LEL Hot Topic | July 2014
A Publication of the American Bar Association Section of Labor and Employment Law

U.S. Supreme Court Finds President Obama Lacked the Power to Make Three Recess Appointments to the National Labor Relations Board

This Hot Topic was prepared by the ABA Section of Labor and Employment Law, Practice and Procedure Under the National Labor Relations Act ("NLRA") Committee, with the assistance of Brian R. Garrison of Faegre Baker Daniels LLP in Indianapolis, Indiana, representing employers in labor and employment matters, and Lisa C. Demidovich of United Nurses Associations of California/Union of Health Care Professionals in San Dimas, California, representing the Union and its represented employees.

On June 26, 2014, the United States Supreme Court decided NLRB v. Noel Canning, holding that President Obama lacked the power to make three of his recess appointments to the National Labor Relations Board ("NLRB"). 573 U.S. ___ (2014). Notably, this is the first time the Supreme Court has interpreted the U.S. Constitution's Recess Appointments Clause, Art. II, §2, cl. 3. See Slip Op. at 9.

Background

The NLRB is composed of five members and cannot issue decisions or take other actions in the absence of a valid three-member quorum. Over the course of 2011, President Obama nominated three people--Sharon Block, Terence Flynn, and Richard Griffin--to serve as members of the NLRB. Their nominations required Senate confirmation and remained pending through 2011. On December 17, 2011, the Senate adopted a resolution stating that it would take a series of brief recesses beginning the following day. Under that resolution, the Senate held pro forma sessions every Tuesday and Friday until it returned for ordinary business on January 23, 2012. During each pro forma session, the Senate would be gaveled to order and then immediately adjourned without conducting any actual business.

The Senate held one such pro forma session on January 3, 2012, which was the same day that NLRB Member Craig Becker's term expired. This left the NLRB with only two confirmed members--Chairman Mark Gaston Pearce and Member Brian Hayes. The next day, President Obama appointed Block, Griffin, and Flynn to the NLRB, using his authority under the Recess Appointments Clause in Article II, section 2 of the U.S. Constitution. This clause provides that the President has the 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 President took the position that the Senate was in "recess" on January 4 within the meaning of the Recess Appointments Clause, so he had the authority to fill the three NLRB vacancies.

On February 8, 2012, after an administrative trial and an appeal to the NLRB, a three-member panel consisting of Members Hayes, Flynn, and Block found that Noel Canning--a bottler and distributor of Pepsi-Cola products based in Washington State--had violated the NLRA by refusing to reduce to writing and execute a collective-bargaining agreement with Teamsters Local 760. The NLRB ordered Noel Canning to execute the agreement and make employees whole for any loss.

Noel Canning petitioned the U.S. Court of Appeals for the District of Columbia Circuit to review the NLRB's decision. It argued that the NLRB's order was invalid and unenforceable because the President's January 4, 2012, appointments were unconstitutional, as they were made during a period when the Senate was not in recess. As a result, Noel Canning submitted that the NLRB did not have a valid quorum of three members when it issued its order. In response, the NLRB argued that the President's recess appointment power is not so limited as to prevent him from making recess appointments during a recess that is a "break in the Senate's business when it is otherwise in a continuing session." Therefore, the NLRB argued that the President's appointment of the NLRB members was constitutionally valid and the NLRB's order should be enforced.

The D.C. Circuit's Decision

On January 25, 2013, a three-member panel of the D.C. Circuit agreed with Noel Canning that the President's recess appointments were unconstitutional. Writing for the court, Chief Judge David Sentelle found that the appointments fell outside the scope of the Recess Appointments Clause for two reasons. First, the D.C. Circuit unanimously found that the phrase "the Recess of the Senate" does not include "intra-session" recesses--those that occur within a formal session of Congress--and applies only to "inter-session" recesses--those that occur between such sessions when a return date is not set. Therefore, as the Senate was holding pro forma sessions at the time of the President's January 4, 2012, NLRB appointments, they were not made during an inter-session recess. Second, the D.C. Circuit found, by a 2-1 vote, that the vacancies filled by the President's recess appointments did not "happen" during "the Recess" as required by the Recess Appointments Clause. As the NLRB vacancies existed at the time the "recess" began and did not arise during the Senate's recess, the majority concluded that they did not "happen" during the "recess" so could not be filled pursuant to the Recess Appointments Clause. Consequently, the D.C. Circuit concluded that the NLRB lacked a quorum of validly appointed members when it issued its order in the Noel Canning case, so that order was invalid and unenforceable.

