A Publication of the American Bar Association Section of Labor and Employment Law

D.C. Circuit Invalidates President's Recess Appointments to the NLRB

Noel Canning, A Division of the Noel Corporation, Petitioner v. National Labor Relations Board, No. 12-1115, United States Court of Appeals for the District of Columbia

Argued December 5, 2012; Decided January 25, 2013

INTRODUCTION

In a decision released on January 25, 2013, the Court of Appeals, D.C. Circuit, invalidated President Obama's January 2012 appointments of three NLRB members. In Noel Canning v. NLRB (Canning or the Decision) the Court unanimously concluded that the National Labor Relations Board (also the NLRB or the Board) lacked authority to conclude an unfair labor practice occurred because three of the five members of the Board had not been validly appointed, resulting in the absence of a required quorum for the NLRB to conduct its business. The Court concluded the appointments were invalid because the Senate was not in recess when the President made the appointments and because the vacancies that were filled did not happen "during the Recess of the Senate" as required by the Recess Appointments Clause (RAC) in Article II, § 2, cl. 3 of the United States Constitution.

BACKGROUND

This case, involving important Constitutional issues, began with an unfair labor practice charge alleging that Noel Canning refused to execute its agreement with the Union. The administrative law judge resolved numerous credibility issues against Noel Canning and ruled that the employer violated Section 8(a)(1) and (5). A three-member panel of the Board, composed of Members Hayes, Flynn and Block affirmed the administrative law judge on February 8, 2012.

On that date, the Board purportedly had five members. Two of the members, Pearce and Hayes had been confirmed by the Senate and were undisputedly valid appointees. The other three members were all appointed by the President on January 4, 2012, purportedly pursuant to the RAC. Sharon Block filled a seat that became vacant on January 3; Terrence Flynn filled a seat that became vacant in August 2010; and, Richard Griffin filled a seat that became vacant in August 2011. At the time of the three appointments, the Senate was operating pursuant to a unanimous consent agreement that provided the Senate would meet in pro forma sessions every three business days from December 20, 2011 through January 23, 2012. The conduct of business during the break without unanimous consent was precluded by the agreement.

Noel Canning asserted the Board did not have a quorum on February 8, 2012, as required by law. (L.P. v. NLRB, 130 S Ct 2635 (2010).) Noel Canning claimed that the last three members' appointments were not valid under the RAC.

ANALYSIS

The Court agreed with Noel Canning. First, it concluded that the term "the Recess" in the RAC refers only to the intersession recess of the Senate. During that time, the Senate is unavailable to receive and act upon nominations from the President. The Court rejected the Board's position that intrasession breaks or recesses could serve as a recess for the purposes of the RAC. Key to the Court's reasoning was the language of the Constitution that refers to "the" Recess definitively and not to "a" recess or to an "adjournment," a term used six times in the Constitution, but never with respect to appointments. The Court also found persuasive the Federalist Papers (No. 67) and the history and interpretation of the clause at the time of the adoption of the Constitution and the years immediately following its ratification.

Second, the Court held that the meaning of the word "happen" in the RAC permits only the filling of "Vacancies that may happen during the Recess of the Senate." The Court concluded that "happen" means that the vacancy actually occurred during the Recess, i.e., during a time when the Senate was not in session or able to confirm. The Court rejected the Board's interpretation that "happen" means "happens to exist" during a recess irrespective of when the vacancy actually began.

THE UNION AND EMPLOYEE PERSPECTIVE

It is important to note the limited impact of this ruling. The court vacated the Board's order and denied enforcement of the Board's order in this particular case. As Chairman Pearce noted in his January 25, 2013 statement, there are similar cases pending in other Courts of Appeals, so it is not a given that about a year's worth of Board work will be invalidated.

During the Senate's "break," the Senate conducted no business. Since 2010, Senate Republicans have blocked votes on two Board nominations put forward by the President. When yet another Board vacancy arose on January 3, 2012, leaving the five-member board without a quorum, the President decided that in order for the Board to function, he needed to act.

The President acted under the authority of the RAC, which states that the "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." U.S. Const. art. II § 2, cl. 3 (emphasis added). Furthermore, it has been held that the President is vested with the discretion to determine when there is a real and genuine recess. See Evans v. Stephens, 387 F.3d 1220, 1222 (11th Cir. 2004), cert. denied, 544 U.S 942 (2005). The RAC has been interpreted to allow the President to make a recess appointment when the Senate takes a break of at least a few days. See id. 387 F.3d at 1224 (a ten or eleven day break in the Senate's session is of sufficient duration to permit recess appointments). Furthermore, according to a 1905 Senate Report, the Senate is in "recess" whenever the Senate is not sitting in regular or extraordinary session, when its members owe no duty of attendance, when the Chamber is empty, when it cannot receive communications from the President, or when it cannot participate as a body in making appointments. The Senate here explicitly agreed that no business was to be conducted during the pro forma sessions absent unanimous consent, and the Senate Chamber sat empty. President Obama, therefore, reasonably determined the Senate was in recess.

The court departed from this long-standing understanding of the term "the Recess." Rather, the court held that the Constitution refers only to "the" recess of the Senate, which can only mean the recess between sessions, and does not apply to intrasession recesses such as the one taken here. This directly contradicts the 11th Circuit's decision in Evans v. Stephens, which held that the RAC may be invoked during intrasession recesses as well. 387 F.3d at 1224. With this split, it seems inevitable that the Supreme Court will have to take this issue up. In the meantime, only the D.C. Circuit, with its tortured grammatical reading of the RAC, would strip the President of his prerogative to assure the proper functioning of government during the Senate's absence.

What makes this case particularly difficult to accept is that the court held that the Board's decision finding the employer guilty of violating the Act was indeed supported by substantial evidence. (The employer here was found to have violated the Act when it refused to execute the collective bargaining agreement containing terms agreed to by the parties.) Noel Canning is a bad actor getting away with its bad act by taking advantage of a partisan recess appointment controversy.

MANAGEMENT'S PERSPECTIVE

The effect of this Decision will have to be considered and could be key to virtually all management labor law decisions going forward. The Decision provides a potential defense to every action taken by the currently constituted Board and to potential enforcement of dozens of precedent shattering decisions by the Board since January 2012. The Decision throws into question the Board's rules with respect to "quickie elections" and postings and to actions the Board has or will institute with respect to interim relief under § 10 of the Act. Employers must, however, be careful. The Board has stated its intent to ignore the Decision and pursue and/or continue litigation notwithstanding the implications of the Decision. It could be years before the United States Supreme Court addresses the merits of the issue, assuming the high court chooses to do so. Other circuit courts could disagree with the Decision and legislative or other political resolutions could affect the impact of the Decision.

For the time being, however, employers must factor this important Decision into the decision-making process with respect to traditional labor law.


This Hot Topic was prepared by the ABA Section of Labor & Employment Law Committee on the Development of Law under the National Labor Relations Act with the assistance of Alan S. Levins, who represents management at Littler Mendelson PC in San Francisco, CA and Nicole Cuda Perez, who represents unions at the firm of Spivak Lipton LLP in New York, NY.

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