Making Sense of Uncertainty in the Wake of Noel Canning
The National Labor Relations Board was created back in 1935 in the midst of the Great Depression and at a time of intense conflict between management and labor. The Board, by design, continues to be a focal point for conflict, both economic and political. Until this year, however, the Board never faced the kind of existential crisis that it was confronted with up until just a few short weeks ago when the Senate reached a bipartisan compromise that enabled the president to fill vacancies on the Board, such that the Board can perform all of its functions. On July 30, 2013, the Senate confirmed all five of the President's nominees--the first time the Board has had a full slate of five regularly appointed and confirmed members since August 21, 2003. The five members of the Board are: Mark Pearce, Nancy Schiffer, Kent Hirozawa, Harry Johnson III, and Philip Miscimarra. Pearce, Schiffer, and Hirozawa are Democrats. Johnson and Miscimarra are Republicans.
The Board's existential crisis was the product of contemporary political wrangling in Washington, and, ironically, a constitutional dispute involving consideration of, inter alia, who said what and when during the constitutional debates of the late-1780s. By decision dated January 25, 2013, the DC Circuit Court of Appeals ruled in Noel Canning v. NLRB, that President Obama had made two constitutionally invalid "recess" appointments to the Board. The Court held that the president could only make recess appointments between enumerated sessions of the Senate (i.e., "inter-session recesses"), and not during breaks within a session of the Senate (i.e., "intra-session recesses"). The D.C. Circuit also held that recess appointments could only be made to fill those vacancies that arise during an inter-session recess, as distinguished from vacancies existing prior to adjourning for inter-session.
Thereafter, on May 16, 2013, the Third Circuit, in a divided opinion, held in NLRB v. New Vista Nursing and Rehabilitation that the appointment of former Board member Craig Becker was also an invalid intra-session appointment. Member Becker participated as a Board member in cases dating back to March 27, 2010. Two months later, on July 17, 2013, the Fourth Circuit issued NLRB v. Enterprise Leasing Co.--another 2-1 decision--which followed Noel Canning in holding that the President's three January 4, 2012, appointments were constitutionally infirm "intra-session" recesses.
On June 24, 2013, the Supreme Court granted the NLRB's petition in Noel Canning for a writ of certiorari. Noel Canning itself did not oppose the Board's petition. In the meantime, there are approximately 100 additional cases pending in federal appeals courts in which the authority of the Board is challenged on similar grounds.
It is difficult to overstate the potential impact of a decision by the Supreme Court affirming Noel Canning. Such a decision could invalidate the great majority of all NLRB decisions issued since early 2010--likely more than one thousand cases, with each one involving thousands of American workers and their unions and employers. It is also contended by many that the ramifications should extend beyond Board quorums for adjudicatory purposes and encompass all official administrative, decisional, or enforcement action--whether it be promulgating new rules and regulations, conducting charge investigations, issuing complaints and subpoenas, delegating authority to the Acting General Counsel to pursue injunctive relief, or appointing new Regional Directors (nine of the 28 current Regional Directors have been appointed since January 2012 alone).
What does all of this mean for management?
Even if it grants certiorari,the Supreme Court likely would not rule on Noel Canning before 2014. While the Senate compromise appears likely to resolve the Board's lack of a quorum, it does not prevent similar problems from arising again in the future, as disputes over future Board nominees can be expected in the modern political climate. Moreover, the compromise does not address decisions rendered and actions taken by the Board prior to the compromise. Thus, employers should still pay close attention to how the Supreme Court rules on Noel Canning and New Vista.
Employers who find themselves the subject of adverse Board decisions rendered prior to the valid appointment of new Board members may wish to file a prompt petition for review in the D.C. Circuit (any decision of the NLRB can be appealed to the D.C. Circuit, but, in the absence of a petition for review, the NLRB may file a petition for enforcement in any circuit where an alleged unfair labor practice occurred). However, employers should expect that such petitions will be held in abeyance until the Supreme Court decides Noel Canning, at which point there will likely be a significant backlog of cases, resulting in further delays.
In charge investigations, answers to complaints, responses to subpoenas, and other matters pending in the NLRB's various regions that pre-date the valid appointment of a full Board quorum, employers should consider raising the quorum issue to ensure that it is preserved on review. Where a case is already pending review before a federal appellate court, but the employer has not previously raised the Board's lack of a quorum, an employer may nevertheless seek to raise it by means of a 28(j) letter. In Noel Canning, the D.C. Circuit addressed the constitutional challenge to the Board's composition for the first time on appeal because the jurisdictional question "creates 'extraordinary circumstances' excusing failure to raise it below."
Employers should work closely with legal counsel in navigating these and other related labor scenarios while the uncertainty engendered by Noel Canning continues.
What does all of this mean for labor?
These are the observations of one union attorney. Clearly, however, if the Supreme Court affirms Noel Canning, the effect could be devastating for an untold number of American workers and their families across this country.
Consider, for example, what could happen in a case that was decided without a quorum back in 2010 in which it was determined that a worker was fired for engaging in conduct protected by the Act. We all know that worker, even without Noel Canning being an issue, has already waited far too long to have the appeal heard and decided by the Board. Now, years later, the decision that worker finally obtains is invalidated. Such an outcome would deny that worker his or her fundamental rights under federal labor law and would be wholly inconsistent with the purposes of the National Labor Relations Act.
Union attorneys and their clients must be prepared to be creative in framing responses on a case-by-case basis to the many ways that Noel Canning may be used to block or nullify any number of Board actions. Indeed, Noel Canning has even been and will likely continue to be used to challenge the appointments of the dedicated public servants that administer and enforce the Act in Washington and in the regional offices around the country.
Finally, the political dimension of what has happened here cannot be ignored. The existential crisis that the Board was facing would not have occurred if the Senate had reviewed the merits of the president's proposed Board appointments in a good faith and timely fashion. That concern appears now to have been eliminated--at least in the near term--by the recent bipartisan compromise in the Senate. In Washington, such bipartisan consensus has traditionally had a very limited life-span.
Bruce Levine is a partner at Cohen, Weiss and Simon, LLP. He specializes in labor and employment law, representing unions in collective bargaining, grievance administration, and litigation before the NLRB and federal and bankruptcy courts.
Brigham Cheney is an attorney in the Labor and Employment practice at Paul Hastings, LLP, in its Orange County, California office. He represents employers in all aspects of labor and employment law.
Comments from the Chair
Ethics Corner: More Jurisdictions Adopt Admission by Motion Rules
Annual Section Conference Programming Highlights
LEL Committees Promote Pro Bono at Midwinter Meetings