The Ninth Circuit Court of Appeals recently ruled that a district court did not abuse its discretion by issuing an injunction requiring the new owners of a community hospital to bargain with the California Nurses Association (CNA), which represented the majority of nurses employed under the previous ownership.  Small v. Avanti Health Systems, LLC., 9th Cir., No. 11-55563 (10/31/11).

The dispute arose from Avanti Health System LLC’s acquisition of the hospital from its prior owner, after the hospital had been in bankruptcy for 18 months.   As a condition of purchase, the employer insisted that the prior owner move to reject the most recent collective bargaining agreement with the CNA.  The bankruptcy court granted the prior owner’s motion, and the sale was completed days later. 

Following the purchase, the employer determined that the CNA no longer represented a majority of its registered nurses and refused to recognize or bargain with the union.  Region 21 of the National Labor Relations Board filed an unfair labor practice charge and sought a preliminary injunction to compel the new owners to recognize the union and bargain in good faith. 

To obtain a preliminary injunction under Section 10(j) of the National Labor Relations Act, a party is required to demonstrate that: (1) it is likely to prevail on the merits; (2) it is likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in its favor; and (4) an injunction is in the public’s interest.  Prior to 2008, courts in the Ninth Circuit employed a lenient standard when evaluating these factors and granted injunctions where a party demonstrated that it was likely to succeed on the merits and that there was a possibility of harm.  In 2008, the United States Supreme Court ruled that the possibility of harm standard was too lenient and made clear that a party seeking injunctive relief must demonstrate the likelihood of irreparable harm. Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008). 

The district court granted injunctive relief and ordered Avanti to recognize and bargain with the CNA.  On appeal, the employer argued that the Region failed to present any evidence to demonstrate the likelihood of irreparable harm.  Contrary to the Supreme Court’s 2008 ruling, the Ninth Circuit assumed, without necessarily requiring evidence, that irreparable harm was a likely consequence of the employer’s failure to bargain.  The court’s presumption of irreparable harm in failure to bargain cases makes it far easier for the NLRB to obtain injunctive relief.

The Ninth Circuit’s liberal interpretation of the irreparable harm prong is even more concerning in light of the increasing number of injunctions authorized by the current Board.  Consistent with recent Board initiatives to streamline the process for seeking 10(j) injunctive relief, in Fiscal Year 2011, the Board authorized 57 injunctions, more than any year since 2000 and more than double the number authorized in 2010.