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). 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:

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).

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:

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:

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 the NLRB's arguments that Member Hayes:

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 to the US Court of Appeals for the District of Columbia Circuit.