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January 30, 2013

Court of Appeals Rules Presidentís Recess Appointments to the NLRB Unconstitutional

On January 25, 2013, the U.S. Court of Appeals for the D.C. Circuit ruled that three National Labor Relations Board (“NLRB”) Member (“Board Member”) appointments made by President Obama in 2012 were unconstitutional.  Noel Canning v. NLRB, No. 12-1115 (D.C. Cir. Jan. 25, 2013).  As a result, the Court found that the NLRB lacked the quorum necessary to rule on the case before it.  This ruling casts doubt on the validity of hundreds of NLRB opinions in which the three disputed Board Members participated.

Facts and Ruling

The United States Constitution permits the President to make appointments without the Senate’s advice and consent only if Congress is in recess at the time of the appointments.  In this instance, the President appointed three Board Members on January 4, 2012, during what the President claimed was a 20-day recess during which the Senate was not in session. 

In Noel Canning, the employer argued that NLRB lacked the required three Board Member quorum because the three of the five Board Members were not properly appointed. The employer also argued that the appointments were improper because the vacancies did not happen during the recess.  The Court agreed with the employer on both issues.

The Court ruled that while the President has the power to make recess appointments, such appointments can only be made during the recess that occurs between sessions of Congress.  Recesses during a session of Congress do not provide the President with an opportunity to make an appointment.  The Senate was not in “recess” as defined by the Constitution because it was conducting pro forma sessions.  As a result, the Court said, the appointments were invalid.

The Court also ruled that the vacancies that the President sought to fill with recess appointments must have arisen during the recess and not prior to the recess.  The Court rejected the NLRB’s more expansive interpretation that the President could fill any vacancies that “happen to exist” during recess.

Impact for Employers

The NLRB is likely to appeal to the Supreme Court.  Pending Supreme Court review, the validity of NLRB rulings issued since January 4, 2012 is questionable.

As a result of its ruling in the Noel Canning case, the D.C. Circuit is holding all other appeals of NLRB decisions in abeyance.  Other Circuit Courts of Appeal, which are not bound by the D.C. Circuit’s ruling, will likely continue to process NLRB appeals through decision.  Employers are sure to argue that these other courts should following the Noel Canning decision.  The other Circuits may follow the D.C. Circuit, or a split in the circuits may arise.

Cases that were decided by the NLRB since January 4, 2012, that were not appealed to a Court of Appeals, face an even less clear outcome.  To the extent a case is in compliance, an employer could potentially refuse to comply, necessitating appellate review.  Cases that were closed in compliance likely cannot be revived to take advantage of the Noel Canning decision.

The Noel Canning decision does not directly impact ALJ decisions that were not appealed to the NLRB.

NLRB Chairman Mark Pearce issued a statement that the NLRB will continue to operate.  Obviously hinting that the issue will not be resolved until decided by the Supreme Court, Chairman Pearce is reported as stating: “[The D.C. Circuit] is one of eight circuits where the issue is being dealt with.  [The NLRB] has functioned with splits in the circuits before and will abide by the supreme law of the land.”  Of course, if the Supreme Court ultimately upholds the Noel Canning decision, all NLRB decisions from January 4, 2012 until such time as a quorum of three duly appointed Board Members exists, will be void.

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It is difficult to predict how other circuits, and ultimately, the Supreme Court will rule on the issue of recess appointments.  Given that the NLRB intends to prosecute cases as usual, employers should carefully weigh their options and potential appeal rights.  The attorneys at Putney Twombly are available to assist in this regard or to answer any questions concerning the impact of the Noel Canning decision.