Entirety of Sales Agreement Was Not Relevant to Union Representation

​The National Labor Relations Board (NLRB) erred in ordering an employer to produce the entirety of its business sale agreement in response to an information request from a labor union representing several of the employer’s workers, the 3rd U.S. Circuit Court of Appeals ruled.

The employer is a health care network comprised of four hospitals and several other health care facilities located in Pennsylvania. A decision was made to sell the employer’s operations to a third party.

After an agreement was reached for the acquisition of the employer, the employer shared a letter with the union that was then sent to employees. In that letter, the employer informed its employees of the sale and the sale’s potential impact on current employees. The letter also specifically referenced how the terms and conditions of employment for employees would and would not change under the asset purchase agreement between the employer and the third-party buyer.

Shortly after receiving a copy of that letter, the union made a request for a complete copy of the agreement and all attachments and schedules of the agreement. The employer and the union engaged in a series of communications regarding the production of the agreement. The employer asserted that portions of the agreement were confidential and as such, would not be provided to the union without the parties entering into a confidentiality agreement. In response, the union filed unfair labor practice charges with the NLRB.

A trial was held before an administrative law judge (ALJ) who determined that the employer violated the National Labor Relations Act (NLRA) by refusing to produce the agreement. The ALJ ordered the employer to produce the entire agreement with all attachments and schedules.

The ALJ reasoned that the agreement contained relevant information, and the employer had failed to meet its burden of proving a valid confidentiality interest in the agreement. An NLRB panel adopted the order of the ALJ. The employer petitioned the 3rd Circuit for review, and the NLRB cross-petitioned for enforcement of its order.

The 3rd Circuit affirmed the determination of the NLRB that the employer had violated the NLRA by refusing to produce the agreement, portions of which were established as relevant by the union, and that the employer had not established any confidentiality interest in those portions.

The 3rd Circuit further concluded, however, that the NLRB had abused its discretion in ordering the employer to disclose the entirety of the agreement. The appeals court found that the union had never established the relevance of the entire agreement, and that the employer could not be faulted for failing to produce any irrelevant parts.

Crozer-Chester Medical Center v. National Labor Relations Board, 3rd Cir., No. 18-1640 & 18-1973 (Sept. 24, 2020).

Professional Pointer: Employers should be cautious in flatly declining to produce information in response to an information request made by an affiliated labor union. The scope of information to which a union may be entitled is broad, particularly where the requested information touches upon the terms and conditions of employment for bargaining unit employees. It also is not enough to simply assert confidentiality concerns as a basis for declining to produce requested information, or to rely upon confidentiality provisions written into an agreement. Employers should be prepared to negotiate with the union to accommodate both the employer’s confidentiality concerns and the employer’s obligation to produce information to the union. To that end, employers may consider releasing information conditionally or with restrictions on the use of that information.

W. Kevin Smith and Jacob W. Crouse are attorneys with Smith and Smith Attorneys, the Worklaw® Network member firm in Louisville, Ky.

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