Ming Quong Children's Center

National Labor Relations Board - Board Decisions

May 24, 1974

210 N.L.R.B. 899 (N.L.R.B. 1974)

MING QUONG CHILDREN'S CENTER 899
Ming Quong Children's Center and Social Services
Union Local 535, Service Employees International
Union, AFL-CIO, Petitioner . Case 20-RC-11493
May 24, 1974
DECISION AND ORDER
BY CHAIRMAN MILLER AND MEMBERS
FANNING, KENNEDY, AND PENELLO
Upon a petition duly filed under Section 9(c) of the
National Labor Relations Act, as amended, a
hearing was held on August 7, 1973, at San
Francisco, California, before Hearing Officer Robert
C. Grace. After the hearing and pursuant to Section
102.67 of the National Labor Relations Board Rules
and Regulations, the Acting Regional Director for
Region 20 issued an order transferring the case to the
Board for decision. Thereafter, the Employer filed a
brief.
The Board has reviewed the Hearing Officer's
rulings made at the hearing and finds that they are
free from prejudicial error. They are hereby affirmed.
Upon the entire record in this case, the Board
finds:
1. Ming Quong Children's Center is a California
nonprofit corporation whose purpose is to help
troubled children resolve their emotional problems.
Ming Quong's facilities are located on 13 acres in
Los Gatos, Santa Clara County, California. There
are seven group home cottages to house the children
who generally live on the premises. The facility is
licensed to accept children from the ages of 5 to 11
and has 42 children presently in residence. Most of
the children at the facility are referred to it from the
Department of Social Services of Santa Clara
County. Eighty percent of the children are residents
of Santa Clara, San Mateo, and San Francisco
Counties in Northern California. The facility does
not accept children from outside the State of
California. Ming Quong has no hospital facilities and
does not have a medical doctor on the staff. It
employs a part-time nurse and handles all medical
emergencies and illnesses through outside hospitals
and clinics. The facility receives the services of a
child psychiatrist and a clinical psychologist as
consultants on a contract basis.
The record shows that total anticipated income at
Ming Quong for fiscal year 1972-73 is projected at
$532,411. CHAMPUS, an agency of the Federal
Government, contributed between $12,000 and
$24,000 during the past fiscal year for military
dependents at the facility, Santa Clara County paid
approximately $192,960 in fees for children placed at
the center during the past fiscal year. According to a
formula for reimbursement, the financial responsibil-
ity for these children is ultimately shared by the State
of California (6.5 percent), the Federal Government
(22.4 percent), and the county of Santa Clara (71.1
percent). The remainder of the income received
comes from private placement of a small number of
children and from gifts and donations.
The record shows that most of the expenditures
made by Ming Quong are in the State of California
and represent payments for salaries, food, and
maintenance of the facilities. A small amount-less
than $1,000-represents payment for staff members'
expenses to attend conferences.
The Board in The Children's Village, Inc., 186
NLRB 953, has asserted jurisdiction over a noncom-
mercial, nonprofit agency which does work similar to
Ming Quong. In that case, the Board noted annual
purchases of goods from out of State of between
$300,000 and $400,000 and an annual income in
excess of $3.5 million and asserted jurisdiction under
existing Board standards. However, the Board
explicitly stated that it was establishing no specific
jurisdictional standard for such operations.
Similarly, in Jewish Orphans Home of Southern
California a/k/a Vista Del Mar Child Care Service,
191 NLRB 32, the Board took jurisdiction over
another somewhat similar institution engaged in the
treatment of emotionally disturbed children where
the employer's gross income exceeded $1 million,
noting again that we were leaving open the question
of whether or not to establish a specific standard for
such cases.
On the other hand, in Methodist Children's Home of
Missouri, 209 NLRB No. 20, the Board declined to
exercise jurisdiction over a child care facility where
the revenues and expenditures of the employer were
not sufficient to meet any of the Board's existing
jurisdictional standards which might be applicable.'
In the instant case the projected annual income of
Ming Quong is substantially less than that involved
in either Children's Village or Jewish Orphans Home,
supra, but is sufficient to fall within certain of our
jurisdictional standards-in particular the retail
standard which we frequently apply to commercial
entities engaged in supplying services as well as to
those engaged in the sale of products. Accordingly,
in this case we have examined closely the question of
whether and under what circumstances or pursuant
to what jurisdictional standards we ought to exercise
jurisdiction over institutions of this general nature.
