United States: Noel Canning v NLRB: D.C. Circuit Holds NLRB Recess Appointments Unconstitutional

Last Updated: February 6 2013
Article by Zachary D. Fasman and Todd C. Duffield

On January 25, 2013, the District of Columbia Circuit ruled that President Obama's appointment of three individuals to the NLRB a year earlier exceeded his powers under the Constitution. The case interprets the Recess appointments clause literally, and very narrowly, and concludes that the agency lacks a quorum and is unable to conduct business. Indeed, the decision's interpretation of the Recess appointments clause is narrow enough to call into question most if not all prior recess appointments, and could invalidate not merely decisions involving the most recent recess appointees but prior rulings issued by the NLRB when other recess appointees formed the Board's three person quorum. The decision surely will be appealed to the Supreme Court by the Administration, but unless overturned, is of enormous significance to the practice of labor law.

Background

President Obama appointed three individuals to the NLRB - Sharon Block, Richard Griffin, and Terence Flynn - on January 4, 2012, claiming the power to make such appointments without the "advice and consent" of the Senate under the Constitution's Recess appointments clause, Article II, Section 2, which reads:

The President shall have the Power 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 these appointments were made, the Senate had just begun its new legislative session but was holding pro forma sessions, whereby one Senator would convene the Senate every three days but the body would conduct no business.1 The effect of these pro forma sessions, a practice that originated towards the end of the second term of President George W. Bush, was to prevent the President from making recess appointments by ensuring that the Senate was never in recess. President Bush chose not to challenge the practice and did not make recess appointments at the end of his second term, resulting in the NLRB shrinking to two members. The Supreme Court, in New Process Steel, L.P. v NLRB, 130 S. Ct. 2635 (2010), held that the NLRB must have three members to constitute a quorum, and has no power to act with only two members. President Obama, seeking to avoid that result, made the recess appointments after the new Congress convened on January 3, 2012, claiming that the Senate really was not in session when it convened on a pro forma basis conducting no business.

The Ruling

The D.C. Circuit read the Recess appointments clause literally, and based its ruling upon historical practice elucidating what the Framers intended. It came to two conclusions based upon the language of the clause interpreted in light of understandings at the time the Constitution was drafted and ratified.

1. The Circuit concluded that the term "the Recess of the Senate" was intended to mean the period between legislative sessions only, and not whenever the Senate was in session but temporarily in recess. The Circuit noted that when the Constitution was drafted, the Senate's legislative sessions were relatively brief and the recess between sessions far longer than today. Given the means of transportation in colonial days, Senators could not easily return to Washington to act on a Presidential appointment. The recess appointment power accordingly was designed, according to the Circuit, to address appointments only during the period between legislative sessions - "the Recess" - as opposed to periods when the Senate was in session but in a temporary hiatus. Read in this fashion, recess appointments are permissible only between sessions of Congress - referred to as an intersession recess - as opposed to when the Senate is in session but on a temporary break - referred to as an intrasession recess. Today, because Congress remains in session virtually all year, an intersession recess tends to be very brief, usually lasting only a week or two. Virtually all prior recess appointments have been intrasession appointments, which the Circuit would find unconstitutional.

2. Building on that reasoning, the Circuit held that the phrase "vacancies that may happen during the Recess of the Senate" means exactly what it says, and allows the President to make appointments without the advice and consent of the Senate only where a vacancy "happens" during an intersession recess. Because modern intersession recesses are so short, very few vacancies arise during this period. Virtually all prior recess appointments to the NLRB - and to all other administrative agencies - filled vacancies that originally arose when the Senate was in session. According to the D.C. Circuit, all such appointments are constitutionally infirm.2

Interestingly, this literal and historical interpretation of the Recess appointments clause was not the focus of the arguments to the Circuit, as Noel Canning and its supporters principally argued that recess appointments were valid only where the Senate was in recess for more than three days, confirming a modern practice, and that President Obama had no authority to decide when the Senate was in recess or not. On the latter point, the Circuit held that "[a]n interpretation of 'the Recess' that permits the President to decide when the Senate is in recess would demolish the checks and balances inherent in the advice-and-consent requirement, giving the President free rein to appoint his desired nominees at any time he pleases.... That cannot be the law." Noel Canning's brief notes that the literal and historical interpretation of the Recess appointments clause was accepted through the presidency of Andrew Johnson, after which various more executive-friendly interpretations came to be accepted. The D.C. Circuit's decision refuses to follow and conflicts with a contrary ruling by the Eleventh Circuit, Evans v Stephens, 387 F. 3d 1220 (11th Cir. 2004), cert. denied, 544 U.S. 942 (2005). This conflict between the circuits, as well as the vital significance of the issue, argues for immediate Supreme Court review.

