Supreme Court nullifies 3 NLRB recess appointments

With the issuance of its long-awaited decision in Noel Canning v. the NLRB on June 30, the Supreme Court invalidated President Obama’s recess appointments of Sharon Block, Richard Griffin, and Terence Flynn to the National Labor Relations Board  on January 4, 2012. As a result, all actions taken by the NLRB from that date until the Board became properly constituted with Senate-confirmed members in August 2013 are invalid. While the Court nullified the NLRB’s actions on the narrowest possible grounds, the decision nonetheless poses a major challenge to Obama’s -- and future presidents’ -- ability to make recess appointments.

Given the change to the filibuster rules that enabled the current board to be confirmed, however, the impact on recess appointees is much smaller than promised when Noel Canning began. That's because fewer recess appointments are now ‘necessary’ as the filibuster deal allows agency nominees and most judges to be confirmed by a simple majority of the Senate. 

The Court defined a recess for purposes of a ‘recess appointment’ as a break in the Congressional schedule longer than three days, and, in almost every case, no less than 10 days. Obama’s January 2012 appointments came during a three-day break. The Constitution requires either House of Congress that wishes to adjourn for more than three days to get the other’s agreement. Therefore, the Senate can’t go into  ‘recess’ for appointment purposes without permission from the House of Representatives. If one party controls the Presidency and the Senate, while the other controls the House of Representatives -- the current situation --  the House can prevent the President from making recess appointments.

‘I think the long term impact will be whoever’s president, of whichever party, will have to present appointments who are not extreme in their opinions and could be confirmed by either party,’ says Kevin Hyde, chair of Foley & Lardner’s labor and employment Law practice.

Regardless of how the Court’s opinion indirectly shapes the Board’s substantive composition going forward, the invalidity of the challenged decisions may be temporary. The NLRB has the power to ‘re-issue’ its decisions because it’s currently composed of properly confirmed members. When doing so, the NLRB has the freedom to not change a word, to completely reverse its earlier holding, or anything in between. The Board that issued the invalidated decisions had a Democratic majority, as does the current Board, and as long as that remains true the reissued decisions are not expected to change much if at all. Given that a Democratic Board member’s appointment expires in December and the Republicans may win the Senate in November, the NLRB may not remain under Democratic control during the reissuing process.

Regardless, companies ‘need to take a look at the decisions of the NLRB that particularly impact your business, and ask whether those decisions were issued by a Board that was comprised of these recess appointments,’ Hyde counsels. ‘Then analyze whether that decision is likely to be reissued [as is], and how quickly that would occur. General Counsel should consider whether it makes sense to change its employment practice related to that decision or to keep following it, [asking] What’s the impact going to be on my organization?’

Ken Yerkes, chair of Barnes & Thornburg’s labor & employment law practice, agrees, noting that as a matter of routine practice ‘the employer would probably default to assuming that the rule or analysis of the improperly constituted board would be embraced by the current pro-labor board and be reissued, so the conservative approach would be to follow it even though it’s not current law.’

The litigation context, however, demands a different approach, Yerkes adds. Because the invalidated decisions are no longer good precedent, their invalidation can affect the strength of parties’ arguments. In at least two important situations invalidating the recent Board’s pro-labor opinions results in a change in law, at least until the pro-labor decisions are reissued.

Although the Court’s decision settled the Constitutional question, the practical impacts will take time to become clear. First, Yerkes points out that re-issuing the invalidated decisions isn’t the only way the NLRB can re-codify its rules and analyses. ’The current board majority [can] identify cases in the queue that would allow them to address the same issues of law and fact to apply the same logic of the [invalidated] cases,’ says Yerkes. ‘It’s not unreasonable to suspect that somebody’s been evaluating the cases in queue for precisely those opportunities.’

One reason the NLRB may pursue that strategy is the time it takes to reissue a lot of decisions. The NLRB took three and a half years to reissue over a hundred decisions when the Supreme Court invalidated actions by a two-member board in a 2010 case called New Process Steel. Potentially ten times as many decisions are at issue now.

Annual changes in board composition are another reason the practical consequences will take time to play out. Once Democratic board member Nancy Schiffer’s term expires on December 16, 2014,  the Board will have two Republicans and two Democrats until Obama succeeds in confirming her replacement.

Precisely how much deadlock will result from the 2-2 split isn’t clear. First, the 2013 change in the filibuster rules should make it relatively easy for the President to confirm her replacement, as long as the Democrats hold the Senate after the midterm elections. If the Republicans take the Senate in November, Obama may not be able to get a replacement confirmed. But even if the 2-2 split remains, its impact isn’t clear because the Board can act through a three-person quorum.  Still, Yerkes believes the split would be damaging by denying the NLRB a partisan majority vote and preventing it from pushing decisions through, slowing the process.

If Schiffer’s replacement isn’t confirmed by August 27, 2015, the expiration of Republican Harry Johnson III’s term would restore a Democratic majority to the board without affecting its ability to form a quorum and would end any potential deadlock.

For all these reasons, the current Board is likely highly motivated to clear its docket as quickly as possible, which NLRB Chair Mark Gaston Pearce effectively said in a statement responding to the decision.