In the course of this examination, we have once
again reviewed the Board precedents and the
legislative history of the Act relating to our exercise
1 Member Kennedy concurred only in the result
210 NLRB No. 125
900 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
of jurisdiction over various types of nonprofit
corporations.
In The Trustees of Columbia University in the City of
New York, 97 NLRB 424, where we declined to
exercise jurisdiction over an educational institution,
the Board reviewed that legislative history, noting
that the House of Representatives had proposed a
specific exemption from the Act for nonprofit
corporations and other like entities "organized and
operated exclusively for religious, charitable, scientif-
ic, literary, or educational purposes." 2 We observed
that while the Congress had not adopted this specific
exemption, the Conference Report on the Labor
Management Relations Act of 1947 3 had stated:
The . . . nonprofit organizations excluded under
the House bill are not specifically excluded in the
Conference Agreement, for only in exceptional
circumstances and in connection with purely
commercial activities of such organizations have
any of the activities of such organizations or of
their employees been considered as affecting
commerce so as to bring them within the scope of
the National Labor Relations Act.
In Cornell University, 183 NLRB 329, we once
again reviewed this legislative history and concluded
that the impact of that history indicated general
approval of the Board's practices in this regard, but
did not mean that the Board "must continue to
refuse to assert such jurisdiction indefinitely in the
future despite change of circumstances." We further
stated that the history "seems to indicate that
Congress was content to leave to the Board's
informed discretion in the future as it has in the past,
whether and when to assert jurisdiction over nonpro-
fit organizations whose operations had a substantial
impact upon interstate commerce." We also observed
in that case that the Supreme Court had described
the Board's actions in this regard 4 as being that "the
Board has never recognized . . . a blanket rule of
exclusion over all nonprofit employers. It has
declined jurisdiction on an ad hoc basis over
religious, educational, and eleemosynary employers
"5
Then, in Cornell, after a full review of all of the
commerce facts relating to higher educational institu-
tions as a class the Board concluded that those facts
strongly supported the claim of the petitioner in that
case "that educational institutions as a class have not
2 Sec 2, H.R 3020, 80th Cong, 1st sess
3 H.R 510, 80th Cong, 1st sess , p 32, 1 Legislative History of the Labor
Management Relations Act, 1947, 505, 536
4 Office Employees International Union, Local No II v N L.R B, 353
U.S 313 (1957)
5 Id at 318
6 The Board in Cornell took jurisdiction over Cornell University without
only a substantial, but massive impact on interstate
commerce." Accordingly, the Board there deter-
mined that it would no longer decline jurisdiction
over all nonprofit educational institutions.6
It is apparent from the above review that we did
not intend, in Cornell, to change our policy of
declining jurisdiction over what the Supreme Court
referred to as "religious, educational, and eleemosy-
nary employers." Instead, we found on the basis of a
thorough review of extensive commerce information
and data that the facts as to the impact on commerce
of private colleges and universities had changed over
the years to a point where the impact of the
operation of such institutions on commerce had
become so substantial that it, was no longer appropri-
ate for us to continue to decline jurisdiction over that
particular class of institution.
We have also concurred in the rationale expressed
by a United States district court7 to the effect that if
we assert jurisdiction over a given class of employers
(there nursing homes) we may not distinguish within
the class on the basis of whether the institution is a
private profit-making enterprise or a nonprofit
institution. Drexel Home, Inc., 182 NLRB 1045.
But as we said in both Children's Village and Jewish
Orphans Home the kind of child care facility with
which we are dealing here does not fall within the
classification of nursing home-a class over which
we have asserted jurisdiction-nor do these institu-
tions fall within the classification of nonprofit
"hospital," over which we are statutorily prohibited
from asserting jurisdiction.
It is equally clear that these institutions are
eleemosynary in character and that we are not faced
with the kind of purely commercial activity engaged
in by nonprofit corporatlons,8 over which, as the
legislative history correctly asserts, we have tradition-
ally asserted jurisdiction.
Nor have we been presented in this case, in
Children's Village, or in Jewish Orphans Home with
the kind of evidence submitted in Cornell University,
indicating that we have here a particular type or class
of institution which has, unlike most charitable
institutions, "not only a substantial, but massive
impact on interstate commerce."
