Justices Reject NLRB Recess Appointments; Hundreds of Rulings May Be Reconsidered

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By Lawrence E. Dubé  

June 26 — President Obama lacked the authority to make recess appointments to the National Labor Relations Board in January 2012 because he acted when the Senate was holding pro forma sessions and wasn't in a “recess,” the U.S. Supreme Court ruled June 26.

While the court clarified some ground rules for future recess appointments, labor lawyers quickly observed that the impact of the decision on the NLRB and its stakeholders—including employers, unions and employees—remains to be seen. The agency may have to reconsider hundreds of decisions, including some of the most important and controversial rulings the board made in 2012 and 2013.

In a unanimous judgment, the high court affirmed a ruling of the U.S. Court of Appeals for the District of Columbia Circuit that an NLRB order against a Yakima, Wash., bottling firm was invalid. The board lacked a quorum because three of its five members were improperly appointed by Obama, the Supreme Court said, agreeing with the appeals court.

However, the high court divided 5-4 on important questions about the power of Obama and future presidents to make recess appointments to positions that normally require the advice and consent of the Senate.

Writing for the majority, Justice Stephen G. Breyer said the president may make appointments without Senate confirmation during recesses that occur either during or outside of Senate sessions, and is not limited to filling vacancies that come into being during a recess. But the president cannot act during Senate recesses of less than three days, and “presumptively” cannot make a recess appointment during a recess of less than 10 days, the court said.

Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor, and Elena Kagan joined in the majority opinion.

Justice Antonin Scalia, joined by Chief Justice John G. Roberts, and Justices Clarence Thomas and Samuel A. Alito, concurred in the judgment, but wrote separately and disagreed with much of the majority's reasoning.

Scalia agreed the 2012 NLRB appointments were improperly made because the Senate was actually in session, but he also argued that the U.S. Constitution only gives the president the power to act without Senate confirmation during recesses that occur between sessions of the Senate, not during intrasession recesses.

The concurring opinion also agreed with the D.C. Circuit that the recess appointment power only applies to vacancies that arise during a Senate recess, and does not allow the White House to act during a recess on a vacancy that existed before the recess even began.

Reactions Split on Ruling

Miguel A. Estrada of Gibson, Dunn & Crutcher LLP in Washington argued the case for Senate Minority Leader Mitch McConnell (R-Ky.) and other Republican senators. The “Supreme Court reaffirmed the Senate's power to prescribe its own rules, including the right to determine when it is in session, and rejected the President's completely unprecedented assertion of unilateral appointment power,” he told Bloomberg BNA in an e-mail.

But Senate Majority Leader Harry Reid (D-Nev.) issued a statement saying the president acted properly in 2012, arguing the NLRB had “ceased to function” until Obama “did the right thing when he made these appointments.” Reid said the high court's ruling “will have no effect on our ability to continue ensuring that qualified nominees receive an up-or-down vote.”

NLRB Chairman Mark Gaston Pearce said in a statement the board is “analyzing the impact that the Court's decision has on Board cases in which the January 2012 recess appointees participated.”

Pearce noted that the board now has “a full contingent of five Senate-confirmed members who are prepared to fulfill our responsibility to enforce the National Labor Relations Act.” The NLRB chairman said the board intends to resolve any cases affected by the Noel Canning decision “as expeditiously as possible.”

Vacancies Had Left Board Without Quorum

Obama made the appointments to fill vacancies on the board that would have left the NLRB without a quorum to decide cases.

Democrat Craig Becker was given a recess appointment as a board member in 2010 after his nomination by the president failed to move forward in the Senate on a cloture vote. Becker's recess appointment was set to expire Jan. 3, 2012, at the formal end of the first session of the 112th Congress.

The Supreme Court held in New Process Steel LP v. NLRB, 130 S. Ct. 2635, 188 LRRM 2833 (2010), that the authority of the five-seat board cannot be exercised by a panel with fewer than three members.

There were already two vacant seats on the board, so Becker's departure on Jan. 3 left the board with only two members who lacked authority to decide cases under New Process Steel.

On Jan. 4, 2012, Obama announced recess appointments of Democrats Sharon Block and Richard F. Griffin and Republican Terence F. Flynn to serve on the board. Obama had nominated Flynn in January 2011, and nominated Block and Griffin on Dec. 15, 2011, but the Senate had not acted on any of the nominations.

The Senate had been holding pro forma sessions every three days for weeks before the president's action, and Republicans contended that the Senate was not in recess when the appointments were made.