The Significance of the Ruling

The decision has broad impact for several reasons.

  • First, it directly calls into question every NLRB decision since January 4, 2012, many of which are controversial. Only one member of the NLRB - Chairman Mark Pearce - has been confirmed by the Senate, the other two Board members (Block and Griffin) have been serving invalidated recess appointments.3 Every decision made by the NLRB since January 2012 therefore was made by an agency with only one properly appointed member, and is invalid under New Process Steel. Any decision that has been appealed thus is subject to invalidation under the Noel Canning rationale.
  • Second, any decision issued by the NLRB until it has a proper quorum will be invalid ab initio. A party who has a case currently pending before the NLRB thus should raise the quorum issue before the NLRB issues a decision. Section 10(e) of the NLRA, 29 U.S.C. § 160(e), provides that "[n]o exception that has not been urged before the Board ... shall be considered" by a reviewing court, with several exceptions. The D.C. Circuit found that the quorum issue - which had not been urged by Noel Canning before the Board - fell within the "extraordinary circumstances" exception because it raised a question as to the NLRB's jurisdiction. Another circuit court may find differently.
  • Third, by statute, every NLRB decision may be appealed to the D.C. Circuit, in addition to other appellate courts. The D.C. Circuit decision thus holds utmost significance for the NLRB, as all agency decisions may end up in that court, resulting in the invalidation of all NLRB rulings in the absence of a quorum. It is highly likely that all parties adversely affected by an NLRB ruling will ensure that the case is appealed to the D.C. Circuit to take advantage of the Noel Canning precedent.
  • Fourth, Noel Canning calls into question not only the Board's 2012 decisions, but prior decisions as well in circumstances where the agency lacked a three person quorum due to an improper recess appointee. Consider, for example, the highly criticized NLRB ruling in D.R. Horton, 357 NLRB No. 184 (2012), which issued on January 3, 2012, prior to President Obama's three recess appointments the next day. Chairman Pearce and Member Becker signed the controversial ruling, which concluded that class action waivers in arbitration programs that were a mandatory term and condition of employment violated the NLRA. While the agency at the time had three members (former Member Brian Hayes did not participate in the Horton ruling), Member Becker was serving an intrasession recess appointment which did not conform to the Noel Canning requirements. Horton is on appeal to the Fifth Circuit, and, if this issue has been properly preserved, it is entirely possible that Horton, as well as all other decisions where a recess appointee such as Member Becker formed the Board's three member quorum, will be found invalid.
  • Fifth, although the General Counsel and Regional Offices will continue to process representation petitions, investigate unfair labor practice charges, issue complaints and conduct hearings, the D.C. Circuit's decision in Noel Canning significantly limits the NLRB's ability to initiate litigation in furtherance of these administrative functions. For example, the following actions by the NLRB require the authority of a quorum: prosecution of injunction proceedings under Section 10(j), 10(e) and 10(f); contempt proceedings pertaining to the enforcement of or compliance with an order or a subpoena; and appeals to the Supreme Court. The NLRB in the past delegated its litigation authority to the General Counsel or Regional Offices when the NLRB anticipated it would lose its quorum, as it did prior to the controversy adjudicated in New Process Steel. It does not appear, however, that the NLRB did so prior to Chairman Wilma Liebman's term expiring on August 27, 2011 - the last time the NLRB had a proper quorum under the Noel Canning precedent.

Chairman Mark Pearce issued a statement last week that, despite the decision in Noel Canning, the NLRB would continue to operate "and will continue to perform our statutory duties and issue decisions." To the extent any of those duties requires a proper quorum, they are certain to be challenged from those adversely affected under the precedent established in New Process Steel and Noel Canning.

Footnotes

1. The Democratic Senate was forced to continue its sessions because the Republican House of Representatives would not agree to an adjournment. Article I, Section 5 of the Constitution prevents either chamber from adjourning for more than three days without the consent of the other chamber.

2 Judge Griffith of the D.C. Circuit concurred with the majority's opinion, but stated that he would not have reached the issue of when the vacancy occurs given the court's dispositive ruling on the prior point.

3 Terence Flynn resigned his seat in late May, 2012.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

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