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Employment Law Blog: The Continuing Saga of the NLRB Recess Appointments and Fallout - March 21, 2013

On January 25, 2013, the United States Court of Appeals for the D.C. Circuit published an opinion in Noel Canning v. National Relations Board, Case No. 12-1115.  The case arose out of a dispute between employer Noel Canning, a soft drink bottler, and International Brotherhood of Teamsters Local 760, (the Union) the union representing employees, concerning whether there was an agreement on the terms of a collective bargaining agreement, or labor contract, and whether Noel Canning committed an unfair labor practice under the National Labor Relations Act in refusing to execute the collective bargaining agreement.

The case was initially the subject of an unfair labor practice proceeding filed by the Union before the NLRB.  A hearing was held, after which the NLRB Administrative Law Judge ruled in favor of the Union, finding a violation of §8(a)(1) and (5) of the National Labor Relations Act.  Noel Canning filed exceptions to the ALJ’s decision with the NLRB, which affirmed the ALJ’s decision.  Noel Canning filed a timely action for review of the NLRB’s decision, and the NLRB petitioned for enforcement of its decision and order.

The D.C. Circuit Court of Appeals first disposed of the factual and non-constitutional issues, however, found that there were “extraordinary circumstances” under §10(e) of the NLRA, justifying consideration of the jurisdictional issue of whether the Court could entertain consideration of the underlying constitutional issues, which had not been raised before the NLRB.  With this finding, the Court proceeded to analyze the issue of the authority of the NLRB to act, and to issue orders, without a quorum.  The issue of the quorum arose from the status of three of the five NLRB members as recess appointees by the President, not having been confirmed by the Senate.  With only two confirmed members, the NLRB would have no quorum to act.

After engaging in an extensive analysis of the definition of “the Recess”, including a review of the Federalist Papers No. 67, the language of the U.S. Constitution, similar language in the North Carolina Constitution which existed at the time of the implementation of the U.S. Constitution, and the historical infrequency of recess appointments, none having occurred in the first 80 years after the adoption of the Constitution and only 3 prior to 1947, the Court concluded that “the Recess” referred to in the Recess Appointment Clause did not support the propriety of intrasession recess or adjournment appointments.  To the contrary, the requirement that appointments occur with the advise and consent of the Senate was viewed as of paramount importance, to avoid defeating the careful separation of powers structure in the Appointments Clause of the Constitution.  “Adjournment”, under the Adjournments Clause, was viewed as referring to legislative breaks, not “a recess”, and distinctly different than “the Recess”, with intention, by constitutional drafters and the Court.  Recess appointments were found to be appropriate only when the Senate was in “the Recess” between congressional sessions, which would last for months at the time the drafters of the Constitution wrote, and not for breaks within a session.

The Court went on to interpret whether the vacancies happened during “the Recess”, an additional requirement for valid recess appointments.  The Court found that the vacancies did not “happen” during an intersession recess, but happened before that time, and that a President could not simply wait for a recess to fill pre-existing vacancies.  The Court likened “happen” to “arise” rather than “exist”.

The Court determined that the appointment of three members of the NLRB on January 4, 2012, were not made in an intersession recess of Congress, but after a new session of Congress had commenced on January 3, 2012.  As such, they were invalid from their inception, and the NLRB lacked a quorum to conduct business when the decision in the underlying case was made on February 8, 2012.  The NLRB decision on that date was vacated.

What does this mean for pending cases, orders and rules?  There are current NLRB cases and pending appellate cases around the country concerning orders issued by the NLRB on and after January 4, 2012.  After the Noel Canning case, enforceability is clearly in doubt.  

One California-based hospital company Prime Healthcare Services, which owns 21 hospitals in four states, made public that it had informed one of its employee unions, SEIU-United Healthcare Workers West, that it would not follow an NLRB ruling mandating the collection of union dues after expiration of a collective bargaining agreement, or a ruling compelling employers to provide unions with certain materials during internal investigations, stating that it would violate the law to do so.  (Reuters, Feb. 1, 2013).

On March 1, 2013, in an action entitled  Laboratory Corporation of America Holdings v. NLRB, (Case 1:13-cv-00276-RBW, U.S. Dist. Ct. for the Dist. of Columbia), an employer filed a complaint for injunctive and other relief against the NLRB to prevent the NLRB from ordering an election or certifying the results of an election.  The issue arose when the National Union of Hospital and Health Care Employees, AFSCME, AFL-CIO, filed a representation petition with the NLRB on January 23, 2013.

In oral argument before the Third Circuit Court of Appeals on March 19, 2013, attorneys in NLRB v. New Vista Nursing (Nos. 11-3440, 12-1027, 12-1936) were asked whether the Court could duck the recess appointments issue.  New Vista involves an employer’s action to prohibit enforcement of an NLRB order.  Following the Noel Canning decision, on February 28, 2013, the U.S. Department of Justice filed a letter brief with the Third Circuit, addressing the decision in Noel Canning, and asserting that New Vista had forfeited its challenges based on that decision, having failed to raise the recess appointment issue, and asserting that the Noel Canning decision was without merit.   In the Fourth Circuit, Nestle Dreyer’s Ice Cream Company v. NLRB is being scheduled for oral argument, and will address similar issues concerning the enforceability of NLRB orders.  

It appears likely that other employees and unions subject to unfavorable NLRB decisions will raise challenges to orders, appeal orders and decisions, and move to stay pending appeals and enforcement actions until a final resolution of the issue of the authority of the NLRB.

The NLRB rulemaking process, resulting in the confirmation of final rules during a period without a quorum of NLRB members, will also likely be held in abeyance, pending determination of the recess appointment issue by the United States Supreme Court.  Consequently, the enforcement of contested posting regulations, the subject of a pending appeal, will not occur in the near future.

How has the NLRB responded?  

On March 12, 2013, the NLRB determined that it would not seek an en banc rehearing before the U.S. Court of Appeals for the D.C. Circuit.  The NLRB, in consultation of the Department of Justice, indicated that it intended to file a petition for writ of certiorari with the United States Supreme Court for review of the decision.  The petition is due on April 25, 2013.   If there are decisions resulting in a split of circuit opinions, it is more likely that the United States Supreme Court will review the case.  As noted above, the NLRB filed a letter brief in NLRB v. New Vista Nursing, and it is likely that such briefs will be filed in pending and new actions concerning NLRB orders and rules for the operative “non-quorum” time period.

However, until that time, the NLRB has been determined to have no ability to act and issue orders without at least a quorum of three validly appointed members.  Pending cases may not be resolved, and orders of the Board since January 4, 2012, may be subject to challenge.

How has the Executive Branch responded?  

On February 13, 2013, President Obama formally nominated Sharon Block and Richard Griffin, the two recess appointees, to the NLRB, and requested Senate confirmation of each.  No vote has been taken as of the publication of this article.

In conclusion, watch for appellate decisions and the Senate confirmation process in the near future, and for action by the United States Supreme Court in the next term.  If the Senate does confirm enough nominees for a quorum, watch to determine whether the NLRB acts to confirm prior orders on rules, including postings, and on prior and pending cases.