Noel Canning filed a petition for D.C. Circuit review of a February 2012 unfair labor practice decision that the company violated Section 8(a)(5) of the NLRA when it refused to sign a collective bargaining agreement containing terms it had negotiated with International Brotherhood of Teamsters Local 760 (358 N.L.R.B. No. 4, 192 LRRM 1503 (2012)).

A three-judge panel of the D.C. Circuit found that the NLRB order against the company would otherwise have been enforceable, but the president's recess appointments were unconstitutional (705 F.3d 490, 194 LRRM 3089 (D.C. Cir. 2013). The board's order against Noel Canning was therefore invalid because it was not approved by a quorum of at least three board members, the court held.

Senate Was in Session When President Acted

Addressing the Senate's situation in January 2012 when Obama made the disputed appointments, Breyer said the court had to determine whether the legislative body's pro forma sessions at three-day intervals were actually part of an extended recess, as the solicitor general argued for the NLRB, or whether they were part of a Senate session during which the president's recess appointment power was unavailable.

“In our view,” the court said, “the pro forma sessions count as sessions, not as periods of recess. We hold that, for purposes of the Recess Appointments Clause, the Senate is in session when it says it is, provided that, under its own rules, it retains the capacity to transact Senate business. The Senate met that standard here.”

The court concluded that the president exceeded his constitutional authority by making recess appointments during a period when the Senate was in session, not in recess.

NLRB Fallout Will Be Significant

Attorneys were still reviewing the decision and its precise impact on the NLRB June 26, but there was no doubt the impact will be significant.

Charles I. Cohen, senior counsel in Morgan Lewis & Bockius's labor and employment practice in Washington, served as a Senate-confirmed member of the NLRB from March 1994 to August 1996.

He told Bloomberg BNA that about 300 published NLRB decisions, as well as approximately 500 unpublished decisions, that were decided by the board between January 2012 and August 2013 depended on the votes of recess appointees to have a quorum.

There are, Cohen noted, more than 100 cases pending in federal appellate courts, where the quorum issue was raised.

Litigants in some of those cases may no longer have an interest in having them considered by the newly constituted five-member NLRB, but many will want to revisit the cases, and the board will allow them to do so, Cohen said.

The NLRB weathered a wave of cases returning to the board after the Supreme Court held in New Process Steel that the agency could not decide cases with fewer than three members on a panel, but Cohen said the situation after the Noel Canning decision is more serious.

Cohen said the “universe” of cases that could return to the board is much larger this time, and the cases have different characteristics. Before New Process, when the board had only Chairman Wilma B. Liebman and Member Peter C. Schaumber, the two members issued decisions only in cases where they could agree on appropriate action, and they effectively tabled other cases in which difficult or novel issues precluded agreement.

However, Cohen observed, the board that decided cases from January 2012 to mid-2013 “was not shy” about addressing important and sometimes controversial cases. Some of the parties who litigated those cases are more likely to be interested in taking their cases back to the board in hopes of obtaining different outcomes, he said.

Heavy Interest in Case Reconsideration Predicted

Scott J. Witlin, a partner in Barnes & Thornburg who heads the labor and employment practice in the firm's Los Angeles office, told Bloomberg BNA that any party who lost a case at the board during the period when the 2012 recess appointees served may want a chance to have a case reconsidered.

Witlin said the NLRB was seen as “heavily partisan” during that period, particularly when the resignation of Republican member Flynn left the board for a time with a 3-1 Democratic majority.

The lawyer observed that while the board issued some significant and controversial decisions in 2012 and 2013, returning the same cases to a board that now has a 3-2 Democratic majority makes “major policy shifts unlikely.” Nevertheless, he said, many parties in NLRB cases may conclude that a future change in board composition, or developments in the courts, will make another effort before the NLRB worthwhile.

Republican Brian E. Hayes was confirmed by the Senate as an NLRB member in June 2010 and served until August 2012. Hayes, who now represents employers as a shareholder at Ogletree, Deakins, Nash, Smoak & Steward P.C. in Washington, told Bloomberg BNA that the NLRB will have to deal with remands of more than 100 cases now pending in federal courts that involve the recess appointments held invalid by the Supreme Court.

But the board will likely have to reconsider many more cases, he predicted. Even if a party that lost an NLRB decision affected by the recess appointment issue did not raise the issue before the board, Hayes said, “the decisions in question were made by a constitutionally invalid entity.”

“I do not believe a respondent must raise or waive a claim based on the constitutional infirmity of the decisional forum in order to preserve the claim,” Hayes said. “In my view, such a claim can be raised at any point.”

To contact the reporter on this story: Lawrence E. Dubé in Washington at ldube@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the opinion is available at http://www.bloomberglaw.com/public/document/NLRB_v_Noel_Canning_No_121281_US_June_26_2014_Court_Opinion.