On June 26, 2014, the United States Supreme Court handed down its Noel Canning decision, unanimously finding that President Obama's January 4, 2012, appointments of Sharon Block, Richard Griffin and Terence Flynn to the National Labor Relations Board (NLRB) failed to comply with the Recess Appointments Clause of the United States Constitution. This means that the 700 decisions the NLRB made from January 4, 2012, until August 5, 2013, when the NLRB again had lawfully appointed members, are all invalid.
How This Case Came to The Supreme Court
Noel Canning is a Yakima, Washington, Pepsi-Cola distributor that the NLRB found had unlawfully refused to reduce to writing and execute a collective bargaining agreement with a union. The NLRB ordered Noel Canning to execute the collective bargaining agreement and make the employees whole for any losses caused by its failure to execute the agreement. Noel Canning appealed to the District of Columbia Circuit Court of Appeals, asserting that President Obama's three NLRB recess appointments were invalid and, since the NLRB must have a quorum of three validly appointed members to act, its adverse decision against the company should be invalidated.
The Court of Appeals agreed with Noel Canning on the ground that these appointments unlawfully occurred during a recess that took place during Congress' formal session, rather than between such sessions; in other words, during an intra-session recess rather than an inter-session recess. The formal session had commenced on January 3, 2012 — the day before the President's appointments and, thus, during a Senate session. The Court of Appeals further asserted that the appointments were invalid because the appointments were made to fill vacancies that had first arisen during the prior legislative session and not during the congressional recess.
The Solicitor General petitioned for certiorari to the Supreme Court, asking the Court to overturn the District of Columbia Circuit. The Court granted that petition, with the additional request by the Court to address whether the President could make lawful appointments when the Senate is convening pro forma sessions, in which it convenes every three days without the intent to conduct any business.
The Majority's Decision
Under the second clause of Article II Section 2 of the United States Constitution, the President ordinarily must obtain "the Advice and Consent of the Senate" before appointing someone to an Office of the United States. The following clause, known as the Recess Appointments Clause, however, creates an exception, allowing the President alone "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." The President is not to routinely rely upon the Recess Appointments Clause to make appointments; to the contrary, the norm is that the President makes a nomination, which the Senate confirms. The issue decided in this case was when a President could properly invoke the Recess Appointments Clause instead of being required to submit a nominee to the Senate confirmation process. To do this, the Court considered the text of the Recess Appointments Clause, particularly the words "happen" and "recess," along with the history of Presidents making recess appointments.
The first issue the majority opinion addressed was whether the Senate is in "recess" only during the inter-session breaks it takes between annual congressional sessions or is it also in recess when it takes intra-session breaks. The Court determined that "recess" includes intra-session recesses "of substantial length." The Court found that the Founders used the word "recess" to refer to both intra- and inter-session breaks, noting that the Senate is "equally away during both an inter-session and intra-session recess, and its capacity to participate in the appointments process has nothing to do with the words it uses to signal its departure." It further explained that over the years, Congress has taken shorter inter-session breaks and longer and more frequent intra-session breaks, so as time progressed, Presidents similarly made more intra-session appointments. Further, the Court determined that restricting the Recess Appointments Clause to inter-session recesses would frustrate its purpose, making the President's appointment power dependent upon the formalities of Senate procedure. Looking at the historical use of recess appointments, the Court determined that the Framers intended the Clause to apply to new circumstances that are consistent with the Clause's text and original purpose. The majority further commented that, while this interpretation might permit appointees to hold office for longer periods, the Senate confirmation process is lengthy. Thus, this interpretation allows the President the assistance of these recess appointments while simultaneously working with the Senate to obtain confirmation of a regular appointee.
The Court then dealt with the issue of how long the recess must be to invoke the Recess Appointments Clause, as the Recess Appointments Clause itself is silent on this issue. The Court determined that the three-day recess at issue in this case was too short, as it is not a significant enough interruption of the Senate's business. Relying on the historical use of recess appointments, the Court stated that there were few examples of recess appointments made during recesses shorter than 10 days. Thus, the Court concluded that a recess of more than three but less than 10 days is "presumptively too short to fall within the Clause," leaving open the possibility that a "very unusual circumstance — a national catastrophe, for instance, that renders the Senate unavailable but calls for an urgent response" — could warrant invocation of the Clause during a shorter break.
