By D&K’s Labor & Employment Team
In Noel Canning v. NLRB, Dec. No. 12-1115 (D.C. Cir., 01/25/2013), the United States Court of Appeals for the District of Columbia ruled President Obama’s 2012 appointments to the National Labor Relations Board (“Board”) were made in violation of the Recess Appointments Clause of the United States Constitution. The invalid appointments related to three members of the five member Board. With three out of five members of the Board having been unlawfully appointed, the Board lacked a quorum and could not exercise its authority under the National Labor Relations Act. As a result, the Court determined that the decision of the Board under review in the case was void and of no effect.
Background
Noel Canning was accused of having failed to implement certain items that the union asserted were agreements reached during negotiations. The Board found that Tentative Agreements were reached and enforced them. The DC Circuit, on review, noted that the Board’s decision would not normally be reversed if supported by “substantial evidence” in the record. It determined that the Board’s decision was supported by substantial evidence, and therefore could not be reversed based on typical standards of judicial review. Noel Canning, however, had also asserted that the Board lacked jurisdiction to act, because three of its five members had been unlawfully appointed to the Board under the guise of the President’s recess appointment authority.
The Board is authorized by law to enforce the provisions of the National Labor Relations Act (NLRA). The NLRA provides that the Board shall consist of five members and that a quorum of the Board is necessary in order to exercise its authority. In early January 2012 the Board was comprised of three members and one of those member’s term expired January 3, 2012. President Obama sought to fill the Board to its full five member compliment shortly thereafter by making three appointments pursuant to his recess appointment power. A recess appointment is authorized when the advice and consent of the Senate is not available due to the Senate being in its Recess. The Court ruled that the appointments were not made during the Recess and those three members were not properly part of the Board in February 2012 when it issued its decision in Noel Canning. The Court also determined that the vacancies being filled did not “happen” during the Senate’s Recess and were therefore not subject to Recess appointment.
The Court’s Analysis
Article II, § 2, cl. 2 of the U.S. Constitution grants to the President authority to nominate, and with the advice and consent of the Senate, to appoint, officers of the United States. NLRB Board members are officers of the U.S. The Constitution further provides that, in the event a vacancy “may happen” during the Recess of the Senate, the President may fill those vacancies through the period of the following term of the Senate. U.S. Const. Art. II, §2, cl. 3.
Noel Canning asserted, along with a group of Republican Senators acting as amicus curiae (“friends of the Court”) that early January 2012 was not a time period during which the Senate was in “the Recess” between sessions as contemplated by the Constitution’s Recess Appointment Clause. As a result, they argued, the appointments were invalid without confirmation by the Senate. The Board and the union argued that the term “Recess” in that clause refers only to a period during which the Senate is not actively in session. The Court, in siding with the company, noted that the Board’s proposed interpretation would allow for Recess appointment during any break in Senate activity – even adjournment for lunch, or for the weekend. Such an interpretation, the Court determined, is untenable, and ignores the Recess Appointment Clause’s purpose which is to serve as a secondary process proper when the Senate is not available to provide its advice and consent. Rather, the Court reasoned, the Constitution clearly refers to the Recess between distinct sessions of the Senate (inter-session Recess), not short recesses during a session of the Senate (intra-session recesses).
In addition, the Court ruled that none of the three vacancies filled by recess appointment happened during the Recess. In so finding, the Court rejected the Board’s argument that this wording simply required that there be a vacancy at the time of a recess. Instead, the Court reasoned that the wording requires that the vacancy come into existence during the Recess between Senate sessions.
What Does This Mean?
The practical significance of this decision is a complex issue. Currently, there are three members of the Board. Two of those members were recess appointments and, according to this decision, are not lawfully serving as Board members. Accordingly, the Board is presently without a quorum and has been acting in such a fashion since January 2012.
In New Process Steel, L.P. v. NLRB, 130 S. Ct. 2635 (2010), the U.S. Supreme Court rules that the Board could not act without a quorum. While the Noel Canning decision only expressly invalidated the decision of the Board that was before it on appeal, the implication is that any decision issued by the Board during the current period of being without a quorum is invalid. If this implication proves accurate, many decisions unfriendly to management issued over the past year would no longer be valid.
For example, in Costco Wholesale Corporation, 358 NLRB 106 (09/07/2012) the Board found a violation of the law in the company’s social media policy, which prohibited employee’s from posting statements negative towards the company or damaging to other employee’s. This and other decisions of a similar fashion are arguably invalid. Likewise, the Board’s regulatory activity over the past year is of questionable validity. One of those rules speeds up the representation election process, thereby limiting the employer’s opportunity to campaign and educate employees about union membership prior to an election.
The Board’s ability to function moving forward is also in question. The Board, without the two recess appointees, presently lacks a quorum and therefore lacks authority to act in any fashion. In fact, the five member Board without the members appointed via recess appointment, is down to a single member.
Politics have clearly played a significant role in the present condition of the Board. President Obama’s NLRB appointees have not been confirmed. Although the Democrats control the Senate, they do so with fewer than the 60 votes needed to block a filibuster. Republicans are therefore still able to block many Presidential appointments. Many see the National Labor Relations Board as a vehicle for the President to promote his position on labor issues that could not be instituted given the inability to get legislative changes through a divided Congress. The Court’s action effectively renders the Board presently unable to conduct business. As such, the Board’s actions, often aggressive and arguably expansive in their application of NLRA rights, are of questionable validity.
As a practical matter, this battle wages on. A similar case is pending before the 7th Circuit Court of Appeals (our jurisdiction), as well as in several other federal courts of appeal. Likely, this matter is headed to the U.S. Supreme Court. In the meantime, we will watch the NLRB closely to see how it reacts to this ruling. Thus far, it has simply stated that it views this as pertaining to one case, and that it will continue its business accordingly. Employers are well-advised to continue to take measures to comply with decisions of the Board concerning hot topics, such as social media usage by employees, until such time as a resolution to the authority of the Board is reached. Employers facing an organizing campaign and potentially a representation election ought to be communicating with labor counsel to determine their options for dealing with orders of the Board.
If you have any questions about this or any other labor law or employment law matter, please contact your Davis & Kuelthau attorney or the Labor & Employment Chair, James M. Kalny, at 920.431.2223 / jkalny@dkattorneys.com.