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The Supreme Court's NLRB Decision: What Does It Mean?

On June 26, 2014, the U.S. Supreme Court issued a decision in NLRB v. Noel Canning, a case with a potentially wide-ranging impact on recent NLRB decisions. In this special article, TAUC General Counsel Steve Fellman explains the ruling and looks ahead to what might happen next.

The Constitution authorizes the President to nominate certain high-ranking government officials - including members of the National Labor Relations Board (NLRB) - but final appointments to such positions can only be made with the "advice and consent" of the U.S. Senate. The Constitution also contains a clause which gives the President alone the power to "fill up all Vacancies that may happen during the Recess of the Senate" by appointing such officials to a term that expires at the end of the next session of the Senate. No Senate approval is needed for a recess appointment.

In 2012, after the U.S. Senate had refused to confirm certain Obama nominees, the Administration decided to use the President's recess appointment power to appoint many officials, including three members of the five-member NLRB. Although the Senate tried to block this tactic by scheduling "pro forma" sessions where little or no work was done, the Administration took the position that the Senate was actually not in session during those times; thus, it argued, the President was free to appoint whomever he wished.

Enter the Noel Canning Corporation, a bottling and distribution facility. In February 2012, shortly after the Administration recess-appointed three new members to the NLRB, the Board found that the company had engaged in an unfair labor practice during negotiations with its Teamsters employees' union. After the ruling, Noel Canning appealed the decision and requested that the NLRB order be set aside, arguing that three of the five NLRB members were recess appointees improperly installed on the Board by the President. The company claimed that since the NLRB only had two properly appointed Board members, and the law required three Board members to constitute a quorum to act, the order issued by the Board was invalid.

On June 26, 2014, a unanimous U.S. Supreme Court agreed. The Court held that recess appointments could only be made when the Senate was actually in recess, and since the Senate had declared that it was in session during the "pro forma" sessions, the Administration could not take the position that the "pro forma" sessions were a sham. The order issued by the NLRB against Noel Canning was overruled. As a result of this decision, it appears that all the NLRB decisions reached while there were three "recess appointees" are subject to challenge.

There are currently five NLRB Commissioners who are not recess appointees and who have been confirmed by the Senate. NLRB watchers indicate the likelihood is that the current NLRB will affirm the decisions reached by the NLRB when it was packed with recess appointees. However, the law requires that NLRB action be based on a review of the record, and it is fairly clear that the NLRB will have to make a complete review of all the cases decided without a quorum.

In short, it is too early to tell how the NLRB will react to the Supreme Court decision; however, it is probable that a number of appeals will be filed asking that the NLRB orders be overturned.

One interesting note: although the majority opinion of the Supreme Court held that any person nominated by the President whose nomination was pending before the Senate when it actually went into recess would qualify to be appointed under the recess appointment clause, four of the nine Justices joined in a strong dissent. They argued that only those nominees actually nominated when the Senate was not in session would qualify for such an appointment.

Steve Fellman is the General Counsel for TAUC and a shareholder with GKG Law in Washington, D.C.

07/01/2014