toward unionization in general. Thus, in addition to
the above-cited cases involving the Hilton Flamingo-Reno’s
shutting down of unionized departments and laying off union
employees, an additional Board decision and three administra-
tive law judge decisions, assuming that such decisions are
adopted by the Board, exhibit the modus operandi of Hilton
corporation gaming entities when confronted with union organ-
izational campaigns.14
The General Counsel, having established a prima facie case
in support of the complaint allegation here as set forth above,
the burden of proof is shifted to the Respondent to explain what
lawful business considerations caused it to abruptly change its
policy regarding contracting out, and to demonstrate that it
would have contracted out its security force for lawful business

savings realized by the Respondent as a result of contracting out its
entire security force in 1997.
14 See Reno Hilton, 319 NLRB 1154 (1995); Flamingo Hilton-
Laughlin, 324 NLRB 72 (1997). Also see administrative law judge
decisions in Reno Hilton, 1998 LEXIS 34 (Jan. 21, 1998); Flamingo
Hilton-Reno, 1997 LEXIS 1020 (Dec. 11, 1997); Flamingo Hilton-
Laughlin, 1997 LEXIS 991 (Dec. 1, 1997).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1430
considerations.15 In this regard the Respondent maintains that
it had the absolute right to contract out, having negotiated such
a contract provision with the Union in good faith;16 that it had
an established practice of reducing costs by eliminating em-
ployee and other expenses in order to increase its profits; and
that it was motivated by economic, not antiunion, considera-
tions.
The Respondent maintains that the Region’s dismissal of the
8(a)(5) bad-faith bargaining allegation is dispositive of its right
to contract out; thus, if the bargaining was undertaken in good
faith and such bargaining resulted in a contract provision giving
it the right to contract out, then this right is absolute. The Re-
spondent’s rationale is clearly erroneous. It is axiomatic that
merely because the Respondent has negotiated the unfettered
right in a collective-bargaining agreement to contract out unit
work at any time, such right to contract out does not unfetter
and insulate the Respondent from the sanctions of the Act pro-
hibiting it from discriminating against employees because of
their union activity. An employer may reserve for itself many
prerogatives in a union contract such as, for example, the right
to discharge employees “at will” or to change their job assign-
ments, yet it is not free to exercise these contractual preroga-
tives for purposes prohibited by the Act.
The Respondent relies on Automatic Sprinkler Corp., 310
NLRB 401 (1995), in support of its foregoing contention.
There the Board found that the employer violated Section
8(a)(3) of the Act by terminating all of its union employees and
subcontracting the work its employees had previously per-
formed. Further, the Board determined that the terms of a col-
lective-bargaining agreement giving the employer the right to
subcontract did not afford it protection from Section 8(a)(3) of
the Act, as its decision to subcontract was discriminatorily mo-
tivated. The Sixth Circuit did not adopt the Board’s rationale
and, in a two to one decision (the dissenting judge strongly
arguing that the majority erred in failing to consider the
Board’s rationale) reversed the Board.17 Thereafter, the Un-
ions’ petition for certiorari was denied by the Supreme Court.18
While Automatic Sprinkler Corp. is certainly factually distin-
guishable from the instant matter, as there the employer funda-
mentally changed the nature of its business by becoming a gen-
eral contractor and contracting out the work of all its employ-
ees, nevertheless the holding of the Sixth Circuit seems to be
that if an employer negotiates a collective-bargaining agree-
ment giving it the right to contract out, the employer’s dis-
criminatory motive for exercising this right is irrelevant.
Clearly this isolated decision neither reflects Board law, nor, as
contended by the Respondent, mandates the dismissal of the
instant matter. Rather, the Respondent’s motive for exercising
this contractual right is determinative of the issue in this pro-
ceeding, namely, whether the Respondent’s decision to contract