Supreme Court Proceedings

On April 25, 2013, the NLRB petitioned the United States Supreme Court for a writ of certiorari. Noel Canning did not oppose certiorari. The Supreme Court granted certiorari on June 24, 2013, and heard oral arguments on January 13, 2014.

The Supreme Court's Ruling

Justice Breyer delivered the Court's decision unanimously affirming the D.C. Circuit's decision that the Recess Appointments Clause does not give the President authority to make the three challenged appointments to the NLRB. NLRB v. Noel Canning, No. 12-1281, Slip Op. at 1 & 41 (U.S. June 26, 2014). The majority opinion, joined by Justices Kennedy, Ginsburg, Sotomayor and Kagan, rejected the reasoning of the lower court in its "first time in more than 200 years" call to interpret the Recess Appointments Clause. Id. at 9 & 41. With three of the five NLRB members' appointments invalidated, the Court found the Board lacked a quorum and set aside its order. Id. at 2-5 & 41. Justice Scalia, joined by Chief Justice Roberts and Justices Thomas and Alito, filed a concurring opinion.

The Opinion, rich in historical references, recognized that the issue of first impression has been extensively considered by the Executive Branch as "Presidents have made recess appointments since the beginning of the Republic." Id. at 8.

The first aspect of the Recess Appointments Clause the Court examined was whether it applied to intra-session recesses in addition to undisputed inter-session recesses and concluded--contrary to the D.C. Circuit--that the Clause applies to both kinds of recess so long as the intra-session recess was for more than ten days. Id. at 1 & 9-21. Historically, "Presidents have made thousands of intra-session recess appointments," likely because "opinions of Presidential legal advisers . . . are nearly unanimous in determining that the Clause authorizes these [intra-session] appointments." Id. at 12. While all Justices agreed the President may make recess appointments during any break--"no matter how short"--between sessions, compare id. at 19 with Concurrence Slip Op. at 15 n.4, the majority found that an intra-session recess "of more than 3 days but less than 10 days is presumptively too short to fall within the Clause," except for "a national catastrophe," preventing the Senate from reconvening to approve the President's needed recess appointments to address the emergent situation. Slip Op. at 21.

The Court next examined whether the Clause covered "vacancies that arise prior to a recess but continue to exist during the recess" or whether the power was limited to "vacancies that first come into existence during a recess," and concluded--again contrary to the D.C. Circuit--that the Clause applies to both kinds of vacancy. Id. at 1-2 & 21-33. Again, relying on history, the Court noted that Presidents, dating back to at least President James Madison and including "every President since James Buchanan," have made recess appointments to pre-recess vacancies. Id. at 26-29. The Court noted Presidents would not likely abuse this power because of limitations on recess appointments, such as they serve "a limited term" and they may have more difficulty tackling controversial issues without the credibility commensurate with Senate approval. Id. at 25.

The Court's final consideration was whether pro forma sessions where no business was transacted could be excluded when calculating the length of the recess. It concluded that the pro forma sessions could not be ignored and break up a recess where the Senate "retain[ed] the capacity to transact Senate business," "received a message from the President," and actually "passed a bill by unanimous consent during the second pro forma session after its [initial] adjournment." Slip Op. at 2 & 33-40. Because of the pro forma session every Tuesday and Friday during the recess at issue here, the President's three NLRB recess appointments occurred during a three-day recess, which is "too short a time to bring a recess within the scope of the Clause." Id. at 2.

