Supreme Court Rejects Bid to Review Validity of President Obama’s NLRB Recess Appointments

On February 6, 2013, the U.S. Supreme Court denied an emergency stay application filed by HealthBridge Management, LLC (a nursing home operator).   The application attempted to block a preliminary injunction issued in December 2012 by the National Labor Relations Board (NLRB).  HealthBridge claimed that the  NLRB order was invalid  because of the D.C. Circuit’s January 25, 2013 ruling that President Obama’s recess appointments to the  NLRB were unconstitutional.  See Noel Canning v. NRLB, Case Nos. 12-1115 & 12-1153 (D.C. Cir. Jan. 25, 2013).  The preliminary injunction requires HealthBridge to reinstate striking workers while the NLRB considers the employees’ unfair labor practices complaint against HealthBridge.  The Supreme Court’s order gave no reasoning for denying the stay application.

In the Noel Canning case, the D.C. Circuit held that President Obama’s recess appointments of three NLRB members on January 4, 2012 were invalid because the Senate was not officially in recess.  Consequently, the NLRB lacked a legitimate quorum of members to act since the unconstitutional appointments. The ruling has cast much doubt and confusion over the legality of the NLRB’s rulings and actions since the invalid appointments, including the numerous decisions issued by the NLRB  over the last year aimed at employer’s social media policies, handbook provisions, class action waivers, and investigation confidentiality.  In filing its stay application, HealthBridge  tried to have the Supreme Court step into the fray and confusion created by the Noel Canning decision.

In responding the Noel Canning case, NLRB Chairman Mark Gaston Pearce issued a statement disagreeing with the decision.  He stated that the D.C. Circuit’s order related to only one specific case and that “similar questions have been raised in more than a dozen cases pending in other courts of appeals.”  In a somewhat defiant stance dismissing the potentially far-reaching decision, Chairman Pearce further stated that “[i]n the meantime, the Board has important work to do. . .  we will continue to perform our statutory duties and issue decisions.”

This is far from the end of the story.  Following the Noel Canning decisions, Senate Republicans introduced two bills seeking to limit the NLRB’s power.  Senate Bill 190 would prohibit the NLRB and the Consumer Financial Protection Bureau from enforcing or implementing decisions and regulations.  Senate Bill 180 would freeze any decisions, regulations or rulings made by the NLRB until a final resolution of the issue in the courts.  Additionally, at least 40 Republican senators sent a letter to two of the “invalidly” appointed NLRB members  requesting that they immediately vacate and resign their positions and stop drawing salaries.

In the meantime, federal Courts of Appeals are set to hear oral argument in several pending cases regarding the validity of the NLRB appointments.  This is most likely the reason that the Supreme Court  decided to reject HealthBridge’s emergency stay application.  If the question of validity is decided by one of the Appellate Courts, the Supreme Court will likely grant review.  Additionally, the NLRB has until mid-March 2013 to file a petition for rehearing en banc with the D.C. Circuit, or until April 2013 to file a petition for certiorari to the Supreme Court.  It now becomes a waiting game.  Meanwhile, uncertainty concerning the legality and validity of the NLRB’s decisions continues to mount.

However, there is Supreme Court precedent that may provide employers with some guidance.  On June 17, 2010, the Supreme Court, in New Process Steel, LLP v. NLRB, held that the NLRB did not have authority to decide approximately 600 decisions from January 1, 2008 to March 27, 2010 when there were only two confirmed Board members.  In a 5-4 decision, the Court held that Section 3(b) of the National Labor Relations Act (NLRA) requires that when the NLRB delegates its authority to a three-member panel, the panel must maintain a membership of three in order to exercise the delegated authority of the Board.

The Court further held that when the membership of the panel falls below three,  that is not a quorum permitted to exercise the delegated authority of the Board.  Effectively, because of the Noel Canning decision, the NLRB  has been operating below the required membership, and therefore lacked a quorum, from the time of the invalid recess appointments.  Hundreds of Board decisions since January 2012 stand to be invalidated.  If this is indeed the case, the NLRB , once it is fully constituted, will more than likely seek to have its previous invalidated decisions re-decided as it did in many of the cases following the New Process Steel decision.

Until a clear decision is rendered by the Supreme Court or proper confirmation proceedings ensue, employers will remain at a disadvantage when dealing with the current NLRB.  Employers should continue to review workplace policies and procedures that would tend to violate an employee’s ability to engage in concerted and protected activity as defined by the NLRA.  As always, employers are urged to discuss their workplace practices and rules with experienced employment counsel before acting on issues related to recent NLRB decisions.

For more information on this issue or assistance with applicable workplace policies and procedures, contact Lou Klein at lklein@foleymansfield.com.

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