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Employer's Challenge to NLRB Composition Was Not Waived by Failure to Raise Before Election: Third Circuit
Practical Law Legal Update w-002-0503 (Approx. 5 pages)
Employer's Challenge to NLRB Composition Was Not Waived by Failure to Raise Before Election: Third Circuit
by Practical Law Labor & Employment
| Published on 26 Apr 2016 • USA (National/Federal) |
In Advanced Disposal Services East, Inc. v. NLRB, the US Court of Appeals for the Third Circuit held that an employer did not waive its right to challenge a regional director's authority to conduct a representation election by failing to raise the issue before the election. The regional director was selected when the panel heading the judicial functions of the National Labor Relations Board (NLRB) lacked a quorum required by the National Labor Relations Act (NLRA).
On April 21, 2016, in Advanced Disposal Services East, Inc. v. NLRB, the US Court of Appeals for the Third Circuit held that the employer did not waive its right to challenge the regional director's authority to conduct a representation election by failing to raise the issue before the election took place. The regional director's authority was in question because he was selected by the panel (Board) heading the judicial functions of the NLRB when the Board lacked an NLRA-required quorum. ( (3d Cir. Apr. 21, 2016)).
The case began when the union prevailed in a contested representation election. After the union was certified as the representative of the bargaining unit, the employer refused to bargain as a way of contesting the regional director's authority to conduct the election. The employer's refusal to bargain was on the grounds that the regional director was selected when the Board lacked a quorum as held in the US Supreme Court's decision in NLRB v. Noel Canning (134 S. Ct. 2550 (2014). (For more information about Noel Canning, see Legal Update, Supreme Court Holds 2012 Recess Appointments to the NLRB Were Invalid, Effectively Invalidates 20-Months of NLRB Decisions and Article, Expert Q&A on Noel Canning and Its Aftermath.) The employer also alleged that certain disruptive election day conduct necessitated a new election.
The Board decided that the election was valid and rejected the employer's challenge to the regional director's authority (Advanced Disposal Services East, Inc., 362 N.L.R.B. No. 89 (May 8, 2015)). The employer petitioned for review in the Third Circuit, and the NLRB cross-petitioned for enforcement.
The Third Circuit noted that:
- The NLRA requires parties to raise objections before the Board in order to preserve them for appeal absent "extraordinary circumstances" (29 U.S.C. §160(e)). While the employer did raise its challenge to the regional director's authority before the Board, the Board required the challenge to be raised prior to the election.
- There is a circuit split about whether a challenge to the composition of the Board, and by extension the authority of a regional director selected by the Board, constitutes an "extraordinary circumstance" under 29 U.S.C. §160(e):
- the DC Circuit concluded that such a challenge is an "extraordinary circumstance" because it goes to the Board's authority to act (UC Health v. NLRB, 803 F.3d 669, 672-73 (D.C. Cir. 2015); SSC Mystic Operating Co. LLC v. NLRB, 801 F.3d 302, 308 (D.C. Cir. 2015); see Legal Update, NLRB Regional Directors Were Authorized by Earlier Delegation to Act Despite Lack of Board Quorum: DC Circuit); and
- the Eighth Circuit characterized this challenge as an affirmative defense that can be waived rather than an "extraordinary circumstance" (NLRB v. RELCO Locomotives, Inc., 734 F.3d 764, 797 (8th Cir. 2013); see Legal Update, Eight Circuit Joins One Circuit Split and Creates Another, Holds Employer's Challenge to NLRB Recess Appointments Is Nonjurisdictional and Waived).
The Third Circuit held that the employer did not waive its right to challenge the regional director's authority by failing to raise the issue before the representation election. The Third Circuit reasoned that:
- The employer's challenge constitutes an "extraordinary circumstance" under 29 U.S.C. 160(e) because it goes to the authority of the Board to act.
- If the court were to conclude that the employer waived its right to challenge the regional director's authority, the invalid orders of an improperly constituted Board would be insulated from review.
The Third Circuit also held that:
- The employer did not accede to the regional director's authority by executing a Stipulated Election Agreement. The Third Circuit reasoned that the employer executed the Stipulated Election Agreement several months before the Supreme Court decided Noel Canning and could not have known what the outcome of that case would be.
- In July 2014, after the Board was properly constituted, the Board properly ratified its selection of the regional director. Likewise, the regional director properly ratified his previously unauthorized actions after the Board ratified his selection as regional director.
- Substantial evidence supported the Board's determination on the merits that certain disruptive election day conduct did not require a new election.