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NLRB ruling spurs concerns of bottleneck

By: Kimberly Atkins , Dolan Media Newswires//July 16, 2014

NLRB ruling spurs concerns of bottleneck

By: Kimberly Atkins , Dolan Media Newswires//July 16, 2014//

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Lawyers say a June 26 decision by the U.S. Supreme Court that struck down President Obama’s 2012 recess appointments to the National Labor Relations Board threatens to invalidate hundreds of rulings made over an 18-month period.

But the ruling in NLRB v. Noel Canning goes even further, they warn.

While establishing the president’s authority to make recess appointments when Congress is not in session for a “sufficient length” of time, the decision also makes clear that Congress can block such appointments by gaveling in short pro forma sessions.

That gives Congress the power, if it chooses to use it, to effectively kill the president’s recess appointment authority — something lawmakers have repeatedly done in recent history when rival political parties have controlled Congress and the White House.

“The recess appointment power has receded into practical irrelevance as a result of this practice, and [Noel Canning] likely cements that reality,” said Andrew J. Pincus, a partner at Mayer Brown in Washington, D.C.

The NLRB is now faced with re-litigating hundreds of cases that were decided with improperly appointed members. That means labor and employment attorneys may face delays due to the bottleneck created by that activity.

“This is going to cause delay after delay after delay,” said Joseph W. Ambash of Fisher & Phillips in Boston, who successfully argued the 2010 case New Process Steel v. NLRB, which invalidated NLRB rulings issued by less than the statutorily required three-member quorum.

Rhode Island lawyer Michael F. Kraemer, who practices at the Boston firm of White & Williams, said the NLRB is a “highly political body” with decisions that differ greatly depending on the leanings of the White House.

The Supreme Court’s decision voided more than 1,000 rulings, about 30 percent of which had resulted in published opinions, he said.

“Those matters were now decided by an unconstitutional board,” Kraemer said. “So if you’re a lawyer who has one of those cases — assuming you’ve done what you need to do to protect your procedural status — then all of a sudden you have a case that needs to be revisited, which is a huge administrative nightmare for the board.”

While it will take time to re-argue the cases, Kraemer does not expect the holdings to be much different when they are decided the second time around.

“When these decisions finally get revisited, I think the current board for the most part is going to do the same thing that the unconstitutional board did,” he said. “It will come up with decidedly pro-union decisions and stick its nose in aspects of the employment relationship where it doesn’t belong.”

‘Interesting procedural arguments’

Justin F. Keith of Boston, who handled New Process Steel with Ambash, said lawyers who currently have an adverse decision from the recess appointments on appeal will feel the most immediate impact from Noel Canning.

“There are some interesting procedural arguments you can make to try to just get the case dismissed outright,” the Greenberg Traurig lawyer said. “But I think what’s eventually going to happen is that almost all of these cases are going to go back to the board on remand.”

When that occurs, Keith said, counsel will find that they are arguing the merits of their claims to an almost entirely different board, as the only remaining member is Chairman Mark Gaston Pearce.

“Whether the board rubberstamps the decisions, like they did with many, many of the post-New Process Steel cases, or takes the opportunity to expand on them is an open question that’s going to play itself out in the next few months,” Keith said. “What’s different here is that, during this recess appointee board era, we had a lot of very controversial decisions, which wasn’t the case after New Process Steel.”

Among the controversial decisions was a ruling that undid 50 years of precedent by holding that employers can no longer stop deducting union dues from paychecks after a contract expires, Keith said.

There also were several significant rulings involving employer confidentiality and terminations for social media conduct, he said.

“All those cases are subject to being revisited,” Keith said. “The board may endorse the prior decisions or they may take an opportunity, now that they’ve got a full five-member board, to expand on them and attempt to further insulate them from challenge in the courts. At this point, we just don’t know.”

Ronald Meisburg of Proskauer Rose in Washington, D.C., is a former NLRB general counsel who also served as a recess-appointed member of the board.

He agreed that the landscape at the NLRB is far different now than after New Process Steel.

“A number of cases that did come out [while Noel Canning was pending] were split decisions,” Meisburg said. “There are dissents in many of the cases, so it will take time to process those cases again.”

Parties unhappy with the results of a re-hearing can seek additional review by the full board, but that process takes time and will lead to a backlog as the board juggles re-hearings with the new cases on its docket.

“It’s an issue of resource allocation,” Meisburg said. “Do they put all the old cases on the back burner?”

Congress in session ‘when it says it is’

Congressional gridlock led to the 2012 recess appointments that were challenged in the case. At the time, Senate Republicans were holding up votes on pending NLRB nominees in protest over what they believed were overtly pro-union decisions and actions by the board.

With the terms of several board members set to expire, the NLRB was close to falling below the statutory minimum quorum of three members needed under the Supreme Court’s ruling in New Process Steel.

To prevent the president from making recess appointments to the board during Congress’ 2011-2012 holiday season recess, lawmakers gaveled in periodic pro forma sessions to keep Congress in session even though no business was being conducted.

Despite those efforts, during a three-day break between pro forma sessions in January 2012, Obama made three recess appointments to the board and also appointed the director of the Consumer Financial Protection Bureau.

Several businesses that subsequently received adverse rulings from the board, including canning and bottling company Noel Canning, challenged the authority of the recess appointments.

The U.S. Court of Appeals for the D.C. Circuit ruled that they were unconstitutional, holding that such appointments can be made only during intersession congressional recesses.

Despite that ruling, the board continued to operate, issuing decisions and rules until members were confirmed by the Senate on July 30, 2013.

The Supreme Court agreed to decide whether the appointments were valid.

In a unanimous decision, the court affirmed the D.C. Circuit.

The justices held that the president’s recess appointment power was not limited to congressional recesses that occur between official sessions of Congress, nor was it applicable only in cases in which vacancies occur between sessions of Congress, as the challengers had argued. But, the court said, the Constitution does require such appointments be made during a congressional break “of sufficient length.”

The justices rejected the Obama administration’s argument that the pro forma sessions were not real “sessions.”

“We hold that, for purposes of the Recess Appointments Clause, the Senate is in session when it says it is, provided that, under its own rules, it retains the capacity to transact Senate business,” Justice Stephen G. Breyer wrote for the court. “The Senate met that standard here.”

Justice Breyer wrote that three days “was too short a period to trigger the president’s recess-appointment power.

While declining to specifically state the minimum required duration of a recess, the court noted in a footnote that, “[i]n light of historical practice, a recess of more than 3 but less than 10 days is presumptively too short to fall within the Clause. The word ‘presumptively’ leaves open the possibility that a very unusual circumstance could demand the exercise of the recess-appointment power during a shorter break.”

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