DC Circuit Rules NLRB Recess Appointments Were Unconstitutional; Enforceability of All Recess Appointees' Decisions in Doubt

Practical Law Legal Update 1-523-7761 (Approx. 9 pages)

DC Circuit Rules NLRB Recess Appointments Were Unconstitutional; Enforceability of All Recess Appointees' Decisions in Doubt

by PLC Labor & Employment

Key Litigated Issues

In Noel Canning v. NLRB, the key litigated issue was whether President Obama's three appointments to the panel (Board) heading the NLRB's judicial functions on January 4, 2012 were constitutional under the President's recess appointments power.

Background

Noel Canning, a bottling and distributing company, petitioned the US Court of Appeals for the District of Columbia Circuit for review of a February 8, 2012 Board decision holding that it violated Section 8(a)(1) and (5) of the NLRA by refusing to put in writing and execute a collective bargaining agreement reached with Teamsters Local 760. Although Noel Canning contended that the Board erred in finding that an agreement had been reached, it raised a new constitutional argument on appeal that the Board did not have the required quorum of three members when it issued the decision because:

President Obama's January 4, 2012 appointments of three of the five Board members, purportedly made under the constitutional recess appointment power, were made while the Senate was not in recess.
The vacancies filled by the three members did not happen during "the recess of the Senate," as required for recess appointments under the Constitution.

Both parties agreed that without a quorum of at least three members, as established in New Process Steel, L.P. v. NLRB, the Board cannot lawfully act. The NLRB, relying on an Eleventh Circuit decision in Evans v. Stephens, argued that recesses include intra-session recesses, not simply breaks between sessions of the Senate, and that President Obama's appointments were therefore lawful under the recess appointments power.

Outcome

On January 25, 2013, a three-judge panel of the DC Circuit issued an opinion in Noel Canning v. NLRB, granting Noel Canning's petition and vacating the Board's decision. The court held that President Obama's January 4, 2012 appointments of Members Griffin, Block and Flynn were invalid, and that the Board therefore lacked a three-member quorum when it issued its decision on February 8, 2012. In the absence of a quorum, the court concluded, the Board's decision must be vacated.

Preliminarily, the court held that:

Noel Canning failed to sufficiently show that the Board erred in its factual findings or legal conclusions.
It was proper to excuse Noel Canning from first challenging the constitutionality of the Board's decision before the Board rather than in its appeal to the court because there were "extraordinary circumstances" implicating fundamental separation of powers concerns.

The panel unanimously concluded that the term "the recess" in Article II, Section 2 of the Constitution refers only to the recess between Senate sessions, not breaks within sessions. Because President Obama's appointments were made on January 4, 2012, after Congress had begun a new session on January 3, 2012, and while that session continued, the appointments were invalid.

Judges Sentelle and Henderson also concluded that the President's recess power is limited to filling "vacancies that may happen during the recess of the Senate," and that:

Under the court's definition of recess, none of the three vacancies that were filled by the January 4, 2012 appointments occurred while the Senate was in recess.
Recess appointments must be made during the same recess in which the vacancy occurred, and that President Obama's appointments were instead made during the Senate session that had begun on January 3, 2012.

Judge Griffith, in a concurring opinion, stated that he would have declined to address the constitutional argument about when the vacancies happened.

The DC Circuit rejected the NLRB's interpretation of "recess," holding that it would "eviscerate the Constitution's separation of powers" by giving the President the power to bypass Senate approval and appoint desired nominees at any time a President pleases.

In a statement on the NLRB's website, NLRB Chairman Pearce:

Disagreed with the DC Circuit's decision.
Noted that the decision applied only to the specific case before the court.
Indicated that the Board (comprised of Chairman Pearce and the two recess appointees, Members Block and Griffin) would continue to issue decisions in spite of the ruling.

Practical Implications

By implication, all Board decisions dated January 4, 2012 or later may be invalid for lack of a three-member quorum. The enforceability of those decisions, or at least the substance of those decisions, remains uncertain, however, because:

The NLRB may appeal this decision and prevail before the US Supreme Court.
The NLRB may successfully enforce other decisions in other Circuit Courts of Appeals if those courts do not reach the same conclusions as the DC Circuit. (The NLRB may even seek enforcement of other decisions in the DC Circuit, asserting that the decision here is not binding precedent.)

Assuming the recess appointments are found unconstitutional or that the NLRB concedes that this determination is correct, whenever the Board is reconstituted and has a lawful quorum, it may decide, as it had in 2010 in the wake of the US Supreme Court's decision in New Process Steel, to:

Unilaterally vacate the decisions by the improperly constituted Board panels.
Issue new decisions adopting the findings, conclusions and reasoning from the vacated decisions.

Although the ultimate outcome of this case and to other cases challenging the enforceability of the Board's decisions in the past year are not certain, employers may not be wise to assume that the NLRB will retreat from its agenda or abandon the Board's decisions. There is no suggestion from the NLRB that:

The NLRB's Acting General Counsel will stop:
- issuing and prosecuting complaints based on theories approved of by the Board in the past year; or
- seeking enforcement of Board decisions from the past year.
The NLRB's administrative law judges, hearing officers and regional directors might abandon Board precedent from the past year when deciding pending cases.
The Board will stop issuing decisions relying on the past year's precedent.

Based on Noel Canning, employers that are subject to a decision by a Board panel that would not be properly constituted if intra-session recess appointees do not count towards quorum requirements should consider:

Moving that the Board reconsider that decision when it is properly constituted.
Petitioning the DC Circuit for review and opposing any cross-application for enforcement by the NLRB of that decision because the Board was not properly constituted when it issued it.
Informing any US Court of Appeals reviewing or deciding whether to enforce that decision about Noel Canning.

Employers should note that the DC Circuit's rationale in Noel Canning places in doubt not only Board decisions issued after January 4, 2012, but also earlier Board actions and decisions for which the Board would not have a quorum if an intra-session recess appointee does not count towards the three member quorum requirement under the NLRA. This may include, among other matters:

Any decision by the Board issued on or after August 28, 2011 (when then Chairman Liebman's term on the Board ended) and Member Becker, who was appointed by intra-session recess appointments was counted as the third member of the Board.
Any decision by the Board issued between March 27, 2010 and June 21, 2010, when Members Pearce and Becker, who were appointed by intra-session recess appointments, were counted as the third and fourth members of the Board.
The Board's December 22, 2011 final rule modifying the NLRB's election procedures, when Member Becker was counted as the third member of the Board.

DC Circuit Rules NLRB Recess Appointments Were Unconstitutional; Enforceability of All Recess Appointees' Decisions in Doubt | Practical Law