The Supreme Court's likely review of a prior appellate decision could uphold Circuits' stricter definition of recess appointments.
On May 16 the National Labor Relations Board lost the second round of litigation over its power to enforce its rules and decisions. In NLRB vs New Vista Nursing and Rehabilitation, LLC, the Third Circuit decided that President Obama’s appointment of Craig Becker to the Board on March 27, 2010 was constitutionally invalid. For the five-member NLRB to act, a minimum of three validly appointed board members must be involved. Because Becker was one of the three members delegated when the NLRB ruled on the New Vista case, the court invalidated its actions. Indeed, any action taken by the NLRB in which Becker was necessary to reach the three member quorum would be invalid under this logic.
The Third Circuit’s decision employs the same reasoning as the D.C. Circuit’s opinion earlier this year in Noel Canning. To appoint member Becker and the appointees at issue in Noel Canning, President Obama invoked a Constitutional provision that allows the President to make appointments unilaterally when the Senate is in recess, and thus not available to give the advice and consent otherwise required. Both courts, however, invalidated NLRB member appointments as unconstitutional by narrowly defining a ‘recess’ as the time between sessions of Congress (intersession), as opposed to breaks during a session, such as vacations (intrasession).
As a result of these decisions, ‘the labor world is in a state of chaos right now, with a lot of uncertainty on both the management and labor side,’ says Jeremiah L. Hart, an associate with Baker Hostetler. ‘The issue needs to be resolved so that both sides can move forward with some degree of certainty.’ Hart notes cases raising this same issue are being litigated in the second, fourth, fifth seventh, ninth and eleventh Circuits. Given the uncertainty, he expects the U.S. Supreme Court will agree to review the Noel Canning decision, but the Court has not yet decided whether to hear the appeal.
If the Court does take the case, it will first have to decide if it agrees with the D.C. and Third Circuits’ definition of ‘recess’, and thus find the appointments unconstitutional. If so, it will then decide how retroactive its ruling should be, or exactly which rules and decisions will be invalidated because the members making them were unconstitutionally appointed? As Hart explains, ‘even though the logical repercussions of these decisions are clear—all actions taken by any inappropriately constituted Board at any time in history should be invalid—the practical consequences of the decisions are up for grabs.’ That’s because ‘the Court may cite [fairness and stability concerns] for limiting the decisions’ retrospective reach to prevent upheaval in the state of labor law.” Still,major upheaval may be coming since. ‘the Supreme Court has already shown that it isn’t afraid to invalidate large numbers of decisions,” says Hart. 'It did exactly that just a few years ago in New Process Steel.’
Given this tremendous uncertainty, and the fact that the soonest resolution could come is several months from now, what’s a compliance officer to do? As general advice, Hart says, ‘Compliance decisions need to be made on a case by case basis with the advice of counsel, but a company should take a real hard look at the actions of the Board that impact their business given the decisions from both the D.C. and 3rd Circuits. Noel Canning and New Vista should be a breath of fresh air for General Counsels as they represent a second bite at the apple. If a ruling goes against them at the Board level, there is an opportunity to have the decision vacated by an appellate court based on the rationale of Noel Canning and New Vista.’
This freedom to challenge the NLRB extends beyond the bounds of the D.C. and Third Circuits. ‘Even if your business is not in the D.C. or 3rd circuits, these decisions are important because any employer who gets an adverse ruling from the NLRB can appeal to the D.C. Circuit,’ says Hart. (Section 10(f) of the National Labor Relations Act gives both the Circuit where the alleged unfair labor practice occurred and the D.C. Circuit jurisdiction.) ‘Any panel of the D.C. Circuit would have to invalidate the NLRB action because of the Noel Canning precedent. However, if the NLRB seeks and gets [full court] review, the Circuit could reverse itself. So an employer victory is not guaranteed.'
Sounds like more instability lies ahead until the U.S. Supreme Court has its say and those consequences play out. The NLRB did not return a call for comment and has not posted a statement about New Vista on its website. Statements the NRLB issued when Noel Canning was decided and when it announced it was seeking Supreme Court review of Noel Canning are available on its website.
