LEL Flash | Issue: March/April 2013

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Issue: March/April 2013

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Stay Tuned--The Potential Expanding Consequences of Noel Canning v. NLRB

If the Recess Appointments Clause of the U.S. Constitution is as limited as the U.S. Court of Appeals for the D.C. Circuit interprets it in Noel Canning v. NLRB, just how many presidential appointments--and how many federal agency actions--may be subject to a similar challenge? The answer may surprise those who thought Noel Canning only concerned National Labor Relations Board (NLRB) cases under the Obama administration.

Background

In Noel Canning, a Division of the Noel Corporation v. National Labor Relations Board, Nos. 12-1115 & 12-1153, (D.C. Circ. Jan. 25, 2013), the U.S. Court of Appeals for the D.C. Circuit analyzed the context in which the Constitution included the Recess Appointments Clause and concluded that the Framers would not have intended to permit the President to avoid the checks and balances inherent in the advice and consent requirement by simply allowing him to appoint his desired nominees any time he pleases, but that the exercise of authority under the Recess Clause was limited to vacancies that "happened during the Recess." The D.C. Court of Appeals decision raises substantial questions of Constitutional law that has a profound impact on the separation of powers within the federal government, and will generate numerous questions for litigants as they evaluate the authority of the governmental agencies before which they appear.

The Court in Noel Canning held that President Obama's January 4, 2012 recess appointments of Sharon Block, Terence Flynn, and Richard Griffin to the NLRB constituted an invalid exercise of presidential power. Specifically, the Court found the appointments to be an impermissible use of the Recess Appointments Clause of the U.S. Constitution. What is most significant about this ruling is that, because the invalidated Board members cannot contribute to a quorum of the Board, and because the U.S. Supreme Court's 2010 decision in New Process Steel, LLP requires a proper quorum for Board actions, the underlying decision lacks authority as a matter of law. So, too, would all other decisions by this Board from January 4, 2012 to the present.

The Recess Appointments Clause provides that "[t]he President shall have Power 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." The D.C. Circuit rested its holding that the NLRB appointees were invalid on two interpretations of the Recess Appointments Clause:

  • First, the Court held that the president's recess appointment authority is limited to "intersession" recesses--the time period between new annual sessions of the Senate. The Court rejected presidential recess appointments made during "intrasession" recesses, such as the recess from late December 2011 through January 4, 2012. According to the Court, presidential power to fill positions during an intrasession recess would "permit the President to decide when the Senate is in recess [and] would demolish the checks and balances inherent in the advice-and-consent requirement, giving the President free rein to appoint his desired nominees at any time he pleases . . ." According to the Court, intrasession recesses could be interpreted as "a weekend, lunch, or even when the Senate is in session and [the President] is merely displeased with its inaction. This cannot be the law."
  • Second, the Court interpreted the words "Vacancies that may happen" from the Recess Appointments Clause as requiring that the position become vacant during the same recess in which the President appoints a replacement. The Court stated that, "There is no reason the Framers would have permitted the President to wait until some future intersession recess to make a recess appointment, for the Senate would have been sitting in session during the intervening period and available to consider nominations."

The court held that President Obama's Board appointments on January 4, 2012, did not result from vacancies occurring during an intersession recess. Furthermore, the Court reasoned that there was no intersession recess at that time because the Senate had not adjourned the First Session of the 112th Congress. Instead, the First Session "expired simultaneously with the beginning of the Second Session" in January 2012. Accordingly, the Court vacated the Board's February 8, 2012 order in Noel Canning because the President's earlier appointments were invalid ab initio.

The Impact of Noel Canning on NLRB Cases

The Noel Canning decision potentially invalidates hundreds of NLRB decisions issued since January 4, 2012. The true impact, however, may not be known for many months because this same issue--the validity of the recess appointments--has been, and continues to be litigated in at least 15 other federal appellate court actions. For example, in 2004, the Eleventh Circuit reached a contrary holding in Evans v. Stephens, 387 F.3d 1220, a case the Supreme Court chose not to review in 2005. Oral argument has been set in the Third and Fourth Circuits in cases raising similar concerns.

