Client Bulletin #413
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A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit has invalidated an opinion by the National Labor Relations Board on the ground that the decision was issued by only two Board members. Writing for the court in Laurel Baye Healthcare of Lake Lanier, Inc. v. NLRB, Chief Judge David B. Sentelle held that the two-member Board acted beyond its lawful authority and that Section 3(b) of the National Labor Relations Act requires a three-member quorum "at all times."
The decision calls into question more than 400 Board decisions and orders in unfair labor practice cases; all other actions where the Board's authority arises from Section 3(b), such as the certification of election results; the pursuit of Section 10(j) and 10(l) injunctions; and cases where the Board has ordered reinstatement and backpay relief to resolve unfair labor practices.
This case arose out of unfair labor practice charges brought by the United Food and Commercial Workers Union against Laurel Baye. After an administrative law judge issued a decision that Laurel Baye had committed violations of Sections 8(a)(1) and (a)(5) of the NLRA, Laurel Baye filed exceptions with the Board. While the case was pending before the Board, the five-member Board lost three members.
On February 29, 2008, the two-member panel of the Board issued a Decision and Order adopting the ALJ's decision and recommended Order. In the D.C. Circuit, Laurel Baye did not challenge the merits of the unfair labor practice findings, but argued two points: (1) that the delegation of power to a three-member group was a sham because the Board knew that soon there would be only two members; and (2) that, even if the Board could have made the initial delegation, that delegation could not survive the loss of the three-person quorum. The D.C. Circuit addressed only the second argument. According to Judge Sentelle, the provision in Section 3(b) that "two members shall constitute a quorum of any group" to which the Board has delegated power does not eliminate the requirement that a quorum of the Board consist of three members. A three-member Board may delegate its powers to a two-member group, and the two-member group may act with two members, so long as the Board quorum requirement is "at all times" satisfied. According to Sentelle, "if Congress intended a two-member Board to be able to act as if it had a quorum, the existing statutory language would be an unlikely way to express that intention."
How the Board went from five to two members is a complicated story. When Board Chairman Battista's term expired on December 20, 2007, the remaining four members voted unanimously to delegate all of the Board's powers to a three-member group (Liebman, Schaumber and Kirsanow) effective December 28, 2007. According to the Board's minutes on that day, this action was taken in anticipation "that in the near future [the Board] may, for a temporary period, have fewer than three members" because the recess appointment terms for Walsh and Kirsanow were set to expire on December 31, 2007. It was the Board's view that its action would permit the remaining two Members to issue decisions and orders in unfair labor practice and representation cases after the departures of Walsh and Kirsanow. The remaining two Members would constitute a quorum of the three-member group under Section 3(b) of the NLRB, which provides as follows:
The Board is authorized to delegate to any group of three or more members any or all of the powers which it may itself exercise . . . . A vacancy in the Board shall not impair the right of the remaining members to exercise all of the powers of the Board, and three members of the Board shall, at all times, constitute a quorum of the Board, except that two members shall constitute a quorum of any group designated pursuant to the first sentence hereof.
The Board decision in Laurel Baye was issued by only Liebman and Schaumber because Kirsanow was no longer a member of the Board. Approximately 400 NLRB decisions have been issued by the two-member Board of Liebman and Schaumber.
The D.C. Circuit decision creates a split in the circuits. The U.S. Court of Appeals for the Seventh Circuit, in New Process Steel v. NLRB, and the U.S. Court of Appeals for the First Circuit, in Northeastern Land Services, Ltd. v. NLRB, have found in the Board's favor. (Constangy reported on Northeastern Land Services in the March/April Executive Labor Summary.) Meanwhile, similar cases are pending in the U.S. Courts of Appeals for the Second and Eighth Circuits. Professor Jeffery Hirsch, who was formerly with the Appellate Branch of the NLRB and is now on the faculty at the University of Tennessee College of Law, where he teaches labor and employment law, prefers the approach of the D.C. Circuit. "That's more persuasive to me," Professor Hirsch said. "The way it reads, basically, is the quorum needs to be three members at all times."
With this conflict in the circuits and the fact that the D.C. Circuit opinion will probably carry more weight because any NLRB decision can be appealed there, it is expected that the two-member issue will end up before the Supreme Court. In the meantime, the Senate is expected to accelerate the confirmation of President Obama's recent pro-labor nominees to fill two of the three current vacancies on the Board. In a press release about the Laurel Baye decision, Wilma Liebman, who was appointed Board chair earlier this year by President Obama, expressed hope that the Board "will soon have an indisputable quorum and will be out from under the current legal cloud" now hanging over its two-member decisions or orders.
When asked about the victory, Cliff Nelson of Constangy had this to say, "In my more than 30 years of practice as a management attorney, I have learned to expect almost anything from the union side. But when it comes to a government agency one should be able to count on two things: competence and fairness. As this decision clearly shows, that is sometimes not the case when dealing with the NLRB."
Constangy, Brooks & Smith, LLP has counseled employers on labor and employment law matters, exclusively, since 1946. A “Go To” Law Firm in Corporate Counsel and Fortune Magazine, it represents Fortune 500 corporations and small companies across the country. Its attorneys are consistently rated as top lawyers in their practice areas by publications such as Chambers USA, Super Lawyers, and Top One Hundred Labor Attorneys in the United States. More than 100 lawyers partner with clients to provide cost-effective legal services and sound preventive advice to enhance the employer-employee relationship. Offices are located in Georgia, Florida, South Carolina, North Carolina, Tennessee, Alabama, Virginia, Massachusetts, Missouri, Illinois, Wisconsin, Texas and California. For more information, visit www.constangy.com.