• D.C. Circuit Invalidates President’s ”Recess” Appointments to the NLRB
  • March 8, 2013
  • Law Firm: Troutman Sanders LLP - Atlanta Office
  • On January 25, 2013, the U. S. Court of Appeals for the D.C. Circuit issued a decision that could potentially invalidate over a year’s worth of decisions issued by the National Labor Relations Board (the "Board" or "NLRB"). In Noel Canning v. NLRB, the D.C. Circuit held that President Obama’s purported "Recess" appointments of three Board members were unconstitutional, and that the Board therefore lacked the three-member quorum required under the National Labor Relations Act to conduct business during the past year.

    Background

    The Board is typically composed of five members. In order to issue decisions or take other action, the Board requires a valid three-member quorum. On January 3, 2012, the term of one of the Board’s three then-sitting members expired, reducing the Board to only two members, both of whom had been confirmed by the Senate. With only two members, the Board was unable to act. To return the Board to a five-member panel, President Obama appointed three new Board members on January 4, 2012 without Senate confirmation, ostensibly pursuant to the Recess Appointments Clause of the Constitution. However, when the President made those appointments, the Senate was operating pursuant to a unanimous consent agreement, which provided that it would meet in pro forma sessions every three business days between December 20, 2011 and January 23, 2012. During that time, the Senate took some action, including satisfying its constitutional obligation to convene the second session of the 112th Congress on January 3.

    On February 8, 2012, a three-member panel of the Board issued an opinion upholding a decision that Noel Canning Company ("Noel Canning" or "the Company") violated the National Labor Relations Act. The Company appealed the Board’s decision to the D.C. Circuit, challenging the validity of the Board’s decision on constitutional grounds, and arguing that the Board did not have authority to act because the appointments of three of its five members were not valid. Specifically, the Company argued that the appointments were invalid because the Senate was not in Recess when the appointments were

    made, and because the vacancies filled by the appointments did not "happen during the Recess of the Senate," as required by the Constitution. The Company also argued that if the appointments were invalid, the Board lacked the required quorum, and thus lacked the power to act when it made its February 8 decision. A unanimous panel of the D.C. Circuit agreed, holding that the appointments were not constitutionally valid and that the Board therefore lacked the authority to act.

    The Court’s Opinion

    Writing for the panel, Chief Judge David Sentelle found that President Obama’s "Recess appointments" were constitutionally invalid for two reasons. First, the appointments were not made during "the Recess," as contemplated by the Recess Appointments Clause of the Constitution. Typically, Board members are appointed with the advice and consent of the Senate. However, the Recess Appointments Clause provides an exception to this rule, allowing the President to fill "all vacancies that may happen during the Recess of the Senate." The court explained that the Recess contemplated by the Recess Appointments Clause does not include every adjournment of the Senate, but is limited to the intersession recesses that occur between sessions of Congress, when the Senate is unable to act. In light of the Senate’s pro forma sessions, and the fact that it convened the second session of the 112th Congress on January 3, the court found that the Senate was merely adjourned rather than in a Recess on January 4, thereby rendering the President’s "Recess" appointments improper.

    Additionally, the court held that the President’s appointments were constitutionally invalid on another basis—the vacancies filled by those appointments did not "happen" during the Recess of the Senate. The court held that, within the meaning of the Recess Appointments Clause, the term "happen" means that a vacancy must arise during the Recess, rather than merely existing at the time the Recess begins. The President’s appointees filled seats vacated between August 27, 2010 and January 3, 2012, and therefore did not "happen" during the Recess in which they were filled.

    Implications of the Decision

    The potential impact of this ruling is tremendous, and goes far beyond merely overturning a finding of an unfair labor practice against a single company. Based on this ruling, every one of the Board’s rulings issued since January 4, 2012 are subject to challenge. This is particularly notable because the Board has issued numerous decisions in the past year extending labor-friendly positions to areas such as social media, employment-at-will policies, and the confidentiality of investigations, as well as issuing orders that have overturned some long-standing (and generally employer-friendly) decisions of prior Boards.

    The Noel Canning decision, however, is not likely to be the last word regarding the validity of the President’s appointments or the Board’s authority to act with those three "Recess" appointees. Indeed, the Board issued a statement shortly after the D.C. Circuit’s decision was announced stating that it believes that the President’s position "will ultimately be upheld," and noting that similar questions have been raised in other pending cases. The current administration is very likely to appeal the D.C. Circuit decision to the Supreme Court. In the meantime, the Board has vowed to continue with business as usual, stating that it will "continue to perform [its] statutory duties and issue decisions." Additionally, as of December 16, 2012, the Board is back down to three members, two of which are the President’s "Recess" appointments. Accordingly, if the Noel Canning decision stands, not only could Board decisions made after January 4, 2012 be invalidated, but any decisions issued from now until the Supreme Court makes a final determination of the validity of President Obama’s appointment could also be invalidated. Indeed, if the decision stands, it could invalidate opinions issued by the Board during other periods when it lacked a three-member quorum as a result of invalid "Recess" appointments, thereby leaving both employer and labor-friendly precedent subject to attack.

    The Noel Canning decision has the potential to make an unprecedented impact on modern labor law, depending upon how the Supreme Court rules. Of course, any Supreme Court decision will not be known for quite some time, and employers should therefore treat the Board’s decisions as valid until these issues have been resolved. However, they should also recognize that grounds to overturn these prior Board decisions may very well exist in light of the Noel Canning decision.