Supreme Court Deals NLRB and Administration Another Legal Setback

by Schnader Harrison Segal & Lewis LLP

The United States Supreme Court yesterday ruled unanimously that three recess appointments made to the National Labor Relations Board by President Obama on January 4, 2012 were an invalid exercise of the power to make recess appointments found in Art. II, §2, cl. 3 of the United States Constitution. National Labor Relations Board v. Noel Canning, No. 12-1281.

Summarizing the view of all nine Justices, Justice Breyer’s majority opinion stated: “we conclude that the President lacked the power to make the recess appointments here at issue.”  Four of the Justices arrived at the same result by a different route, explained in Justice Scalia’s concurring opinion.

This is the second time in the past several years that the Supreme Court has invalidated NLRB action for what might be termed administrative or procedural irregularity.  In New Process Steel v. NLRB, the Court found that action in deciding more than 600 cases by an NLRB with only two sitting members from January 2008 until July 2010 was invalid because the agency lacked a quorum, which it held to be at least three members.

While Noel Canning was decided on constitutional law principles having little to do with the substance of labor and employment law, the potential impact of the Supreme Court’s decision on labor law is substantial.   The fact that three of the five Members of the NLRB were appointed without authority means that from January 2012 until July 2013, the Board lacked the three-member quorum needed to make valid decisions for that eighteen-month period.  One thousand or more decisions were made in that period and are rendered invalid by the Noel Canning decision.

Certainly this means that the Board, which now has a full quorum, will have to re-decide many of the decisions that were invalidated.  Given the similar makeup of the current and invalid Boards, the outcome of many cases may not change on reconsideration.  A particularly pressing question is presented by the dozens of Board decisions that were appealed to one of the federal appellate courts, which largely were stayed while Noel Canning was awaiting decision.  One would expect that the Board would have to reconsider its decisions in those cases on a priority basis.  Further intriguing questions concern the status of regional directors appointed by improperly constituted panels and the fate of cases presently being prosecuted by the General Counsel based on Board decisions that now are invalid.

One thing that is clear is that the Board will have much urgent work to occupy its time simply dealing with the repercussions of Noel Canning.  That could be good news for employers given the Board’s ambitious plans to alter radically the representation election rules and its recent request for briefs from interested parties on what is likely to be an equally radical reworking of the rules on employee use of employer e-mail networks to engage in concerted activity.

Many project that the enormity of the Noel Canning fallout will consume the agency at least through the 2014 elections, after which the Board majority could be up for grabs, depending on the results of the Congressional elections.


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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