Legal Updates

NLRB Asks Supreme Court To Review Ruling That Could Invalidate Hundreds Of NLRB Decisions

The National Labor Relations Board (“NLRB” or “Board”) has asked the U.S. Supreme Court to review a federal appeals court decision suggesting that hundreds of recent Board rulings may be invalid because the Board lacked the necessary quorum of members to issue them.

In this decision, Noel Canning v. NLRB, the U.S. Court of Appeals for the D.C. Circuit held that President Obama’s three recess appointments to the NLRB in January 2012 were constitutionally invalid.  Without these recess appointments, the Board would have lacked the three-member quorum required for it to act.

Citing Noel Canning, many employers have asked the Board to rescind decisions issued since the recess appointments were made.  The Board, however, has rejected those challenges, maintaining that the D.C. Circuit’s decision is both incorrect and not binding on the Board.

Background

The NLRB is a five-member body that needs a three-member quorum to issue decisions and take other official actions.  The expiration of Member Craig Becker’s term on January 3, 2012, left the Board with only two members, Mark Gaston Pearce and Brian Hayes.

On January 4, 2012, President Obama invoked the Recess Appointments Clause of the U.S. Constitution and appointed Sharon Block, Terence Flynn, and Richard Griffin as new Board members.  This clause allows the President to “fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.”  At the time, the Senate had not formally recessed but was not in active session.

In February 2012, a three-member panel of the Board (consisting of Members Block, Flynn, and Hayes) held that Noel Canning, a Pepsi bottler in Washington state, had violated the National Labor Relations Act (“NLRA”) by refusing to reduce to writing and execute a collective bargaining agreement containing terms to which the parties had agreed.  Noel Canning appealed this decision to the D.C. Circuit.

Noel Canning argued that the recess appointments were constitutionally invalid and, in turn, that the Board lacked a valid quorum when it decided the case.  This, says Noel Canning, renders the decision invalid and unenforceable.

D.C. Circuit’s Decision

The D.C. Circuit rejected the Board’s argument that the term “Recess,” as used in the Recess Appointments Clause, includes breaks in the Senate’s business during a continuing session.  Rather, the court agreed with Noel Canning’s position that a “Recess” occurs only when the Senate formally recesses.

Since the Senate was not formally recessed when the appointments to the NLRB were made, the D.C. Circuit concluded that the appointments were constitutionally invalid.  The D.C. Circuit also opined that a recess appointment can be made only if the vacancy arises during a formal Senate recess, which was not the case here.

Implications Of Decision

In the wake of Noel Canning, many employers have sought to invalidate Board action on the ground that it was taken without the required quorum.  The Board has defended its activity, asserting that the D.C. Circuit’s holding is incorrect and will be reversed by the Supreme Court, although, as of this writing, the Supreme Court has not ruled on the Board’s petition for review of the case.

If the Court were to uphold Noel Canning, then this could invalidate the hundreds of Board decisions issued since January 4, 2012, when the recess appointments were made.  In that event, the NLRB would likely commence the arduous process of reviewing and reissuing these decisions once further appointments have given it a valid quorum.

Recommendations

Until Noel Canning is resolved, employers are encouraged to:

• Consider directing any appeals from adverse Board decisions to the D.C. Circuit, as the other federal courts of appeal are not bound to follow Noel Canning;
• Confer with counsel relative to labor matters, as the Board is likely to remain on a pro-labor course for the foreseeable future, regardless of how Noel Canning is resolved; and
• Closely monitor further developments in this area of the law.  In this regard, President Obama recently nominated three new candidates to the Board.  If and when at least two of them are confirmed by the Senate, the Board will once again have an undisputedly valid quorum.

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If you have any questions about Noel Canning or would like guidance on any other labor-law issue, please do not hesitate to contact us.