LABOR LAW UPDATE

What began as routine successor bargaining between Noel Canning, a contract bottling and canning facility in Yakima, Washington, and Teamsters Local 760, has resulted in a potentially groundbreaking decision from the D.C. Circuit Court of Appeals on the President’s constitutional appointment power. In Noel Canning v. NLRB, a three-member panel of the D.C. Circuit ruled that the President’s three recess appointments to the NLRB were unconstitutional.

The case came before the D.C. Circuit Panel on appeal after the NLRB issued a decision upholding an administrative law judge’s finding that Noel Canning violated its duty to bargain in good faith by failing to reduce a successor agreement to writing. Noel Canning appealed the Board’s decision to the D.C. Circuit challenging, among other things, the Board’s statutory authority to issue the decision since the Board was not operating with a properly constituted three-member quorum, as required by the National Labor Relations Act and the U.S. Supreme Court’s 2010 decision in New Process Steel L.P. v. NLRB. In that case, the Supreme Court held that the NLRB must have a “quorum” of three members in order to conduct business and issue decisions. Noel Canning argued that when the NLRB issued its decision, it lacked the necessary three-member quorum because the three most recent appointments to the NLRB made by President Obama did not comply with Article II of the Constitution.

Board Members are “Officers of the United States” under the Constitution. The President may only appoint Officers with the advice and consent of the Senate, unless the appointment meets the requirements of the Recess Appointments Clause (Art. II, § 2, Cl. 3.) The Recess Appointments Clause grants the President the authority to make appointments without Senate approval “during the Recess of the Senate.” On January 3, 2012, NLRB Member Craig Becker’s appointment expired, bringing the total number of vacancies to three and leaving the NLRB without a quorum. On January 4, 2012, President Obama appointed three new members to the NLRB (Sharon Block, Terence Flynn, and Richard Griffin). At the time of the appointments, the Senate was operating under a unanimous consent agreement. The agreement provided that the Senate would meet in brief pro forma sessions every three days and conduct no business until the agreement expired on January 23, 2012. The President believed the twenty-day period while the consent agreement was in effect permitted him to make the appointments.

Noel Canning argued that the President did not make the appointments “during the Recess of the Senate” as required by the Recess Appointments Clause because “the Recess,” as used in the Clause, refers only to the interval between Senate sessions, thereby permitted the President to make only “intersessional” recess appointments. The NLRB disagreed, advocating for a broader reading of “the Recess” allowing the President to make appointments during “intrasessional” recesses, periods where the Senate is on break and not conducting business yet still formally in session. Under this interpretation, the twenty-day period during which the Senate operated under the consent agreement was an intrasessional recess during which the President was permitted to make the appointments to the NLRB.

To resolve the issue, the Panel undertook a lengthy interpretation of the meaning of the phrase “the Recess,” beginning with an examination of the natural meaning of the Recess Appointments Clause’s use of the phrase “during the Recess of the Senate.” It paid particular attention to the usage of the instead of a before “Recess.” The Panel also noted the distinction between “Recess” and “adjournment” made elsewhere in the Constitution, and concluded that the natural language supported Noel Canning’s interpretation of the Clause.

The Panel next considered the meaning of “the Recess” as it was understood at the time the Constitution was written, and examined the historical practice in the period immediately following the adoption of the Constitution. The Panel concluded that both of these inquiries supported Noel Canning’s interpretation as well. Finally, the Panel considered which interpretation better supported the underlying policy of the Clause, concluding that allowing intrasessional recess appointments would upset the checks and balances between the branches of government because it would allow the Executive branch to bypass the important restraint of appointment power provided for by the “advice and consent” requirement of the Senate provision.

In rejecting the NLRB’s interpretation of the Recess Appointments Clause, the Panel addressed a 2005 Eleventh Circuit decision in which the Eleventh Circuit reached the opposite conclusion regarding intrasessional recess appointments. The Panel criticized the Eleventh Circuit’s analysis for failing to address all of the language of the Recess Appointments Clause and for relying on modern dictionary definitions in aid of its interpretation. The Panel also addressed the fact that while Presidents have made numerous intrasessional recess appointments over the last seventy years, no intrasessional recess appointments have been made in the 80 years following the adoption of the Constitution.

Although the Panel acknowledged that its holding on this constitutional issue was sufficient to resolve the case, it also considered Noel Canning’s additional constitutional argument, which asserted that the President’s appointments were invalid because the vacancies did not happen during the Recess of the Senate. Noel Canning argued that the use of the word “happen” means to “arise,” so the President is only permitted to make appointments to fill vacancies that “arise” during “the Recess.” The NLRB disagreed, arguing that “happen” means “exist” so the President may fill any vacancy that happens to exist when the “the Recess” occurs. The D.C. Circuit Panel again agreed with Noel Canning, citing both the natural meaning of the Constitutional text and the policy issues that would arise if the President could simply wait for a recess to occur to make appointments, thus bypassing the need for the advice and consent of the Senate in making any appointments.

Where does this leave employers seeking to comply with the National Labor Relations Act and NLRB law interpreting the Act? It is highly unlikely that the D.C. Circuit Panel’s decision will be the final word on this issue. The NLRB is expected to appeal the decision to the U.S. Supreme Court and it would be surprising if the Supreme Court did not grant certiorari to resolve the circuit split and clarify the recess appointment power of the President.

Pending such resolution by the Supreme Court, NLRB Chairman Pearce has said the NLRB will continue to perform its duties. The NLRB faced a similar situation in 2010, when employers across the country were challenging its ability to issue decisions with two instead of three Members. As mentioned above, the Supreme Court resolved that issue with its decision in New Process Steel, and afterwards the NLRB had to reconsider approximately 600 decisions it had issued without a proper quorum. In practice, this had little consequence for employers because what the properly constituted NLRB did was to simply approve and reissue the reconsidered decisions, and then in many cases immediately move to enforce those decisions against employers in NLRB-friendly circuits such as the Ninth Circuit (instead of in the D.C. Circuit, to which many of the NLRB’s decisions has been appealed). Should the Supreme Court similarly find that the NLRB has been acting without authority due to improperly made recess appointments, employers should expect the same result – in essence, mere rubber stamping of the decisions issued by the current NLRB once the NLRB again has a legitimate quorum.

So, when the dust settles, the Noel Canning decision may have more of an impact on the work of Constitutional scholars than on the labor relations of most employers. At least those employers who received adverse decisions from the current NLRB, however, and who have appealed those decisions to the D.C. Circuit, get a temporary reprieve from complying with those decisions. After issuing its decision in Noel Canning, the D.C. Circuit automatically placed in abeyance all appeals of NLRB decisions pending before it. Even those employers who do not have appeals pending before the D.C. Circuit may have the opportunity to relitigate adverse NLRB decisions cases if the Supreme Court agrees with the D.C. Circuit panel and invalidates the decisions issued by the current NLRB. Even after New Process steel was issued, the NLRB invited litigants to files motions for reconsideration if there had been any change in the facts of the cases being considered by the properly constituted NLRB. Should the Supreme Court hold the recess appointments to be unconstitutional, the precedential value of NLRB decisions issued in the past year, including its many controversial decisions, is questionable.

As always, Bullard Law will continue to provide updates on the changing landscape of labor and employment law. Any employers with questions about how the Noel Canning case might impact their own unique circumstances are encouraged to contact us at (503) 248-1134 or at bullardlaw.com