NLRB Loses Two-Member Board Case (New Process Steel)

Hot of the presses is the Supreme Court's New Process decision.  In a 5-4 decision (with Stevens writing for a largely conservative majority and Kennedy writing for a largely liberal minority), the Court agreed with the employer that the NLRB had no authority to issue two-member decisions.  In the interest of getting the news out fast, I haven't had time to read the decision yet, but as I've said before, I think this is the correct result on the law although an unfortunate rejection of an admirable attempt by Liebman and Schaumber to get cases out. 

What remains to be seen is how the Board will deal with the now-vacated cases.  I'm assuming that a new three-member panel will look at all the cases again.  The Board may simply add either Member Becker or Pearce to a panel with Liebman and Schaumber, who have obviously given their opinion on the cases already.  This will obviously take some time, but given that these are noncontroversial cases, hopefully not too long.

Here is the full syllabus:

The Taft-Hartley Act increased the size of the National Labor Relations Board (Board) from three members to five, see 29 U. S. C. §153(a),and amended §3(b) of the National Labor Relations Act to increase the  Board’s quorum requirement from two members to three and to allow the Board to delegate its authority to groups of at least three members, see §153(b). In December 2007, the Board—finding itself with only four members and expecting two more vacancies— delegated, inter alia, its powers to a group of three members. On December 31, one group member’s appointment expired, but the others proceeded to issue Board decisions for the next 27 months as a two-member quorum of a three-member group. Two of those decisions sustained unfair labor practice complaints against petitioner, which sought review, challenging the two-member Board’s authority to is-sue orders. The Seventh Circuit ruled for the Government, concluding that the two members constituted a valid quorum of a three-member group to which the Board had legitimately delegated its powers.

Held: Section 3(b) requires that a delegee group maintain a membership of three in order to exercise the delegated authority of the Board.

    (a) The first sentence of §3(b), the so-called delegation clause, authorizes the Board to delegate its powers only to a “group of three or more members.”  This clause is best read to require that the delegee group maintain a membership of three in order for the delegation to remain valid. First, that is the only way to harmonize and give meaningful effect to all of §3(b)’s provisions: (1) the delegation clause; (2) the vacancy clause, which provides that “[a] vacancy in the Board of the powers of the Board” shall not impair the right of the remaining members to exercise all of the powers of the Board; (3) the Board quorum requirement, which mandates that “three members of the Board shall, at all times, constitute a quorum of the Board”; and (4) the group quorum provision, which provides that “two members shall constitute a quorum” of any delegee group. This reading is consonant with the Board quorum requirement of three participating members “at all times,” and it gives material effect to the delegation clause’s three-member rule. It also permits the vacancy clause to operate to provide that vacancies do not impair the Board’s ability to take action, so long as the quorum is satisfied. And it does not render inoperative the group quorum provision, which continues to authorize a properly constituted three-member delegee group to issue a decision with only two members participating when one is disqualified from a case. The Government’s contrary reading allows two members to act as the Board ad infinitum, dramatically undercutting the Board quorum requirement’s significance by allowing its permanent circumvention. It also diminishes the delegation clause’s three-member requirement by permitting a de facto two-member delegation. By allowing the Board to include a third member in the group for only one minute before her term expires, this approach also gives no meaningful effect to the command implicit in both the delegation clause and the Board quorum requirement that the Board’s full power be vested in no fewer than three members. Second, had Congress intended to authorize two members to act on an ongoing basis, it could have used straight-forward language. The Court’s interpretation is consistent with the Board’s longstanding practice of reconstituting a delegee group when one group member’s term expired.
    (b) The Government’s several arguments against the Court’s interpretation—that the group quorum requirement and vacancy clause together permit two members of a three-member group to constitute a quorum even when there is no third member; that the vacancy clause establishes that a vacancy in the group has no effect; and that reading the statute to authorize the Board to act with only two members advances the congressional objective of Board efficiency—are unconvincing.

Some thoughts:

The majority's decision boils down to its interpretation of the most consistent reading of 3(b).  Essentially, the Court held that the NLRB's interpretation, while perhaps having some textual support (or at least not wholly inconsistent with the text), is simply too weird to be the appropriate reading.  As noted in the syllabus above, the NLRB's argument would allow it--as it did here--to undermine the quorum and delegation clauses.  In short, it seems that Congress did not write 3(b) with the intent of allowing a semi-permanent two-member Board to continue issuing cases; rather, the two-member language was reserved for a recusal, death, or something similarly temporary (which the Court stated it's OK with, in footnote 6).  That basic argument is the one that has had me convinced all along.  It's too bad that Congress has put the Board in this position, but the main fault lies with the confirmation process (or lack thereof).

Footnote 4 raises--but does not address--whether delegations to the General Counsel or Regional Directors under similar circumstances are valid.  The reason is the Court's holding that a delegee groups ceases to exist once the Board no longer has three members.  If such delegations are ultimately deemed invalid, this would significantly broaden the impact of New Process.

The dissent takes a more practical view, essentially arguing that the text should be interpreted in a wat that doesn't undermine the policies of the NLRA (not issuing decisions tends to do that).  In other words, both the majority and dissent recognize that the NLRB's interpretation can be gleaned from the text; the majority rejects it because that interpretation is a more awkward fit, while the dissent accepts the NLRB's view because it is more consistent with the overarching policies of the NLRA (and also argues that it's more consistent with the text).

Also, not surprisingly, there was no discussion of the Second Circuit's Chevron deference argument.

Finally, the NLRB has issued a press release on the decision.

Hat Tip:  Justin Keith (who was one of the attorneys for the employer) & Amy Cocuzza

-JH