In recent weeks, the Supreme Court has already received and denied at least two petitions for an emergency stay against injunctive relief issued by the Board, premised on the uncertainty of the Board's authority in the wake of Noel Canning. In addition, shortly after the Noel Canning decision, Chairman Mark Pearce issued a statement promising that the Board will continue to operate "and will continue to perform our statutory duties and issue decisions."

The Impact of Noel Canning Beyond the NLRB

On February 4, 2013, the Congressional Research Service (CRS) issued a detailed memorandum that begins to answer the question of how broad of an impact Noel Canning might have on the way federal agency appointments are made throughout the federal government. The CRS based its "preliminary discussion" memorandum on data derived from the start of President Ronald Reagan's first term beginning in January 20, 1981. Based on this data, the CRS' memorandum attempts to quantify the number of presidential recess appointments made to the NLRB and other federal agencies and entities from the Reagan administration through the present. The memorandum then analyzes the question of how those recess appointments would fare in light of the holding from Noel Canning.

According to its research, the CRS concluded that, since 1981 through the present administration, approximately 652 recess appointments had been made, roughly half of which fit within the Noel Canning court's interpretation of impermissible "intrasession" recesses.

Recess appointments to the NLRB during this timeframe total 32, exactly half of which occurred during intrasession recesses. Out of a total of nearly 140 different agencies and organizations to which presidential recess appointments have been made, three have been used for appointments to the U.S. Circuit Courts of Appeals. The Department of State had the highest number of recess appointments with a total of 40. Other recess appointments were made to positions in the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Interior, Justice, Transportation, and Treasury. Roughly nine recess appointments had been made to the Occupational Safety and Health Administration (OSHA), seven to the Department of Labor (DOL), ten to the Equal Employment Opportunity Commission (EEOC), and one to the Pension Benefit Guaranty Corporation (PBGC). Each of these recess appointments raises substantial questions regarding the legitimacy of these agencies' authority with respect to issuance of interpretative regulations, rulemaking and perhaps even issuance of subpoenas or initiation of litigation.

Most Recent Developments

As of February, the reach of the Noel Canning decision has stretched beyond appointments of NLRB members to litigation involving at least one other federal agency named in the CRS report. Within the D.C. Circuit, where the Noel Canning decision is binding, a challenge is now pending with respect to President Obama's "intrasession" recess appointment of Director Richard Cordray, appointed to the newly formed Bureau of Consumer Financial Protection.

With respect to the on-going question of NLRB authority, the battle continues. On February 28, 2013, the U.S. Department of Justice filed a brief with the Third Circuit Court of Appeals supporting the NLRB's authority. The appeal in that case concerns New Vista Nursing & Rehabilitation LLC, where the employer calls into question the validity of a 2011 Board ruling ordering the company to bargain with a local of the Service Employees International Union (SEIU). According to the DOJ's briefs in New Vista, "The Noel Canning decision conflicts with nearly two centuries of executive branch practice and the decisions of three other Courts of Appeals, two of them sitting en banc." The DOJ warned that the conclusions of the Noel Canning court "are at odds with the settled understandings shared by the executive and legislative branches; and they threaten a serious disruption of the separation of powers."

As for the Noel Canning case itself, the Department of Justice has not yet filed optional briefing for an en banc review by the D.C. Circuit's panel decision. It is likely the DOJ will bypass a request for reconsideration in favor of a direct petition for grant of certiorari by the U.S. Supreme Court. Given the significance of the Circuit split, and the potentially underestimated ramifications of the Noel Canning case for numerous other presidential recess appointments, many predict the Supreme Court will grant certiorari to hear this case, or a consolidation of related challenges, on the merits in its next term.

This article was prepared by Jonathan C. Wilson, a shareholder, and Adam J. Peters, an associate, at Littler Mendelson in Dallas, TX, and Michael J. Lotito, a shareholder at Littler Mendelson in San Francisco, CA and co-founder of the Workplace Policy Institute.

Contents

Opening Page

Comments from the Chair

Special Feature

Ethics Corner

Section News: ERR Gives Back

Flash Co-Chairs:

Jeremy J Glenn, Meckler Bulger et al | Elana Hollo, National Labor Relations Board | Katherine Huibonhoa, Paul Hastings LLP | Amy F. Shulman, Broach & Stulberg LLP

American Bar Association Section of Labor and Employment Law
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