Dealing the agency its second major setback on the legitimacy of
its quorum, the Supreme Court has invalidated a trio of recess
appointments made to the NLRB back in January of 2012. Moments ago,
the Court handed down its landmark decision in NLRB v. Noel
Canning, upholding a challenge to the agency's authority
to issue hundreds of decisions over the 18 months that followed the
invalid appointments.
In a case of first impression, the Court lent strict
interpretation to Article II, Section 2 of the U.S. Constitution,
which empowers the President to "fill up all Vacancies that
may happen during the Recess of the Senate." This decision has
broad ramifications for the employers involved in the invalidated
cases (all of which must now be re-decided), and on the Board's
ability to maintain focus on a pro-labor agenda over the course of
this year. It also promises to reshape the delicate balance between
executive and legislative powers for decades to come.
Background
Back in June of 2010, the Supreme Court first rebuked the NLRB
for want of a legal quorum with its decision in New Process Steel,
invalidating the Board's authority to act with only two members
and temporarily overturning hundreds of cases in the process. That
upheaval proved to be short-lived, however, as a trio of new Board
members took their turns on "rump panels" with their
incumbent counterparts to effectively rubber stamp those
decisions.
By the end of 2011, however, the NLRB was once again confronting a
possible return to the days of two-member status. Member Schaumber
had long since departed, and Chairman Leibman's term expired in
August, bringing the Board to only three members for the duration
of that year. Member Becker's recess appointment was slated to
end on January 3rd of 2012, leaving only Democratic Chairman Mark
Pearce and Republican member Brian Hayes.
With the NLRB again at risk of losing a proper quorum (and
therefore its legal authority to act by virtue of New Process
Steel), the Administration moved swiftly to fill the vacancies with
a trio of new recess appointees on January 4, 2012. Acting without
the Senate's "advice and consent," President Obama
appointed pending Democratic nominees Sharon Block and Richard
Griffin, along with Republican nominee Terence Flynn, to fill the
vacancies and preserve the agency's ability to continue
rendering decisions thereafter. The recess appointees participated
in hundreds of cases through July of 2013, when they were replaced
by set of four new confirmed nominees who joined incumbent Chairman
Pearce.
But as fate would have it, their appointments were made at a time
when the Senate was technically not in recess, but instead remained
in a pro forma session that had commenced on December 17 and
continued over the holidays. The Administration maintained that for
all intents and purposes, the Senate was not in session at all
because it was not actually meeting and conducting business. In the
face of concerns that the Administration was without authority to
confer these appointments while the Senate remained in session, the
agency declared that it too remained open for business and
proceeded to issue a series of new decisions, one of which was
adverse to a family-owned bottling company called Noel Canning.
How The Case Arose
Over the course of 2011, Noel Canning was in the process of
contesting unfair labor practice charges alleging that it had
refused to execute a collective bargaining agreement to which it
had orally agreed. On the heels of an adverse determination by the
Administrative Law Judge presiding over the case, the company filed
an appeal in an effort to secure relief from the NLRB. In February,
2012, the agency upheld the ALJ's findings.
Following standard procedure, a trio of Board members participated
in that decision, two of whom had just been appointed over recess.
Shortly thereafter, Noel Canning petitioned for review with the
U.S. Court of Appeals for the D.C. Circuit on the basis that those
appointments failed to pass constitutional muster, and that it was
not up to the Executive branch to decide when the Senate was in
recess.
In January of 2013, the D.C. Circuit Court held that the
Board's decision would have been enforceable, but for the fact
that the underlying recess appointments were unconstitutional.
Because the Board's decision was not approved by a quorum of
three properly appointed members, it was struck down as invalid.
Writing for the panel, Judge Sentelle applied a strict reading of
Article II, Section 2 to conclude that the "recess"
requirement refers only to a recess between formal Senate sessions,
and that the Constitution did not confer an executive right to make
"intrasession" appointments. Because the appointments
were made after the start of the 112th Congress, the court ruled
(in a finding largely adopted by the Circuit Court of Appeals for
the 3rd Circuit) that they were made intrasession and therefore
invalid.
