High Court Challenge Targets Presidential Appointment Authority

Daily Labor Report® is the objective resource the nation’s foremost labor and employment professionals read and rely on, providing reliable, analytical coverage of top labor and employment...

By Lawrence E. Dubé

Nov. 4 — The White House’s longstanding practice for filling senior leadership positions in federal agencies could be challenged by the U.S. Supreme Court as it weighs arguments in a dispute between a Mesa, Ariz., ambulance company and the National Labor Relations Board ( NLRB v. SW Gen., Inc. , U.S., No. 15-1251, oral argument 11/7/16 ).

For nearly two decades, presidents have designated federal employees as “acting” officials while simultaneously nominating them for Senate confirmation in the same jobs.

But the U.S. Court of Appeals for the District of Columbia Circuit threw a wrench in the works when it held that Lafe E. Solomon, the NLRB’s former acting general counsel, could not exercise the authority of his office once President Barack Obama nominated him for a four-year term in the position.

SW General Inc., which does business as Southwest Ambulance, argued that the Federal Vacancies Reform Act precluded Solomon from being both the president’s nominee and the acting general counsel. The high court will hear arguments Nov. 7 on the government’s claim that the D.C. Circuit misread the statute.

Resolution of the FVRA issue could affect the entire government, although the NLRB may be less vulnerable to a loss before the Supreme Court than other agencies.

Frederick L. Schwartz, a management labor lawyer at Barnes & Thornburg in Chicago, told Bloomberg BNA Nov. 1 that NLRB v. SW General is a complicated dispute about interpreting a federal law, and the court could decide the case for or against the government. However, Schwartz predicted that even if the government loses the case, the outcome will have little practical impact on the NLRB.

Schwartz would not speculate on the outcome of the case, but he noted that a 4-4 deadlock from a Supreme Court with only eight justices would leave the D.C. Circuit ruling in effect.

Loss in Court Would Limit White House Options

A ruling that leaves the D.C. Circuit court decision in place would limit the president’s options in dealing with a vacant general counsel position.

The president could designate one individual as acting general counsel and then nominate a different person for a full Senate-confirmed term in the job. The White House could also designate one individual as acting general counsel and then replace that person with another acting general counsel upon sending a presidential nomination to the Senate.

Neither alternative would provide the flexibility that presidents believed they had under the Federal Vacancies Reform Act until 2015, when the D.C. Circuit seemingly changed the rules in SW General.

However, the problem would be manageable at the NLRB if the White House knew in advance what limits apply to its choices under the Federal Vacancies Reform Act and what steps are required to avoid legal challenges to agency actions.

NLRB Lawyer Became Acting General Counsel

Solomon was a career attorney at the NLRB in June 2010 when then-General Counsel Ronald Meisburg left the agency to return to the practice of law.

President Barack Obama issued a memorandum on June 18, 2010, directing Solomon “to perform the duties of the office of General Counsel” and the lawyer continued to serve as acting general counsel until November 2013. Obama nominated Solomon on Jan. 5, 2011, to serve a four-year term as general counsel, but the Senate never acted on the nomination. The NLRB general counsel’s powers include authorizing the issuance of unfair labor practice complaints against employers and unions.

During Solomon’s 26 months as acting general counsel, the agency issued hundreds of complaints based on the statutory power of his office. About a dozen cases challenging Solomon’s authority during his tenure as acting general counsel remain in the courts, including SW General’s case.

Ambulance Company Won Court Challenge

SW General challenged Solomon’s status after he authorized a January 2013 unfair labor practice case against the company.

Acting on the complaint, an administrative law judge found the employer made unlawful changes in employee pay. The board adopted the ALJ decision with no mention of the FVRA (360 N.L.R.B. No. 109, 200 LRRM 1217 (2014)), but a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit vacated the NLRB order (796 F.3d 67, 203 LRRM 3577 (D.C. Cir. 2015)). The full court voted 7-3 not to rehear the case.

