Friday, May 1, 2009

Two-Member NLRB Decisions Struck Down (and Upheld)!

NLRB We've posted quite a bit about challenges to decisions issued by the two-member NLRB (see, for instance, here, here, and here) and now the near-final verdict is in:  the decisions are struck down.  In the Laurel Baye decision issued today, the D.C. Circuit held that the two-member NLRB did not have authority to issue decisions.  The key issue in the case was whether the Board correctly interpreted Section 3(b) of the NLRA as permitting two-members decisions. Section 3(b) states that:

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.

 According to the court, the Board's interpretation of this provision was improper:

[T]he Board’s position ignores the requirement that the Board quorum requirement must be satisfied “at all times.” Moreover, it ignores the fact that the Board and delegee group quorum requirements are not mutually exclusive. The delegee group quorum provision’s language does not eliminate the requirement that a quorum of the Board is three members. Rather, it states only that the quorum of any three-member delegee group shall be two. The use of the word “except” is therefore present in the statute only to indicate that the delegee group’s ability to act is measured by a different numerical value. The Board quorum requirement therefore must still be satisfied, regardless of whether the Board’s authority is delegated to a group of its members.

Reading the two quorum provisions harmoniously, the result is clear: a three-member Board may delegate its powers to a three-member group, and this delegee group may act with two
members so long as the Board quorum requirement is, “at all times,” satisfied. But the Board cannot by delegating its authority circumvent the statutory Board quorum requirement, because this requirement must always be satisfied.

Indeed, 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. The quorum
provision clearly requires that a quorum of the Board is, “at all times,” three members. A modifying
phrase as unambiguous as this denotes that there is no instance in which this Board quorum requirement may be disregarded. . . .

Congress provided that a quorum of the Board is three members. The Board does not have three members. It cannot act. Though section 3(b) gives the Board power to delegate its authority to a group of members, this authority is necessarily limited by the fact that the delegation authority
allows the Board to grant its power only to a group of three or more members. The Board’s
delegation power is also obviously limited by the fact that the Board quorum provision establishes that the power of the Board to act exists when the Board consists of three members.The
delegee group’s delegated power to act, however, ceases when the Board’s membership dips below the Board quorum of three members. It therefore follows that where, as here, a delegee group acts on behalf of the Board, the Board quorum requirement still must be satisfied.

As I've said before, I agree with this interpretation of Section 3(b), although thought the Board had a reasonable position and an admirable goal of keeping the agency doing what it's supposed to do (and hats off again to Members Liebman and Schaumber for all their hard work during this time).  More important, however, is that this decision will impose a significant cost on the Board and the victims of unfair labor practices in all the affected cases--as they'll now have to wait a lot longer to have their cases heard again.  To its credit, the D.C. Circuit addressed this reality in its closing:

Finally, we acknowledge that the case before us presents a close question, and that neither OLC’s interpretation nor the Board’s desire to continue to function is entirely indefensible. Both were undoubtedly born of a desire to avoid the inconvenient result of having the Board’s adjudicatory wheels grind to a halt. Nevertheless, we may not convolute a statutory scheme to avoid an inconvenient result. Our function as a court is to interpret the statutory scheme as it exists, not as we wish it to be. Any change to the statutory structure must come from the Congress, not the courts. Perhaps a properly constituted Board, or the Congress itself, may also minimize the dislocations engendered by our decision by ratifying or otherwise reinstating the rump panel’s previous decisions, including the case before us. See, e.g., FEC v. Legi- Tech, Inc., 75 F.3d 704 (D.C. Cir. 1996) (affirming properly reconstituted FEC Board’s ratification remedy for its unconstitutional membership).

Perhaps a small silver lining for the Board in this case is that Congress and the Obama Administration will try to move more quickly to get the Board back up to its full complement of members.


Finally, in a late-breaking twist, I've just found out (thanks to Peter Winkler, Dennis Walsh, and Patrick Kavanagh) that the NLRB actually won on the exact same issue today in the Seventh Circuit.  The court's analysis in New Process Steel isn't as thorough as the D.C. Circuit's, although much more so than the First Circuit's, which earlier upheld the two-member decisions.  In New Process Steel, the Seventh Circuit held that the decisions were valid, stating (among other things) that the Board's reading of Section 3(b):

indeed is the plain meaning of the text. As we read it, § 3(b) accomplished two things: first, it gave the Board the power to delegate its authority to a group of three members, and second, it allowed the Board to continue to conduct business with a quorum of three members but expressly provides that two members of the Board constitutes a quorum where the Board has delegated its authority to a group of three members. The plain meaning of the statute thus supports the NLRB’s delegation procedure.

Thus far--and the way today is going, who knows what other court will weigh in--the count is now 2-1 in favor of the NLRB's current two-members decisions.  Unfortunately for the Board, the votes aren't weighted equally.  Not only does the D.C. Circuit have jurisdiction over every potential NLRB case (so any party that wanted to challenge a two-member decision can race to file there), its holding generally garners far more respect than those of other circuits.

I don't know how the Board will decide to proceed until it gets more members; it could apply its non-acquiescence rule and continue to plow ahead or it can sit back and wait a bit until it can be sure that what it does won't be struck down because of this issue.  I imagine the Board itself doesn't know at this point, so we'll have to wait and see.  You can also see the AP story that quotes the NLRB's press release on Laurel Baye.

Hat Tip:  Jeff Wilson & Peter Winkler


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Because the universe sometimes likes a good joke, the 7th Circuit issued a decision on the same morning that goes the other way:

This would seem like a quintessentially cert-worthy split (especially when you factor in the 1st Circuit weighing in on the side of the Board). But, at the same time, it would probably be quicker (and far more reliable) to just confirm a Board nominee who could ratify the 2-member decisions.

Posted by: jaydub | May 1, 2009 9:53:22 AM

Why has President Obama not yet referred the nominations of Pearce and Becker to the Senate? Let's get the NLRB back up to speed.

Posted by: H. Blankenhorn | May 1, 2009 10:38:20 AM

Good point, Jeff, about whether the Board will forge ahead under its non-acquiescence policy. That would be folly, in my view. But, folly is not unprecedented at the Board.

Posted by: Jeff Wilson | May 1, 2009 11:02:23 AM

I assume that the Board will petition for rehearing/en banc in Laurel Baye and the employer will petition for rehearing/en banc in New Process. It will certainly get interesting.

Posted by: Josh | May 1, 2009 12:44:34 PM

Perhaps what Harry Reid and his Party inflicted on the NLRB by deliberately prohibiting interim appointments will be remembered.

Posted by: JR | May 5, 2009 6:45:20 AM

Here is a link to Reid's account of the impasse between the President and the Senate Democrats over recess appointments.

Posted by: H. Blankenhorn | May 5, 2009 8:33:52 AM

I agree with JR, but let's face it: spineless Senate Republicans could have challenged the phony "sessions" by calling for quorums when the Senate was gaveled to order, and didn't.

Reid is mainly to blame, but craven Senators more interested in comity than principle certainly contributed to this farce.

Posted by: James Young | May 5, 2009 6:41:25 PM

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