Supreme Court Invalidates NLRB Recess Appointments, Jones Day Labor Blog

In a decisive victory for Jones Day client Noel Canning, today the United States Supreme Court ruled unanimously that President Obama’s three January 2012 recess appointments to the National Labor Relations Board (the "NLRB" or "Board") were unconstitutional under the Recess Appointments Clause (the "Clause") of the U.S. Constitution. See Noel Canning v. NLRB, No. 12-1281, slip op. (June 26, 2014). The Court held that the Clause does not permit Presidents to make appointments during recesses of less than 10 days. Accordingly, President Obama’s three appointments to the Board during a three-day adjournment of the Senate were unconstitutional.

In New Process Steel, L.P. v. NLRB, 130 S. Ct. 2635 (2010), the Court ruled that the Board must maintain a quorum of three validly appointed members in order to conduct official business. In light of the holding in Noel Canning, the Board did not have three lawfully appointed members from January 2012 through July 2013. Thus, the decision could invalidate all Board actions during that period. The practical impact of the Court’s holding in Noel Canning is the following:

More than 700 reported and unreported decisions issued by the quorum-less NLRB are invalid. This includes a significant number of highly controversial decisions that either modified or overruled past Board precedent.

Enforcement actions brought by at least 10 NLRB Regional Directors who were approved by the 2012–13 recess-appointee Board are arguably invalid.

Delegations of authority from the recess-appointee Board to its Acting General Counsel are also arguably invalid.

According to the NLRB’s Office of Public Affairs, there are currently more than 100 pending legal challenges to the January 2012 recess-appointee Board, with at least one case pending in each of the 12 federal circuit courts. Many—if not all—of these cases will likely be returned to the NLRB for reconsideration.

To the extent that NLRB decisions after August 2013 relied upon cases that overturned or modified precedent established by a quorum-less recess-appointee Board, such decisions are subject to collateral attack.

Some of the most critical of the invalid decisions issued by the 2012–13 recess-appointee Board are:

• WKYC-TV, 359 N.L.R.B. No. 30 (Dec. 12, 2012), in which the Board overturned 50 years of precedent and held that an employer’s obligation regarding the checkoff of union dues—if contained in a collective bargaining agreement—continues after contract expiration, absent a specific contractual right to terminate such a requirement.
• American Baptist Homes of the West d/b/a Piedmont Gardens, 359 N.L.R.B. No 46 (Dec. 15, 2012), in which the Board reversed the rule established in 1978 privileging employers to withhold confidential witness statements obtained by an employer during an internal investigation.
• Banner Estrella Medical Center, 358 N.L.R.B. No. 93 (July 30, 2012), in which the Board restricted employers from requiring general confidentiality agreements from employees when investigating internal matters.
• Alan Ritchey, Inc., 359 N.L.R.B. No. 40 (Dec. 14, 2012), in which the Board held that employers must give notice to a union and offer to bargain before initiating discretionary discipline policies regarding union-represented employees.
• Sodexo America LLC, 358 N.L.R.B. No. 79 (2012), in which the Board held that an employer could not prohibit off-duty access because the rule granted the employer "unfettered discretion" to determine which employees could access the facility during non-working hours.
• Karl Knauz Motors Inc., 358 N.L.R.B. No. 164 (Sept. 28, 2012), in which the Board held that employer policies requiring employees to be courteous in the workplace, keep information confidential, refrain from making statements critical of employers, and refrain from using profanity are unlawful under the Act, as such policies could potentially "chill" employee free speech and interfere with employee organizing rights.

The current Board will now be called upon to revisit all decisions invalidated by Noel Canning. The Board has experience with this, as it had to reconsider approximately 600 decisions after the New Process Steel decision. Now that the Board is at full strength with all members confirmed, it can simply reissue the decision in the most controversial cases. It is expected they will follow the procedure they used after New Process Steel, inviting litigants to file motions for reconsideration if there have been changes in the facts since the original decision issued. In addition, since there is no statute of limitations to appeal a Board order, losing parties may file appeals in the Court of Appeals challenging any adverse determinations on Noel Canning grounds. This would include appeals challenging the actions of the Acting General Counsel who was delegated authority by the quorum-less Board, as well as actions of the Regional Directors who were appointed by a quorum-less Board.

As a result of this decision, any employers who were subject to an adverse determination by the now-illegal Board between January 2012 and July 2013 should work closely with their labor counsel to ensure they are pursuing appropriate strategies

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Michael S. Ferrell
Chicago
+1.312.269.4226
mferrell@jonesday.com

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