NLRB Recess Appointments Held Not Valid

Over the past several months, the National Labor Relations Board (NLRB) has issued decisions that have caused concern for employers across the United States based on the broad reading of the National Labor Relations Act (NLRA), as well as the far-reaching impact of those decisions.  On January 25, 2013, however, the U.S. Court of Appeals for the D.C. Circuit issued its decision in Noel Canning v. NLRB, (D.C. Cir. Jan 25, 2013), invalidating recess appointments to the NLRB and, thus, potentially invalidating all decisions issued by the NLRB since President Obama’s recess appointments on January 4, 2012.  Specifically, the Court held that President Obama’s recess appointments of Members Sharon Block, Terence Flynn, and Richard Griffin were invalid.  As a result, since January 3, 2012, the NLRB lacked the necessary quorum of members to issue decisions.

The January 2012 Recess Appointments

The NLRB, comprised of five members (when all positions are filled), cannot issue decisions or take other action absent a valid three-member quorum.  Following the expiration of Member Craig Becker’s term on January 3, 2012, the NLRB was left with only two confirmed members – Chairman Mark Pearce and Member Brian Hayes.  Accordingly, in an effort to avoid an effective shut-down of the NLRB, on January 4, 2012, President Obama invoked the Recess Appointments Clause of Article II, Section 2 of the Constitution and appointed Block, Flynn and Griffin as Board members.

The D.C. Circuit’s Significant Decision in Noel Canning

On February 8, 2012, a three-member panel of the NLRB consisting of Members Hayes, Flynn, and Block issued an order that Noel Canning – a Pepsi-Cola bottler and distributor – violated various sections of the NLRA.  Noel Canning petitioned for review by the D.C. Circuit, arguing on appeal that the order by the NLRB was invalid and unenforceable because the Board did not have a valid quorum of three members at the time the order issued because the recess appointments of Members Block, Flynn and Griffin were constitutionally invalid.

The D.C. Circuit agreed with the employer, holding that the January 4, 2012 recess appointments by President Obama were unconstitutional for two reasons:  first, because the appointments were not made during “the Recess” as contemplated by the Recess Appointments Clause of the United States Constitution and, second, because the vacancies filled by the recess appointments did not “happen” during “the Recess” of the Senate as required by the same constitutional provision.

Although members of the NLRB are generally nominated by the President and appointed with the advice and consent of the Senate, the Constitution’s Recess Appointments Clause provides an exception to the general rule by allowing the President 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.”  At the time of the President’s recess appointments, the Senate was operating under a unanimous consent agreement which provided that the Senate would meet in pro forma sessions every third business day from December 20, 2011 through January 23, 2012.  Further, pursuant to the Constitution, “Congress must assemble at least once in every year, and such meeting shall begin at noon on the 3d day of January . . . .”  As such, during the January 3, 2012 pro forma session, the Senate acted and officially convened the second session of the 112th Congress. Thus, the employer argued that at the time of the January 4, 2012 recess appointments, the Senate was not in “the Recess” between sessions.

Conducting a full analysis of the text, history, and structure of the Constitution, the Court found that because of the Senate’s action on January 3, 2012, the recess appointments made by the President on January 4, 2012 did not occur during “the Recess” as contemplated by the Recess Appointments Clause.  While the NLRB argued that the Clause provides the President with the power to make recess appointments during any “breaks in the Senate’s business when it is otherwise in a continuing session,” the Court rejected this interpretation reasoning that such an interpretation fails to define how short a break is too short for purposes of the Recess Appointments Clause.  Instead the Court found that the Clause limits the President’s power to make recess appointments to intersession recesses of the Senate – the period of time between one session of the Senate and the next when the Senate is unavailable to receive and act upon Presidential nominations.  The Court further reasoned that to adopt the NLRB’s interpretation would wholly defeat the purpose of the Framers in the “careful separation of powers structure reflected in the Appointments Clause.”  Accordingly, the Court found that President Obama’s recess appointments did not occur during an intersession recess, but rather while the Senate was holding pro forma sessions and after the second session of the 112th Congress convened on January 3, 2012.