Upon further reflection, therefore, we have con-
cluded that we erroneously departed, in Children's
Village and Jewish Orphans Home, from our congres-
sionally approved general practice of declining
jurisdiction over nonprofit charitable organizations
establishing a definitive jurisdictional standard , but later established such a
standard in a rule-making proceeding
r Council 19, American Federation of State, County and Municipal
Employees, AFL-CIO v N L R B., 296 F.Supp. 1100 (D C Illinois, 1968).
s E g, The Sunday School Board of the Southern Baptist Convention, 92
NLRB 801
MING QUONG CHILDREN'S CENTER 901
without having had the special kind of justification
relied upon in Cornell. Applying the Frankfurterian
philosophy to which we have had previous occasion
to refer9 that "Wisdom too often never comes, and
so one ought not to reject it merely because it comes
late," we recognize the error in this departure from
previous practices and shall act to correct it herein.
Accordingly, we conclude that it would not
effectuate the policies of the Act for the Board to
assert its jurisdiction over this type of nonprofit
institution whose activities are noncommercial in
nature and are intimately connected with the
charitable purposes of the institution.
We shall, therefore, dismiss the instant petition.
ORDER
It is hereby ordered that the petition filed herein
be, and hereby is, dismissed.
MEMBER KENNEDY, concurring:
I concur in the result.
MEMBER FANNING, dissenting:
I dissent from my colleagues' refusal to assert
jurisdiction over this Employer and from their
overruling of The Children's Village and Jewish
Orphans Home decisions.10 The majority's conclusion
that the Employer's operations are eleemosynary in
character and have little impact on commerce has
little to recommend it either as a reflection of the
record made in this proceeding or as a judicious
application of the policies governing the Board's
jurisdictional determinations.
The Employer is engaged in the business of
furnishing professional treatment to emotionally
disturbed children. It does so almost entirely on a fee
basis. Thus, of its more than $500,000 annual gross
revenues, $469,000 were received as the payment of
fees charged for services rendered. These fees were
set through negotiations with the Welfare Division of
Santa Clara County and of other county government
in the immediate vicinity of San Francisco. Eighty
percent of the children treated by Ming Quong are
referred to it by such public welfare agencies. The
director of the Welfare Division of Santa Clara
County testified that the division refers more
children to Ming Quong than to any other similar
agency, and that it paid Ming Quong $192,960 for
services rendered to the county in the treatment of
9 New York University, 205 NLRB No 16, fn 9 (1973)
10 The Children's Village, Inc, 186 NLRB 953, Jewish Orphans Home of
Southern California a/k/a Vista Del Mar Child Care Service, 191 NLRB 32
11 CHAMPUS paid Ming Quong between $12,000 and $24,000 during
the year in question The Employer receives more than $50,000 from the
county of Santa Clara, and its operations meet the standard for enterprises
furnishing services to other enterprises engaged in commerce See Siemons
Mailing Service , 122 NLRB 81, generally and, more particularly, In 12
children referred by the county. Of this amount, he
noted, the county was reimbursed from state and
Federal programs in the amounts of approximately
$12,500 and $42,100, respectively. Of Ming Quong's
annual revenues for fiscal year 1972-73, only about
$62,000 derived from gifts and contributions. All the
rest was received from fees charged by Ming Quong
and paid by either Santa Clara County, other
counties, or CHAMPUS, an agency of the Federal
Government.ii At the time of the hearing, the
Employer was caring for 42 children, ages 5 to 11,
most of whom were referred to it by the aforemen-
tioned public welfare agencies. To care for these
children, and to maintain and operate the facilities,
the Employer employs approximately 55 full-time
and 10 part-time employees. These include a child
psychiatrist, a clinical psychologist, a registered
nurse, professional social workers, professional ther-
apists, and professionally trained group home man-
agers or "house parents." The 42 children are housed
in 7 cottages or homes, each with a group home
manager living in with the children. Ming Quong
treats emotionally and psychologically disturbed
children in an attempt to cure their psychological
and emotional difficulties to the end that they may
return to their families and enjoy normal family and
social relationships. "Normally, the more disturbed
children [with] fairly severe behavior problems .. .
who are judged to need a fairly intensive type of
treatment" are referred to Ming Quong. "Treatment
is by no means merely maintenance of the children
as is true in some institutions," rather Ming Quong
"is a place for children to be treated psychologically.
