South Carolina Court Strikes Down NLRB Notice-Posting Rule

by Morgan Lewis
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Judge holds that NLRB posting requirement exceeds Board's rulemaking authority under the Administrative Procedures Act.

In the second of two anticipated rulings on the issue, Judge David C. Norton of the U.S. District Court for the District of South Carolina issued a decision striking down the National Labor Relations Board's (NLRB's or Board's) final rule (the Rule) requiring all employers subject to the Board's jurisdiction—the vast majority of employers doing business in the United States—to post a notice in the workplace informing employees of certain of their rights under the National Labor Relations Act (NLRA).

In his April 13 ruling in Chamber of Commerce v. NLRB, Judge Norton held that the Board exceeded its authority under the Administrative Procedures Act (the federal law that governs the way in which administrative agencies may propose and establish regulations) by promulgating the Rule and, therefore, the Rule was invalid in its entirety.

Morgan Lewis has been participating in the NLRB notice-posting litigation before Judge Norton on behalf of 36 members of Congress as amici curiae.

Background

The NLRA gives employees the right to "form, join, or assist" unions, to bargain collectively with their employers, or to refrain from engaging in such activities. Although less than 7% of private sector employees are represented by unions, the NLRA's protections extend to nonunion employees as well as union-represented employees.

Under the Rule, which is scheduled to go into effect on April 30, 2012, affected employers must post a notice informing employees of their right, among other things, (1) to"[o]rganize a union"; (2) to "take action . . . to improve [their] working conditions by, among other means, raising work-related complaints directly with [their] employer or with a government, and seeking help from a union"; and (3) to "strike and picket." The required notice must be posted in the same place where other notices are posted. The Rule also requires that the notice be posted on an employer's intranet or Internet site if the employer customarily communicates with its employees by such means.

The Rule states that failure to post the notice could have three adverse effects: (1) it could be considered an unfair labor practice under Section 8(a)(1) of the NLRA; (2) failure to post the required notice could toll the six-month statute of limitations for filing unfair labor practices in other cases; and (3) the NLRB could use the failure to post the notice as evidence of an employer's unlawful motive in other unfair labor practice cases.

In a March 2 ruling on the same issue in National Association of Manufacturers v. NLRB, Judge Amy Jackson of the U.S. District Court for the District of Columbia issued a decision upholding the Board's right to issue the Rule, but striking down two key enforcement mechanisms for failure to post the notice—making an employer's failure to post the notice an unfair labor practice and the tolling of the statute of limitations.[1]

Judge Norton's Decision

Judge Norton's opinion begins by explaining the two-step Chevron analysis that must be applied to determine whether an administrative agency has exceeded the rulemaking authority delegated to it by Congress.[2] Under Chevron step one, the court must determine whether Congress has directly spoken to the question at issue. If the intent of Congress is clear, then the analysis is at an end because both the court and the agency must defer to the intent of Congress. If, however, the statutory language is ambiguous, the court must proceed to Chevron step two and determine whether the agency's action is based on a permissible construction of the statute.

In applying Chevron step one, Judge Norton looked to (1) the plain language of Section 6 of the NLRA, which grants the Board the authority to promulgate rules "necessary to carry out" the rest of the statute; (2) the structure of the NLRA as a whole; (3) the legislative history of the NLRA; and (4) other relevant statutes. Based on his review of these sources, Judge Norton concluded that Congress had intended the Board to function "as a reactive agency" that takes action only when a member of the public files an unfair labor practice charge or a representation petition. Further, Judge Norton held that the fact that Congress had included explicit notice-posting requirements in numerous other statutes, while failing to include such a requirement in the NLRA or to add one as part of the multiple amendments that have been enacted over time, indicated that Congress did not intend to delegate the authority to require the posting of notices to the Board. Accordingly, Judge Norton held that, while the Board has the power to promulgate rules necessary to its function of deciding unfair labor practice charges and representation issues, it cannot create rules that "place . . . affirmative obligation[s] on employers prior to a charge or petition first being filed." Judge Norton ruled, therefore, that the Rule could not survive step one of the Chevron analysis and that the Board had exceeded its authority under the Administrative Procedures Act by promulgating the Rule.

Impact

The split created by the differing decisions in the South Carolina and D.C. litigation creates some uncertainty regarding the immediate future of the Rule. Judge Norton's decision squarely holds that the Rule is unlawful, but the Board may seek a stay pending an appeal to the U.S. Court of Appeals for the Fourth Circuit that would allow the Board to enforce the Rule until the Fourth Circuit rules on the issue. Judge Jackson's ruling in the D.C. litigation has already been appealed to the U.S. Court of Appeals for the D.C. Circuit, and the plaintiffs in that case may renew a previously rejected attempt to block enforcement of the Rule pending that appeal. The Board has not yet commented on or taken any action with respect to the South Carolina ruling. However, there is a strong possibility that the Board will voluntarily delay implementation of the Rule until the appellate courts have ruled on the issue.

As noted above, Morgan Lewis has been participating in the NLRB notice-posting litigation before Judge Norton, representing 36 members of Congress, including John Kline, Chairman of the House Committee on Education and the Workforce, as amici curiae. Morgan Lewis also represented the same parties in the separate notice-posting lawsuit in the District of Columbia. Our amicus brief filed in the South Carolina litigation is available at http://op.bna.com/dlrcases.nsf/r?Open=ldue-8nnqa2; our amicus brief filed in the D.C. litigation is available at http://op.bna.com/dlrcases.nsf/r?Open=ldue-8nnq9e.

[1]. See our LawFlash regarding that decision, "D.C. Court Issues Split Decision in NLRB Notice Case" (Mar. 6, 2012), available online at http://www.morganlewis.com/pubs/LEPG_LF_SplitDecisioninNLRBNoticeCase_06march12.

[2]. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

 

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