The president relied on the FVRA, 5 U.S.C. §3345(a)(3), in naming Solomon as acting general counsel, but the D.C. Circuit said another provision, Section 3345(b)(1), prohibited Solomon from being both the acting general counsel and a presidential nominee for Senate confirmation in the same job.

Finding Solomon couldn’t authorize the January 2013 complaint against SW General, the appeals court refused to enforce the NLRB order against the company. The NLRB petitioned for Supreme Court review, and the court agreed to hear the case.

If the high court backs the NLRB position, SW General will be required to comply with NLRB’s back pay order. If the government loses, the board will be unable to enforce the back pay remedy.

Government Takes Issue to Supreme Court

In its Supreme Court brief, the government said the D.C. Circuit erred when it applied Section 3345(b)(1) to Solomon’s designation as acting general counsel.

The subsection applies only to a limited number of agency “first assistants” who take over positions under another FVRA provision, not to federal employees like Solomon who are designated under Section 3345(a)(3), the government said. A “first assistant” is an agency employee designated to fill in during absences of of an agency official. In SW General, the parties agreed Solomon had never been a first assistant at the NLRB.

Democratic and Republican administrations have relied on the same interpretation of the FVRA in making more than 100 designations of agency officials since the statute was passed in 1998, the government told the high court.

Ruling Wasn’t Expected to Shake NLRB

While the government brief highlights its concern about the impact of an adverse ruling on federal agencies, NLRB’s situation may not be nearly as dire as it could have been.

The D.C. Circuit itself wrote in SW General that it did not expect its ruling to create a flood of litigation for the NLRB.

The court wrote that it considered the ambulance company’s argument about the FVRA only because the company properly raised the issue as a defense in appealing an ALJ ruling to the board.

The court said that parties failing to challenge Solomon’s authority on a timely basis would not enjoy “the same success” as the ambulance company.

Issue Lacks Traction in Many Cases

In fact, there have been relatively few cases in which Solomon’s post-nomination service as acting general counsel was raised at the board level. The board has rejected challenges to NLRB complaints issued on behalf of Solomon, with board members concluding that Solomon was properly designated as acting general counsel and was not ineligible to serve in the position once he received his presidential nomination.

Most of the dozen or so cases pending in federal appellate courts in which parties have invoked the SW General ruling in support of their challenges to board orders appear likely to fail.

In Marquez Brothers Enterprises, Inc. v. NLRB, 650 Fed. App’x 25, 2016 BL 161436 (D.C. Cir. 2016), the D.C. Circuit issued a judgment that an employer could not challenge Solomon’s service in the court proceeding due to its failure to raise the issue before the board.

Section 10(e) of the NLRA bars an appellate court from considering an objection that was not raised before the board, and the D.C. Circuit said the employer could not excuse its tardiness by arguing that it was entitled to have the court consider a challenge to the NLRB’s jurisdiction. Writing that the company was attacking “the service of a single officer” the court said the “typical NLRA exhaustion doctrine applies.”

The NLRB has already cited the D.C. Circuit’s Marquez ruling in other cases, including Ohio Edison Co. v. NLRB, No. 15-1783, pending before the Sixth Circuit.

General Counsel Has Used Ratification Option

General Counsel RIchard F. Griffin also began more than a year ago to issue notices of “ratification” in cases based on complaints that Solomon authorized.

The FVRA generally provides that agencies may not ratify actions taken by officials improperly designated under the act, but the statute, 5 U.S.C. §3348(e), provides that the ban on ratifications does not apply to several categories of federal officials, including agency inspectors general, and the general counsels of the NLRB and Federal Labor Relations Authority.

Griffin has reviewed and ratified actions by Solomon in many cases, writing in a typical case that his review indicated that the issuance of a complaint, and continued prosecution of a case, were appropriate.

Griffin wrote that his action did not reflect an agreement with SW General, but was “a practical response aimed at facilitating the timely resolution of the charges that I have found to be meritorious while the issues raised by SW General are being resolved.”

The board has relied on the general counsel’s ratifications as additional justification for rejecting the FVRA arguments and there have not been any court rulings undermining Griffin’s position.

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

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.