D.C. Circuit Holds Recess Appointments to NLRB Invalid

Yesterday, a three-member panel of the D.C. Circuit Court of Appeals issued a decision finding that the recess appointments to the National Labor Relations Board (NLRB) by President Obama on January 4, 2012 were unconstitutional. Specifically, the court held that the Board lacked a quorum of three members when it issued the decision in this case because the appointments did not occur during a "recess" of the Senate. This ruling stands to have broad ramifications as it calls into question the validity of the Board’s decisions dating back to January 4, 2012. Noel Canning v. NLRB, No. 12-1115, D.C. Circuit Court of Appeals (January 25, 2013). 
The case arose from an unfair labor practice charge brought against Noel Canning, a bottler and distributor in the state of Washington. An administrative law judge (ALJ) ruled that the company violated the National Labor Relations Act by refusing to reduce to writing and execute a collective bargaining agreement reached with the union. The ALJ then ordered Noel Canning to sign the agreement. The company appealed this decision to the NLRB, and the Board affirmed. The case ultimately reached the D.C. Circuit Court of Appeals.

On appeal, Noel Canning argued that the Board erred in determining that the parties actually reached a final agreement following negotiations. The company also challenged the authority of the Board to issue an order on two constitutional grounds. First, it claimed that the NLRB lacked a quorum because three members of the five-member Board were appointed when the Senate was not in recess. Second, the vacancies filled by these three members did not "happen during the Recess of the Senate" as required by the U.S. Constitution.

After finding that the Board’s decision was valid on statutory grounds, the D.C. Circuit turned to the constitutional arguments. Under Article II, Section 2, Clause 3 of the U.S. Constitution (also referred to as the Recess Appointments Clause), "[t]he President shall have power to fill up all vacancies that may happen during the recess of the Senate, by granting commissions which shall expire at the end of their next session."

Pursuant to this provision, President Obama on January 4, 2012 appointed three members to the NLRB. The first of these three members, Sharon Block, filled a seat that became vacant on January 3, 2012, when Board member Craig Becker’s recess appointment expired. The second seat, which was vacated by Peter Schaumber on August 27, 2010, was filled by Terence F. Flynn. Richard F. Griffin was appointed to the third seat, which became vacant on August 27, 2011 at the conclusion of Wilma B. Liebman's term.

Noel Canning contended that the President's appointments were invalid because they were not appointed during the "recess" of the Senate. Specifically, the company argued that the term “recess” refers to the intersession recess of the Senate (or the period between sessions) when the Senate is not available to act upon nominations from the President. The D.C. Circuit agreed with the company, after carefully considering the plain text, history, and structure of the U.S. Constitution. "To adopt the Board's proffered intrasession interpretation of 'the Recess,'" the court held, "would wholly defeat the purpose of the [f]ramers in the careful separation of powers structure reflected in the Appointments Clause [of the U.S. Constitution]." Thus, because the Board lacked a quorum of three members when it issued the ruling in this case, the court vacated the Board’s decision.

Even though Noel Canning prevailed on its first constitutional argument, the D.C. Circuit continued its analysis of whether the vacancy must arise during the recess of the Senate for the recess appointment to be valid. "Consistent with the structure of the Appointments Clause and the Recess Appointments Clause exception to it," the court wrote, “the filling up of a vacancy that happens during a recess must be done during the same recess in which the vacancy arose." The court continued, "There is no reason the [f]ramers would have permitted the President to wait until some future intersession recess to make a recess appointment, for the Senate would have been sitting in session during the intervening period and available to consider nominations."

According to Harold P. Coxson, a principal with Ogletree Governmental Affairs, Inc. and shareholder in the firm’s Washington, DC office: "This is a seminal decision which is a 'game changer' for the NLRB and the parties subject to its jurisdiction. Under the controlling authority of the U.S. Supreme Court’s New Process Steel precedent, this decision will likely mean that the Board’s decisions issued since the invalid recess appointments were made–January 4, 2012 –lacked a quorum and will have to be recalled and redecided by the Board, just as happened following New Process Steel. The ruling also may impact those decisions and rules involving recess appointee Craig Becker, since his appointment was not during an intersession recess of Congress. Thus, perhaps any cases where he was one of three members on a decision or issuance of a rule may be subject to challenge as well, since the Board may have lost its quorum when former Chair Leibman left the Board on August 27, 2011."

Coxson added: "Although we can expect the Board to seek en banc review of the panel's decision by the full D.C. Circuit, and then perhaps by the U.S. Supreme Court, it is unclear what the Board and the Obama Administration will do in the interim. It may not affect the actions of the Board’s 'Acting' General Counsel Lafe Solomon, himself appointed under the federal Vacancies Act, which has also been challenged–except, perhaps, where he seeks Board enforcement."

Additional Information

This important ruling and other issues relevant to the labor and employment law agenda will be addressed in detail during Ogletree Deakins' 2013 Legislative and Regulatory Program on February 21 and 22 at the Renaissance Washington, DC Downtown Hotel. To view the full seminar agenda, click here. To register for the program, click here or contact Kim Beam at (800) 277-1410 or kim.beam@ogletreedeakins.com.

Should you have any questions about this decision, contact the Ogletree Deakins attorney with whom you normally work, or the Client Services Department via email at clientservices@ogletreedeakins.com.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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