Notably, however, the Court did not stop there.  While the Court was not required to consider the employer’s second argument, as its holding on the first constitutional issue was sufficient to dispose of the case, the Court also addressed the issue of whether the vacancies must “happen during the Recess” for the president to utilize the Recess Appointments Clause.  Analyzing the word “happen” as it relates to when a vacancy that may be filled pursuant to the Recess Appointments Clause must arise, the Court held that the clause only applies to vacancies that actually arise during the Senate’s recess, not vacancies that happen to exist at the time the recess begins.  Thus, according to the D.C. Circuit, the President may only exercise the Recess Appointment power during the same recess in which the vacancy arises, reasoning that to permit otherwise would allow the President to wait until a future intersession recess to make a recess appointment even though the Senate would have been in session during the intervening period and available to consider such nominations.

Accordingly, the Court held that the recess appointments made by President Obama on January 4, 2012 did not arise during the intersession recess of the Senate because the Senate never adjourned the First Session of the 112th Congress on December 30, 2011.  Instead, the First Session “expired simultaneously with the beginning of the Second Session” on January 3, 2012.  Because the Senate was operating in pro forma sessions on January 4, 2012, a formal adjournment of the First Session was effectively prevented.  Thus, the Court found that the President could not have validly used his Recess Appointment power.  The Court, therefore, vacated the order by the NLRB, holding that the NLRB did not have a quorum when it issued the February 8, 2012 order because the President’s appointments were invalid.

The NLRB likely will seek review of the D.C. Circuit’s decision.  To do so, it may either petition the D.C. Circuit for an en banc hearing before the full court, or it may immediately petition the United States Supreme Court for certiorari.  Regardless of the NLRB’s chosen course of action, the issue likely will reach the Supreme Court eventually as challenges to the President’s recess appointments remain pending in three other appellate courts.

Notably, on February 6, 2013, the Supreme Court denied without comment an application for a stay in a case involving a challenge to the constitutionality of President Obama’s recess appointments to the NLRB.  Although the case was the first to reach the Supreme Court raising the issue, it is not necessarily indicative of what the Court will do if (and when) another case raising the constitutional issue is presented.

Implications in the Wake of Noel Canning

In New Process Steel v. NLRB, 130 S. Ct. 2635 (2010), the Supreme Court held that the NLRB could not legally render decisions or otherwise act without a quorum of at least three members.  Thus, if the Supreme Court agrees with the D.C. Circuit, more than 200 decisions issued by the NLRB from January 4, 2012 to the present would be invalid.  Some of the far-reaching NLRB decisions called into question by the decision in Noel Canning include those that have addressed social media, employer confidentiality rules, off-duty employee access rules, dues check-off provisions, employer investigations, employer arbitration policies, and employee discipline and work rules.

Significantly, not only would the decisions to the present be invalid, but also all decisions issued until the time the Supreme Court renders a decision would be invalid.  This is significant in light of the NLRB’s stated intention to continue with “business as usual” in the wake of the Noel Canning decision.

Further, if the decision in Noel Canning stands, it is possible that all NLRB decisions from August 27, 2011, through January 3, 2012, also will be invalidated because the recess appointment of Member Craig Becker could be challenged as it, too, was an appointment not made during an intersession recess.  If Becker’s appointment is invalidated, the NLRB would have been acting without the necessary quorum since August 27, 2011 pursuant to the Supreme Court’s decision in New Process Steel.  In fact, attacks on decisions made during that period have already been made.

In addition to attacks on NLRB decisions that issued, if Becker’s appointment is invalidated, it would impact the “quickie election” rule which provides for NLRB-conducted representation elections in as few as 10 days after a representation petition is filed as well as the Employee Rights Notice posting obligation – rulemaking that was voted on by Member Becker.  It also is worth noting that following the Noel Canning decision, pressure is being placed on Members Block and Griffin to resign from their positions.

Noel Canning is Good News for Employers, But it Still is Necessary to Proceed with Caution

Employers who have received adverse Board decisions since January 4, 2012, but have not yet petitioned for review, may wish to contact labor counsel about seeking appellate review.  Those employers who currently are involved in an unfair labor practice or representation matter should expect that the NLRB will continue to act on those cases.  The NLRB’s Office of the General Counsel will continue to investigate and prosecute cases, the NLRB’s administrative law judges will continue to hear and decide cases, and the Regional Director’s in NLRB regional offices will process representation cases.  Additionally, employers who are not currently involved in NLRB matters should proceed with caution.  While the decision in Noel Canning has the potential to invalidate hundreds of decisions, such action has yet to take place.  And, it is unlikely that the issue will not be resolved until a decision is issued by the Supreme Court.  In the meantime, employers should work closely with their labor counsel to ensure appropriate labor relations and litigation strategies are being pursued given the current state of the law.