The Court next addressed whether the phrase "vacancies that may happen during the recess of the Senate" means that the vacancy must initially arise during the recess or whether it could initially arise prior to the recess but continue during the recess. The Court concluded that the term "happen" is ambiguous in this context and a broad interpretation of this term supports allowing a President the assistance of subordinate officers when the Senate is in recess. Therefore, this approach furthers a goal of the constitution to keep offices filled. Recognizing that a President could invoke the Recess Appointments Clause to circumvent the Senate confirmation process altogether, the Court stated that recess appointments may be less desirable because of their limited terms and, without Senate approval, officers appointed in this manner may have more difficulty accomplishing the objectives of their position. The Court further noted that the Senate could frustrate the President's ability to invoke the Recess Appointments Clause by refusing to take recesses, but it has had such a capacity throughout history and Senate confirmation remains the norm. In addition, the Court noted that every President since James Buchanan has used the Recess Appointments Clause to fill vacancies that initially had occurred before the recess.
The final issue before the Court was how to calculate the length of the Senate's "recess." During the Senate's pro forma sessions at issue, the Senate was convening every Tuesday and Friday without any intent to transact business on those days. At the end of each session, it adjourned until the next pro forma session. President Obama made the recess appointments at issue on January 4, 2012, which was between the January 3 and January 6 pro forma sessions. The Court determined that these sessions were, in fact, sessions, and not recess periods, noting that, "for purposes of the Recess Appointments Clause, the Senate is in session when it says it is, provided that, under its own rules, it retains the capacity to transact Senate business." The Court noted that the Constitution gives the Senate extensive control over its schedule, with limited exceptions, and the Court historically has taken the Senate's own report of its actions at face value. The Court clarified that it did not give absolute deference to the Senate's determination of when it is in session and, if the Senate lacked the capacity to act under its rules, the Court would not consider it to be session even if it said it was. Based on this reasoning, the Court was in session during the relevant pro forma sessions at issue in this case because it said it was in session and had the capacity to conduct business.
What This Decision Means to Employers
This decision invalidates all of the 700+ decisions the NLRB rendered between January 4, 2012, and August 2, 2013. Employers should review those cases that the NLRB decided during this period to determine if there are any adverse rulings that are affected by this ruling. In addition, during the period the NLRB was improperly constituted, it made certain Regional Director appointments, arguably rendering those appointments similarly invalid. Therefore, employers could challenge all decisions those Regional Directors have made, even those that were issued after August 2, 2013, as those Regional Directors continue to lack authority to render such decisions. Employers must make a strategic decision on how best to proceed with respect to these decisions. We recommend employers seek qualified labor counsel to assist in determining the best course to pursue.
This case may also affect the continuing vitality of the NLRB's controversial decision in D.R. Horton, Inc., which held that class action waivers in arbitration agreements violate employees' Section 7 rights, although the fate of that decision is less certain. The uncertainty lies in whether the NLRB's January 3, 2012, decision remains valid, even though one of the three panel members, Member Becker, was appointed under the Recess Appointments Clause during a 17-day intra-session recess during March and April 2010. Member Becker's appointment was ruled invalid in NLRB v. New Vista Nursing & Rehab, 719 F.3d 203, 221 (3d Cir. 2013), in which the Third Circuit concluded "the Recess of the Senate" only applied to inter-session recesses. The Noel Canning decision rejected such reasoning, concluding "the Recess of the Senate" applies to both inter-session and intra-session recesses. The majority opinion, and Justice Scalia's concurrence, however, leave open the issue of whether an appointment occurring during an intra-session recess lasting longer than 10 days, like Member Becker's, remains valid. Justice Scalia highlighted the majority's silence on the issue and questioned the idea of whether the President has an "utterly free hand" during recesses lasting longer than 10 days. But the majority's reasoning seems to suggest that Member Becker's appointment will stand, or at least is not presumptively invalid. In light of the uncertainty of the issue, however, the debate over the validity of Member Becker's appointment will likely continue.
It is unknown how the Noel Canning decision and its after-effects will affect the Board's pursuit of its key objectives, including instituting quickie elections and allowing employees to use employer email to conduct union campaigns. It is likely that the NLRB will take several years to re-decide those cases that the unconstitutionally appointed Board members originally decided. The NLRB may work on its key objectives while incrementally re-deciding the invalid cases or it might put those key objectives on hold while it clears its docket of those cases. We will monitor the NLRB's activities and keep our readers apprised.