The Concurrence

Concurring in "judgment only," Justice Scalia criticized the majority opinion for "transform[ing] the recess-appointment power from a tool carefully designed to fill a narrow and specific need into a weapon to be wielded by future Presidents against future Senates." Concurring Op. at 2. Instead, Justice Scalia, just as the D.C. Circuit held, would have limited the Recess Appointments Clause to inter-session recesses and to "offices that become vacant during the intermission." Id. at 1-2. Justice Scalia concludes his opinion by offering alternative speculations of the import of the majority's opinion: Either the Senate may seek to "avoid triggering the President's now-vast recess-appointment power by the odd contrivance of never adjourning for more than three days without holding a pro forma session at which it is understood that no business will be conducted" or "[m]embers of the President's party in Congress may be able to prevent the senate from holding pro forma sessions with the necessary frequency, and if the House and Senate disagree, the President may be able to adjourn both 'to such Time as he shall think proper.'" Id. at 62 (quoting U.S. Const., Art. II, §3).

Implications

Management Perspective

The Noel Canning decision calls into question every official action taken by the NLRB during the terms of its unconstitutionally appointed Members. This means all the NLRB's actions between January 4, 2012 and August 2, 2013--which includes issuing over 700 decisions and appointing several Regional Directors--are likely invalid. The NLRB now must revisit and reconsider all the invalid decisions that return to it. It is likely that the parties to many of these cases have already complied with the NLRB's order or otherwise resolved their disputes, which may render the underlying issues moot. For those cases that have not been resolved and return to the NLRB, the NLRB will have to review each of these cases as new decisions and reissue decisions after this review, just as it did after the Supreme Court's 2010 New Process Steel decision. As happened after New Process Steel, the NLRB will likely reconsider and reaffirm its decision in most, if not all, of these cases. But that may take substantial time, as many of the invalidated decisions were high-profile cases in which the decisions departed from NLRB precedent and had significant implications for employers. They are much different from the decisions invalidated by New Process Steel, which were issued in cases where a two-member NLRB, with one Democratic Member and one Republican Member, could find consensus. So, while it is unclear what will happen in the decisions invalidated by Noel Canning and in current cases the General Counsel's office is prosecuting based on those decisions, employers are wise to take guidance from them. On the other hand, the likely invalidation of the NLRB's Regional Director appointments poses a thornier issue, as its consequences may extend beyond the need to merely revisit cases and reissue decisions. Employers may challenge as invalid a variety of decisions made and actions taken by those Regional Directors since their appointments, such as those related to determining the appropriate bargaining unit, ruling on election objections, and certifying election results in union representation cases.

In conclusion, due to the time necessary for the NLRB to revisit the invalid decisions, Noel Canning will likely bog down the NLRB and inhibit its ability to proceed as planned on the other cases and issues currently before it. This means it will likely take some time before the NLRB takes action on two fronts of significant concern for employers: finalizing new rules to expedite representation election procedures and issuing decisions in cases in which the NLRB has invited amicus briefs (such as Purple Communications, Inc., which addresses employees' right to use an employer's email system for activity unrelated to the employee's business purposes, and Browning-Ferris Industries, which addresses the NLRB's joint employer standard). Due to Noel Canning and the NLRB's obligation to continue addressing other pending cases, it may not get around to these two significant issues until after December 16, 2014, when Member Nancy Schiffer's term ends. That would mean that instead of a Democratic majority, the NLRB would have two Democratic and two Republican members. While lawfully able to operate, the lack of Democratic control would mean uncertainty for the cases and issues pending before the NLRB at that time. And depending on the results of the November 2014 elections, a Republican-controlled Senate may significantly limit the President's ability to make a recess appointment upon Member Schiffer's departure. At bottom, during the period while the uncertainty caused by Noel Canning is resolved, employers should work closely with labor counsel when making strategic decisions on how to proceed before the NLRB.

Union Perspective

Subsequent events--namely the Senate rules change to allow for the President's Executive Branch appointments to be confirmed by a Senate majority and the Senate's confirmation of the NLRB General Counsel and five board members--have circumscribed the continuing impact and scope of the Court's holding on NLRB decisions. The greatest effect of the Court's ruling on labor will be the decisions that were decided by former Members Block, Flynn, and Griffin where the unsuccessful party sought review on the basis that their appointments were invalid, but unions are optimistic that the NLRB--having experience with reconsideration after the Court's 2010 invalidation of the Agency's delegation of power to a two-member board in New Process Steel v. NLRB, 560 U.S. 674 (2010)--will handle those pending cases expeditiously and effectively to ensure the NLRA's purposes are effectuated.

 

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