Two of the judges went on to note that the underlying vacancies
did not come into being during an intersession recess of the
Senate, and found the ensuing appointments to be invalid for that
reason as well. The NLRB petitioned directly for Supreme Court
review of the Circuit Court's rationale on both grounds. Noel
Canning did not take issue with the petition, but did ask the Court
to consider a third issue revolving around the President's
authority to exercise recess appointment powers while Senate is
convening every three days in pro forma session, as was the case in
early 2012. The high court agreed to take the case, and to consider
all three issues.
The Court's Ruling And Its Impact On The NLRB
In a unanimous decision with an extensive concurring opinion
from Justices Scalia, Roberts, Thomas and Alito, the Court ruled
that the Administration exceeded its authority by invoking Article
II to fill a trio of vacant NLRB positions in early 2012. Reviewing
a litany of recess appointments stemming back decades, the majority
concluded the Congress ultimately decides when it stands in recess,
and that a recess of less than ten days is presumptively too short
to confer appointment power upon the President. Consequently, there
was no recess at the time the President acted, and his appointments
were therefore rendered invalid.
While the ruling leaves the President's substantial recess
appointment powers intact, it emphasizes that even the Executive in
Chief must respect Congress's pro forma recess authority, and
that if either house of Congress is in control of the opposing
party, then those powers can be effectively blocked. Because the
President failed to respect that authority in this particular case,
the Court concluded that it had no choice but to uphold the D.C.
Circuit's decision, invalidating the three recess appointments
in the process.
Reading from his concurrence, Justice Scalia criticized the
majority for relying upon the vague nature of historical precedent,
suggesting instead that a strict reading of the Constitution would
have confined recess appointments to those made between formal
sessions. Scalia went on to accuse the majority of "judicial
adventurism" by constructing presumptive standards as to the
proper length of a pro forma recess, and suggesting that the
anachronistic nature of recess appointments should preclude the
judiciary from making them broadly available.
What This Means For Employers
At a minimum, this decision represents good news for
approximately 600 employers who sustained adverse determinations
from the highest level of the NLRB between January of 2012 and July
of the following year. Every one of these cases (many of which were
controversial themselves) was decided by a Board that lacked
authority to act, and is therefore null and void ab initio (i.e.,
from the beginning). While many will presumably meet the same fate
a second time around, that prospect is by no means a certainty,
given the potential impact of two new Republican members, and four
new members overall.
Unlike the Board's last encounter with a Supreme Court
reproach to its quorum, this time the agency would be left with but
a single member (Chairman Pearce) who participated in the decisions
at issue. That would force the Board to establish new three-member
panels in every case, consisting of a majority of members who have
yet to consider the underlying facts. More importantly, there's
nothing to preclude the establishment of some panels consisting of
two Republican members, in which case the fortunes of the parties
could be inexorably altered. Consequently, the rubber stamp may not
be utilized to the same degree this time around.
By the same token, the breadth of this decision now calls into
question a host of additional cases decided between August 27, 2011
and January 3, 2012, to the extent that they too were
quorum-deficient due to the participation of an improper recess
appointee. Among them are dozens of three-member cases involving
former member Becker, who himself was serving recess appointment.
Becker participated in several Board developments of note,
including the so-called "quickie election" rule that has
since been republished, and the controversial D.R. Horton decision
that now forms the basis of current Board doctrine invalidating
mandatory arbitration provisions containing class waivers.
While the vast majority of American businesses would not be
directly impacted under either scenario, these developments could
influence the course of labor relations on a much broader scale in
the months to come. Thus far, the Board has made no secret of its
intent to implement an activist pro-labor agenda, and Chairman
Pearce has gone on record with his support of a quickie-election
rule that could conceivably be reinstated with little
fanfare.
If the Board were forced to confront the daunting task of
reevaluating a myriad of improperly decided cases issued over the
past two years, however, it could get bogged down in exercises of
retrospection that may forestall that agenda for quite some time.
Consequently, the implications of Noel Canning could ultimately
prove to be far-reaching, and we encourage employers to closely
monitor developments at the NLRB as it adapts and responds to the
high Court's decision.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.