15 Wright Line, 251 NLRB 1083 (1980), enfd. 662 F.2d 899 (1st Cir.
1981), cert. denied 455 U.S. 989 (1982), approved in NLRB v. Trans-
portation Management Corp., 462 U.S. 393 (1983).
16 The Union filed a charge alleging that the Respondent had en-
gaged in bad-faith bargaining in violation of Sec. 8(a)(5) of the Act.
This allegation was dismissed by the Regional Director and the dis-
missal was affirmed upon appeal.
17 120 F.3d 612 (6th Cir. 1997).
18 118 S.Ct. 1675 (1998). It appears that the Board did not petition
the Court for certiorari and accepted the Sixth Circuit’s decision as “the
law of the case.”
out the work was discriminatorily motivated in violation of
Section 8(a)(3) of the Act.
Respondent contends that its contracting out of the security
force is to be viewed as a continuation of an ongoing past prac-
tice of cost reduction. Thus, the Respondent, together with its
sister property, the Flamingo Hilton-Reno, have demonstrated
an established past practice of reducing costs by shutting down
and consolidating their bakery and laundry departments19 and
combining other units, such as portions of their accounting
departments and the management of their gift shops, and that
the Respondent has otherwise reduced costs by laying off em-
ployees, shutting down an unprofitable restaurant, and leasing
out its pro-bowling shop.20
There is certainly no contention by any party here that the
Respondent is not privileged to cut costs as it deems expedient,
whether by consolidating business units, laying off employees,
contracting out,21 or by any other means, provided that its cost
cutting is not motivated by considerations proscribed by the
Act, namely, a desire to discriminate against its employees in
violation of the Act. However, as noted above, in addition to
Hilton’s established past practice and proclivity to violate the
Act when confronted with the potential unionization of its em-
ployees,22 the evidence adduced in support of the General
Counsel’s prima facie case shows that in fact, during the height
of its cost cutting PEP program, the Respondent’s considered
decision was a definitive and documented “no go” with regard
to contracting out any portion of its in-house security force
despite the fact that such savings were stated to be about $8000
per employee per year, the same as the savings Respondent
maintains it has currently realized from contracting out.23
Regarding its contention that it was motivated by economic
or other lawful business considerations, the Respondent’s evi-
dence is sorely wanting, as not one individual who was instru-
19 As noted above, this “past practice” on which the Respondent re-
lies was found by the Board to be violative of the act.
20 Following the close of the hearing here, the Respondent filed a
motion to reopen record, asserting that on April 17, 1998, in further-
ance of its cost-cutting program, it announced to its employees that it
had decided to subcontract its Patiio Room coffee shop operations to an
independent restaurant operator, Chevy’s Fresh Mex Restaurant, result-
ing in the loss of 132 jobs and at substantial cost savings to the Re-
spondent. The Respondent’s motion was denied.
21 However, the Union here continues to maintain that Respondent
did not bargain in good faith. This contention, having been previously
resolved, is not an issue in this proceeding.
22 In Flamingo Hilton-Laughlin, supra, the Board found the viola-
tions so pervasive and serious that it imposed a bargaining order. Fur-
ther, in that case the Board stated (slip op. at p. 2):
In this connection, the record shows that Jim Anderson, Hilton’s
corporate senior vice-president, labor relations and personnel
administration, played a major role in orchestrating the Respon-
dent’s unlawful campaign against the Union. We agree that
Anderson’s continued employment is a factor undercutting the
Respondent’s management turnover defense to the imposition of
a bargaining order.
23 In this regard there is some dispute as to the actual savings real-
ized by the Respondent. Thus, the Respondent’s position is that after
the first year, during which it incurred substantial expenses associated
with the dismissal of its in-house security force, it expected to save
about $500,000 per year. The Union takes the position that the poten-
tial savings are considerably less and are dependent on other contingen-
cies, such as the renegotiation of APS’s contract with the Respondent
or cost saving measures that could have been negotiated between the
Respondent and the Union upon the expiration of the 1-year collective-
bargaining agreement.
RENO HILTON 1431
mental in making such a decision was called by the Respondent
as a witness in this proceeding. Under the circumstances it is
reasonable to assume, and I find, that the testimony of such
witnesses would be adverse to the Respondent’s position.24
Moreover, it is significant that a memo written by Director of
Security Bennett and sent to a number of Respondent’s officials
and managers, is missing several pages, one of which, accord-
ing to Bennett’s memo, sets forth his ideas regarding the advan-
tages of contracting out. Thus, page one of Bennett’s memo
states:

NOTE: Attached are the two bids from the security services
companies and some ideas as to why a contract security com-
pany can better serve us than in-house security. [Emphasis
added.]

Under the circumstances, where none of the copies can be
located and where Bennett, who continues to occupy the posi-
tion of director of security, has not been called as a witness to
attempt to furnish or convey the substance of the missing por-
tions of his memo, I am also constrained to conclude that what
was contained in the memo would similarly be adverse to the
Respondent’s interests in this proceeding.
On the basis of the foregoing, I find that the Respondent has
not satisfied its burden under Wright Line, and I accordingly
find that the Respondent has violated and is violating Section
8(a)(3) and (1) of the Act as alleged by contracting out its secu-
rity officer force and dismissing its entire complement of secu-
rity officers on January 13, 1996.

24 See Douglas Aircraft Co., 308 NLRB 1217 fn. 1 (1992). See also
Champion Rivet Co., 314 NLRB 1097, 1098 fn. 8 (1994):
When a party fails to call a witness who may reasonably be
assumed to be favorably disposed to the party, an adverse in-
ference may be drawn regarding any factual question on
which the witness is likely to have knowledge. It may be in-
ferred that the witness, if called, would have testified ad-
versely to the party on that issue. See International Auto-
mated Machines, 285 NLRB 1122, 1123 (1987), enfd. mem.
861 F.2d 720 (6th Cir. 1988).

CONCLUSIONS OF LAW
1. The Respondent is an employer engaged in commerce
within the meaning of Section 2(2), (6), and (7) of the Act.
2. The Union is a labor organization within the meaning of
Section 2(5) of the Act.
3. The Respondent has violated Section 8(a)(3) and (1) of
the Act by contracting out the work of its security officers and
dismissing its entire complement of security officers on about
January 13, 1996.
THE REMEDY
Having found that the Respondent has violated and is violat-
ing Section 8(a)(1) and (3) of the Act, I recommend that it be
required to cease and desist therefrom and from in any like or
related manner interfering with, restraining, or coercing its
employees in the exercise of their rights under Section 7 of the
Act. Further, the Respondent shall be required to offer each of
the security officers who were unlawfully terminated on about
January 13, 1996 immediate and full reinstatement to their
former positions of employment and make them whole for any
loss of wages and other benefits they may have suffered by
reason of Respondent’s discrimination against them in the
manner prescribed in F. W. Woolworth Co., 90 NLRB 289
(1950), plus interest as computed in New Horizons for the Re-
tarded, 283 NLRB 1173 (1987). Further, the Respondent shall
be required to post an appropriate notice, attached hereto as
“Appendix,” and shall be required to mail a signed copy of the
notice to each of the security officers involved here.25
[Recommended Order omitted from publication.]
25 If no exceptions are filed as provided by Sec. 102.46 of the
Board’s Rules and Regulations, the findings, conclusions, and recom-
mended Order shall, as provided in Sec. 102.48 of the Rules, be
adopted by the Board and all objections to them shall be deemed
waived for all purposes.