The treatment given may be described as `milieu
therapy' in which the child experience in a cottage or
house-like setting is of paramount importance in the
treatment process, in which everyone is important,
the house parent, the social worker responsible for
the treatment, whatever contacts the supervisors
might have. It is a staff effort to help the child deal
with his emotional problem and social functioning."
Family counseling is also an important part of the
process. Children stay at the center for an average of
30 months.
From the foregoing there emerges the picture of a
highly professional, intensive, extended care, mental
health treatment center, operated on a fee basis.
Although a small amount of its revenues derives
from contributions and gifts, Ming Quong can by no
Moreover, over $50,000 of such revenues are received from the Federal
Government , and its operations therefore affect commerce within the
meaning of the Act and are imbued with an importance to the national
welfare See Browne & Buford Engineers and Surveyors, 145 NLRB 765,
Canal Marais Improvement Corporation, 129 NLRB 1332, Woods Hole
Oceanographic Institution, 143 NLRB 568 See also Butte Medical Properties,
d/b/a Medical Center Hospital, 168 NLRB 266, 267, University Nursing
Home, Inc, 168 NLRB 263,264
902 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
stretch of the imagination be described as an
eleemosynary operation, as it charges and receives
fees for the full value of its services.12 Nor does its
nonprofit character warrant the conclusion that it is
not engaged in commercial operations.13 Not only
has the Board consistently held that the furnishing of
professional services constitutes activities in com-
merce or affecting commerce, the Board has so held
with respect to medical services in numerous cases.14
In any event, the Employer's operations correspond
in broad purpose to those of hospitals and nursing
homes. The business aspects of its operations are
akin to those of nursing homes and other related
facilities as to which the Board has asserted jurisdic-
tion.
That the differences that exist between its opera-
tions and those of "nursing homes and related
facilities" preclude application of the same nursing
home jurisdictional standard to these operations is
an exceedingly dubious proposition.15 To refuse
either to apply that standard or to devise any other
standard for this aspect of the industry is wholly
unwarranted.16 Having long since made the determi-
nation that operations of the health care industry
have a substantial impact on commerce and, having
established minimum jurisdictional requirements for
assertion of jurisdiction over individual operations in
the industry, the Board should not now arbitrarily
decline to assert jurisdiction over operations meeting
those minimal requirements solely on the ground
that the operations in question are incorporated on a
nonprofit basis . 17 Much less can it do so on the
clearly erroneous basis that the operations in
question are eleemosynary in character.
I believe that the Board should decide in this case
either to apply the nursing home standard to
employers such as Ming Quong or establish another
standard for this class of employers . I favor the
former course of action , for I believe the prolifera-
tion of jurisdictional standards is approaching the
point of introducing pointless complications and
uncertainties into our jurisdictional determinations.
However that may be, I find the majority opinion a
wholly unsatisfactory basis for decision in this case,
and I therefore dissent.
12 Compare Visiting Nurses Association, Inc, 188 NLRB 155, Visiting
Nurses Association of Sacramento, 187 NLRB 731, Trustees of the Corcoran
Gallery of Art, 186 NLRB 565
13 Council 19, American Federation of State, County and Municipal
Employees, AFL-CIO v. N L R B, 296 F Supp 1100 (D C Illinois, 1968);
Drexel Home, Inc, 182 NLRB 1045
14 See , for example, Visiting Nurses Association, supra, Visiting Nurses
Association of Sacramento, supra , The Swanholm, an operation of the Martin
Luther Foundation, Inc, 186 NLRB 45. Quain and Ramstad Clinic, 173
NLRB 1185, Dr J C Campbell, and Dr Walter F Boucher, Partners, d/b/a
Dr J C Campbell, Dentist, 157 NLRB 1004
15 Compare Visiting Nurses Association, supra, Visiting Nurses Association
of Sacramento, supra
16 Office Employees International Union, Local No 11 v N.LR.B., 353
U.S. 313 (1957)
17 Council 19, American Federation of State , County and Municipal
Employees, AFL-CIO v N LR.B, supra