Setting the Stage

In January 2012, Senate Republicans had been working for months to deny President Obama the ability to make three appointments to the National Labor Relations Board (NLRB). Some GOP senators believed this blockade would effectively shut down the five-member board, which they believed tends to favor labor interests.

The President attempted to maneuver around this blockade by preparing to make appointments while the Senate was in recess. In an effort to counter this maneuver, Republican senators avoided a recess and technically kept the Senate doors open in a pro forma session.

Notwithstanding the pro forma session, on January 4, 2012, President Obama appointed NLRB members Terence Flynn (R) , Richard Griffin (D) and Sharon Block (D). The President took the position that, despite technicalities, in reality the Senate was in recess, thereby allowing him to exercise his right to make recess appointments not subject to Senate confirmation.

The Opening Act: An Aggressive 2012 Board

The newly appointed Board, with its Democratic majority, issued numerous significant decisions in 2012. Several reversed long-established Board precedent, confounded employers and demonstrated an aggressive and activist agenda. Those decisions tightly narrowed the ability to issue social media policies and terminate employees for social media posts; forced employers to disclose witness statements obtained without a confidentiality promise; proscribed mandatory dispute resolution programs; required employers to respond promptly to union requests for information, even when the information requested may be irrelevant; and obliged employers to deduct union dues even after a collective bargaining agreement expires.

The Plot Twist: The Noel Canning Decision

In 2012, Noel Canning, a Washington state bottler and distributor of soda products, petitioned the D.C. Court of Appeals for review of an NLRB decision finding that Noel Canning violated the National Labor Relations Act by refusing to execute a collective bargaining agreement reached with the Teamsters union. But, Noel Canning argued more than the merits of the Board’s decision. It also questioned the Board’s authority to issue the decision altogether on constitutional grounds, arguing that because the Senate was not actually in recess at the time of the appointments, the three newly appointed members of the Board were never validly appointed. Thus, the Board lacked authority to issue a decision because a quorum did not exist.

On January 25, 2013, the D.C. Court of Appeals issued a blockbuster decision that spun traditional labor law into another cycle of uncertainty. The court agreed with Noel Canning, ruling that the January 4, 2012 recess appointments of Flynn, Griffin and Block were invalid because they did not occur during an intersession recess of the Senate. (In a separate controversy, Flynn stepped down in May 2012 following allegations that he leaked confidential information during time as a staff lawyer at the agency.) The court held that the President could only make recess appointments during gaps between enumerated sessions of the Senate (intersession appointments) and not intrasession recess appointments. Accordingly, a pro forma session is not a recess, and the appointments were ruled to be invalid.

The Second Act: The Board Ignores Noel Canning

The NLRB and the Department of Justice have adamantly opposed the D.C. court’s decision. NLRB Acting General Counsel Lafe Solomon has reiterated that it has been the Board’s longstanding practice not to acquiesce in adverse decisions by individual courts of appeals in subsequent proceedings involving different parties. In essence, the Board has ignored the Noel Canning decision. The Board has continued to issue decisions and hear, process and decide election petitions and unfair labor practice charges, notwithstanding Noel Canning.

The NLRB has decided not to seek en banc review of the Noel Canning decision. Instead, it will bring its challenge directly to the Supreme Court. It remains to be seen whether the Supreme Court will accept the Board’s petition for certiorari.

The Dramatic Fallout

While employers wait for potential review by the Supreme Court, the D.C. court’s ruling has ignited similar claims and appeals in federal courts alleging that the NLRB lacks the authority to act because it was not comprised of the necessary three-person quorum of properly appointed members. Although Noel Canning does currently provide employers with a potential avenue to overturn Board decisions by seeking review before the D.C. circuit, employers will have to wait. The court has already issued orders holding pending cases that raise the recess appointment issue in abeyance.

Employers are likely to flood other circuit courts with similar challenges. More than a dozen cases involving the recess appointment issue are now pending in the other appellate courts. However, as specifically noted by the D.C. Circuit in Noel Canning, other circuits may take a different view of the recess appointments.

An Uncertain End: How Should Employers React?

Although Noel Canning calls them into question, the Board’s 2012 decisions remain Board law. The Board’s ALJs and regional offices will likely continue to rely on and apply all of the Board’s aggressive 2012 decisions. For now, employers should continue to accept them as the rule of law. But stay tuned for the third act: Supreme Court review (or lack thereof!).