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From Banking and Finance Law Daily, June 24, 2013

Recess appointments to the NLRB will get constitutional vetting from on high

By Pamela Wolf, J.D.

The U.S. Supreme Court today announced that it will hear the highly controversial NLRB v. Noel Canning (Dkt No 12-1281) case to determine whether President Barack Obama’s three recess appointments to the Board in January 2012 pass constitutional muster. The District of Columbia Circuit Court of Appeals held they did not just over a year after the polarizing appointments were announced. After the federal government filed a petition asking the Supreme Court to review the decision, Noel Canning did not oppose a grant of certiorari. Forty-five Republican senators had also urged the Court to take the case and invalidate the recess appointments.

Amid the firestorm that erupted following the NLRB recess appointments, the House passed the Preventing Greater Uncertainty in Labor-Management Relations Act, H.R. 1120, despite a presidential veto message. The bill, which passed the House in April and has been referred to the Senate, would require the NLRB to cease all activity that requires a quorum of Board members. The legislation would also prohibit the Board from implementing, administering, or enforcing any decision, rule, vote, or other action decided, undertaken, adopted, issued, or finalized on or after January 4, 2012, that requires a quorum of the Board members.

Where it all started. The road to the Supreme Court began when employer Noel Canning petitioned for review of an NLRB decision holding that the employer acted unlawfully when it refused to reduce to writing and to execute a CBA reached with the Teamsters. The employer questioned the authority of the Board to issue the order on two constitutional grounds. First, it asserted that the Board lacked authority to act for want of a quorum on the theory that three members of the Board were never validly appointed since they took office under recess appointments when the Senate was not in recess. Second, according to the employer, the vacancies that these three members purportedly filled did not “happen during the Recess of the Senate,” as required for recess appointments under the Constitution.

Constitutional challenges. The D.C. Circuit sided with the employer on its constitutional challenges, holding that when the Board issued the findings and order in this case, it could not lawfully act because it did not have a quorum.

Although no jurisdictional question was raised by the parties, the appeals court examined its jurisdiction to decide the relevant constitutional issues raised by the petition. Here, the court determined that it was faced with facts that triggered the Yardmasters exception (Railroad Yardmasters of America v Harris challenged the authority of the National Mediation Board on the basis that it had no quorum), and held that it could exercise jurisdiction under NLRA Sec. 10(e) because a constitutional challenge to the Board’s composition creates “extraordinary circumstances” excusing failure to raise the argument below.

In this case, the D.C. Circuit concluded, there was “no order to enforce” because there was no lawfully constituted Board. As a result, the challenged order was outside the orbit of the authority of the Board because it had no authority to issue any order — it had no quorum. This, held the appeals court, constituted an extraordinary circumstance within the meaning of the NLRA.

Recess appointments. On the date that the NLRB issued the ruling in this case, it purportedly had five members. It was undisputed that two Board members had been validly appointed by Senate confirmation. The remaining three members were all appointed on January 4, 2012, ostensibly via the Recess Appointments Clause of the Constitution (Art. II, Sec. 2, cl. 3). However, at the time the president made these recess appointments, the Senate was operating pursuant to a unanimous consent agreement, which provided that the Senate would meet in pro forma session every three business days from December 20, 2011, through January 23, 2012, but that “no business would be conducted” during those sessions.

According to the employer, “the Recess” in the Recess Appointments Clause referred to the period between sessions of the Senate when the Senate is, by definition, not in session and, therefore, unavailable to receive and act upon nominations from the president. The Board, however, asserted that “recess” means breaks in the Senate’s business when it is otherwise in a continuing session. The D.C. Circuit found arguments supporting the intrasession interpretation of recess unconvincing and disagreed with the Eleventh Circuit’s ruling in Evans v Stephens, cited by the Board. Rather, the appeals court agreed with the employer’s position, finding that history supported its interpretation and holding that “the Recess” is limited to intersession recesses.

Because the Senate was not in recess, the president’s recess appointments to the Board were invalid and the Board, accordingly, was operating without a quorum. Citing New Process Steel, LP v NLRB, which holds that the Board cannot act without a quorum of three members, the appeals court held the Board was not authorized to conduct business on the day that it issued the challenged ruling.

Questions presented. The federal government filed a petition for certiorari, asking the High Court to decide two questions:

  • Whether the president may use the recess-appointment power during intrasession Senate recesses or whether the power is limited to intersession recesses; and
  • Whether the president’s recess-appointment power is exercisable for vacancies that exist during a recess or whether the power is limited to vacancies that first arose during that recess.

In its order granting the certiorari, the Supreme Court added a third question to the list, one that was urged by Noel Canning:

  • Whether the President’s recess-appointment power may be exercised when the Senate is convening every three days in pro forma session.

Pro forma sessions. Noel Canning noted in its reply brief that the D.C. Circuit had not addressed whether three-day pro forma Senate sessions constitute “the Recess.” According to Noel Canning, they do not, and allowing recess appointments during pro forma sessions would unwisely expand presidential appointment powers. In theory, said Noel Canning, a president could use any period (e.g. weekends) as the basis for making recess appointments. Moreover, Senate has taken action at previous pro forma sessions, including the passage of legislation in August and December of 2011. The company also noted that President Obama made the NLRB recess appointments one day after the Senate met to convene the 112th Congress’s second session.

Narrow affirmance urged. Acknowledging that the High Court may be reluctant to adopt the company’s broadest arguments against an intrasession presidential recess-appointment power, the employer suggested a path that would permit affirmation of the D.C. Circuit on narrow grounds. Noel Canning repeatedly noted that the Senate relies on three-day pro forma sessions because the Senate cannot adjourn more than three days without the House’s consent. As a result, according to the employer, the Supreme Court could at least affirm the appeals court on the narrow ground that the Senate had not adjourned beyond three days when President Obama made the January 4, 2012, recess appointments. As a result, the narrow holding would invalidate only the January 4, 2012, recess appointments.

If the addition of this question to those presented by the case for review is any indication, the Court appears at least open to the argument.

What’s at stake? This case has much broader implications than just the fight between the Noel Canning and the NLRB, or even whether all of the NLRB decisions since the president’s January 2012 recess appointments are invalid — a prospect that alone has huge implications. It will also impact the raging battle between President Obama and a Congress that has been more than just sluggish regarding the confirmation of his nominees, particularly with regard to the NLRB. Some would characterize the nomination logjam as a strategy to render impotent an agency whose determinations have been largely viewed by Republicans as inappropriately overreaching.

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