NLRB Union Election Rule Held Invalid for Lack of Quorum
In Chamber of Commerce v. NLRB, the US District Court for the District of Columbia held that the union election rule issued recently by the National Labor Relations Board is invalid because a quorum of the Board's members was not present for the vote on the rule.
On May 14, 2012, the US District Court for the District of Columbia held that the NLRB's union election rule, which took effect on April 30, 2012, is invalid because a quorum did not exist when the two members of the three-member panel (Board) voted to approve the rule. Member Hayes did not vote on the final rule in December 2011, and did not otherwise participate in the vote. When no vote or acknowledgment of the vote was received from Member Hayes, he was not requested to provide one, which is contrary to Board practice. Furthermore, Member Hayes was not present for the vote merely by his membership on the Board.Close speedread
Key Litigated Issues
In Chamber of Commerce v. NLRB, the key litigated issue was whether the NLRB issued its union election rule in December 2011 by way of a vote in which a quorum of the three-member panel (Board) was present.
On June 22, 2011, the NLRB issued a proposed rule that would change its union election procedures. The Board approved the proposed rule by a three-to-one vote, with Member Hayes dissenting. Several months later, on December 15, 2011, by a two-to-one vote, the Board approved an order to publish the final rule on union election procedures immediately following the Board's approval of the final rule. Member Hayes dissented in this vote, as well.
On December 16, 2011, two Board members voted to approve the final rule. This vote was done electronically, through the Board's Judicial Case Management System (JCMS). However, Member Hayes did not cast a vote, even though he was notified that it would occur. In an e-mail exchange between the Members that day, Member Hayes indicated that he would not include a dissenting statement in the final rule, but would add a statement later. Member Hayes was not asked by phone or e-mail to record a vote in JCMS. Several hours after the vote occurred, the final rule was sent to publication.
The final rule was published in the Federal Register on December 22, 2011 (see Legal Update, NLRB Issues Final Rule Amending its Union Election Process ( www.practicallaw.com/4-517-0194) ). Member Hayes's dissenting statement was published when the rule took effect on April 30, 2012.
The Chamber of Commerce and the Coalition for a Democratic Workforce challenged the rule and filed a motion for summary judgment with the US District Court for the District of Columbia. Among their other claims, the plaintiffs argue that the rule is invalid because the Board adopted it without the required quorum. The NLRB filed a motion for summary judgment, as well.
On May 14, 2012, the US District Court for the District of Columbia granted the plaintiffs' motion for summary judgment and denied the defendant's motion. The court held that the Board lacked authority to adopt the final rule because a quorum of its Members did not participate in the vote.
Under the Labor Management Relations Act (LMRA), three members of the Board constitute a quorum. The Board did not have a quorum when it voted to approve the final rule on December 16, 2011, because Member Hayes did not participate in the voting process. Although Member Hayes did not have to cast a vote to form a quorum, he had to be present for the vote. Member Hayes was notified of the vote, but he took no action, and was only given several hours to make his decision. Furthermore, when no vote or acknowledgment was received from Member Hayes, he was not requested to provide one, which is contrary to Board practice. The court held that Hayes's actions were the equivalent of a failure to attend the vote. Therefore, only two members were present when the final rule was approved.
The court explained that this case would have been closer if:
Member Hayes had:
expressly indicated his intention to abstain from the vote; or
acknowledged his receipt of the notification.
A member of the NLRB contacted Hayes to seek his response to the notification.
A substantial period of time passed following the circulation of the rule to the Members.
The court held that Member Hayes could not be counted toward the quorum merely for being a member of the Board. Under Board precedent, a Board member may not be counted toward a quorum simply because he holds office. Nor did it matter that Member Hayes was notified that the rule was going to be put to a vote, because he was still required to participate in the voting process in some way.
Furthermore, Member Hayes's dissenting opinion to the proposed rule did not satisfy the quorum requirement because no quorum existed when the rule was adopted.
Finally, it is irrelevant that a quorum of the Board was present for the promulgation of the publication order on December 15, 2011, because no rights or legal consequences flow from that order.
The court held the rule is invalid for failure to adhere to the quorum requirement. The NLRB is a creature of statute, and the quorum requirement is an important limit on the agency's power to act.
The court ruled only on the quorum argument, and it took care to note that it was not ruling on the merits of the rule or the other arguments made by the parties. The court stated that the rule could be lawful if issued because of a legitimate vote.
Since the court did not address the plaintiffs’ substantive arguments, the decision permits the Board to establish a quorum of three members and vote for, and implement the rules. Employers should expect a quorum of the Board to vote on and adopt the final rule in the near future and again prepare for the new election rules (see Preparing for Amendments to the NLRB Union Election Process Checklist ( www.practicallaw.com/5-518-7146) ).
However, President Obama appointed three of the current five members of the Board by recess appointments. Several parties have challenged the recess appointments as invalid asserting that the Senate was not truly "in recess" when the appointments were made (see, for example, Noel Canning, a division of Noel Corp., v. NLRB, USCA Case #12-1115 (D.C. Cir. Feb. 24, 2012)). If a court agrees with this argument, then:
The recess appointments would be invalidated.
Board decisions or votes decided by the recess appointees would be invalid under New Process Steel v. NLRB
The Board would be reduced to two members.
In that scenario, the Board would be incapable of constituting a quorum or voting on the rules.
The court's decision also may be appealed since its interpretation of Board quorum requirements would affect how the Board can function when less than fully staffed and could permit an obstinate Board member to prevent Board action by refusing to participate in Board votes.
Update: In response to the court's decision in Chamber of Commerce v. NLRB, the NLRB issued a press release on May 15, 2012, announcing that:
The NLRB has temporarily suspended the new union election procedures that took effect on April 30, 2012 while considering its future actions.
The NLRB's Acting General Counsel has:
withdrawn his April 26, 2012 guidance to regional offices on the new election procedures (see Legal Update, NLRB Issues Guidance About Representation Case Procedure Changes ( www.practicallaw.com/4-519-1691) ); and
advised regional NLRB directors to revert to their previous practices for election petitions, starting May 15, 2012.
Approximately 150 election petitions were filed under the new election procedures, and the parties involved in these cases will be:
contacted by the NLRB; and
allowed to process each case from its current posture rather than re-initiating the case under the prior election procedures.
Update: On June 11, 2012, the NLRB requested that the US District Court for the District of Columbia review and amend its decision. On July 27, 2012, the court rejected ( www.practicallaw.com/9-520-6510) the NLRB's arguments that Member Hayes:
Should be counted toward the quorum based on his earlier statements and participation in preliminary voting.
Was present for the electronic vote but abstained from voting.
Employers should expect the NLRB to file an appeal to the US Court of Appeals for the District of Columbia Circuit.
Update: On August 7, 2012, the NLRB filed an appeal ( www.practicallaw.com/4-521-2392) to the US Court of Appeals for the District of Columbia Circuit.