Another setback for the NLRB

The U.S. Supreme Court recently slapped President Obama's hand, so to speak. In NLRB v. Noel Canning, the court held that Obama's three "recess appointments" to serve as members on the National Labor Relations Board (NLRB) in 2012 were unconstitutional, calling into question the validity of hundreds of cases decided between January 2012 and July 2013.

The true impact of the Noel Canning decision is yet to be seen, but it will definitely affect some companies that have cases pending on appeal.

The NLRB is composed of five members and primarily acts as a quasi-judicial body deciding cases alleging violations of the National Labor Relations Act, or NLRA. The board members are appointed by the president to serve five year terms. Usually appointments to the NLRB require Senate approval. However, the Constitution's Recess Appointments Clause permits the president to fill vacancies that may happen during a Senate recess.

On January 3 and 6, 2012, the Senate held pro forma sessions, brief sessions in which no business is conducted. Between those sessions, on January 4, 2012, President Obama appointed three people to the NLRB without Senate approval, invoking the Recess Appointment Clause.

About a month later, the NLRB found that Noel Canning, a soft drink distribution company, engaged in an unfair labor practice when it refused to enter into a collective-bargaining agreement with a labor union. Noel Canning appealed, seeking to set aside the decision because Obama's members were invalidly appointed since the Senate did not approve the nominations and a three-day adjournment is not a long enough period of time to trigger the Recess Appointments Clause. Thus, Noel Canning argued that without valid appointments, the NLRB was powerless to act.

The case was appealed to the U.S. Supreme Court. The court confirmed the president's executive authority under the Recess Appointments Clause to make appointments during both inter-session and intra-session recesses for vacancies that first come into existence during a recess and vacancies that arise prior to a recess but continue to exist during the recess. However, the court ultimately concluded that President Obama's appointment of the three board members was unconstitutional because recess appointments are only permissible if made during a break of 10 or more days. A three-day break is too short.

Obama's three appointees served on the board from January 2012 to July 2013, presiding over hundreds of cases. The question now is: what happens to the validity of those decisions? The board decided over 500 unpublished opinions and over 300 published opinions. Of those, over 100 were appealed to the courts. It is likely that nothing will happen with the decisions that were not appealed. However, the board will have to re-decide all the cases pending on appeal and has already started filing non-oppositions to requests for remand. It is possible that the board will simply affirm all of its prior decisions, but the make-up of the board has changed and it is more likely to take a fresh look at each case. This will undoubtedly take some time and will increase the board's workload, which may significantly delay other pending cases. The board has not yet issued a statement regarding how it plans to proceed in light of Noel Canning.

Another issue that will need to be addressed is the validity of the ten regional directors appointed by the illegal Board. It is possible, and probably likely, that the new board will ratify those appointments.

This decision comes as another setback to the NLRB, which chose to abandon its notice posting requirement earlier this year after several appellate courts determined the posting requirement was invalid, and the failure of its previous "ambush election" rules.

If you have any questions about the impact of this decision on your company, please seek legal advice right away.

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Randall Schmitz is a trial attorney at Gjording Fouser PLLC and his practice has a special emphasis on labor law and construction litigation. You can learn more about the firm and Randy's practice by visiting www.gfidaholaw.com.

Published: Fri, Sep 05, 2014