A federal Circuit Court of Appeals decision last Friday in Noel Canning v. NLRB was front page news across the country for good reason. The court held that President Obama’s Jan. 4, 2012, “recess appointments” to the National Labor Relations Board (the “NLRB”) were “constitutionally invalid.” If upheld by the Supreme Court, the decision will impact the balance of power between the executive and legislative branches of the federal government.

For employers, the practical meaning of the decision is that the NLRB has been operating without authority for more than a year, casting doubt on the validity of the hundreds of decisions issued over that time. In addition to determining that the NLRB members had not been appointed during a recess, the Court went a step further and decided that the president’s recess appointment power may only be used when the vacancy also arises during a recess. If maintained, this will severely limit the president’s power to avoid Senate confirmations through recess appointees.

An Ordinary Case with an Extraordinary Result

Noel Canning is a soft-drink bottler and distributor based in Washington state, involved in a relatively unremarkable unfair labor practice case. The NLRB found that Noel Canning violated the National Labor Relations Act (the “Act”) by refusing to reduce to writing and sign a collective-bargaining agreement it allegedly had reached with the union that represented some of its employees. The NLRB ordered Noel Canning to sign and honor the agreement. The D.C. Circuit Court of Appeals accepted  review of the NLRB’s decision.

Noel Canning argued not only that the Board’s ruling on the merits was incorrect, but also that President Obama’s “recess appointments” were invalid because they were not made "during the Recess of the Senate" as required by the U.S. Constitution. Thus, the Board lacked a valid quorum necessary to act. The D.C. Circuit agreed and vacated the Board’s order in the Noel Canning case.

The D.C. Circuit’s opinion could have a huge impact beyond the favorable outcome for Noel Canning. If the Noel Canning decision is upheld by the Supreme Court, employers can expect that the NLRB’s decisions and rules adopted since Jan. 4, 2012 will be vacated, and will require input and agreement from validly appointed members before they can be effective, much like what happened two years ago after the Supreme Court decision in NLRB v. New Process Steel. That would be welcome news for many employers after a year that saw many controversial NLRB rulings, including:

  • Findings that certain categories of employee use of social media is protected under the National Labor Relations Act (“NLRA”);
  • Requiring a bargaining-with-the-union obligation on employers before imposing discipline;
  • Requiring employers to pay employees for taxes owed on backpay awards;
  • Finding lobbying fees chargeable to employees who object to becoming union members and paying full union dues;
  • Ruling that employer requests for confidentiality during ongoing workplace investigations can violate the NLRA by being overbroad; and
  • Overturning 50 years of precedent to require employers to keep deducting and remitting to unions employees’ union dues, even after the contract imposing the requirement expires or is terminated.

Current Impact

For employers who are facing unfair labor practice charges based on decisions issued since Jan. 4, 2012, or who are involved in representation proceedings before the NLRB, Noel Canning does not automatically wipe out these decisions or affect the authority of the NLRB to investigate charges and hold hearings. Employers must raise the Noel Canning ruling in these proceedings, however, in order to preserve that very important procedural defense. 

What’s Next?

An appeal to the Supreme Court is all but certain, but it is unclear precisely when the Supreme Court will take up the issue. The D.C. Circuit is the only court of appeals—so far—to decide this issue and the NLRB may seek broader review of the decision by all the judges in that circuit (known as “en banc” review). The 7th Circuit Court of Appeals recently avoided the question of whether the appointments were constitutionally valid, deciding the case on a different procedural matter. The NLRB, however, claims that there are “more than a dozen cases pending in other courts of appeals” around the country that raise the issue, so it is likely a conflict will arise, allowing the Supreme Court to review the issue sooner than later.

In the meantime, the NLRB is not going to shut itself down or voluntarily recall or vacate any decisions issued by the recess appointees. Quite the contrary. NLRB Chairman Mark Gaston Pearce issued a statement that the NLRB “respectfully disagrees with [the] decision” and that it regards the decision to be limited “only to one specific case, Noel Canning[.]” Not surprisingly, the White House also “respectfully but strongly disagree[s] with the ruling.” 

Given the NLRB’s view of Noel Canning, the “Race to the Circuit” has never been more important as the case provides employers who are subject to unenforced or unreviewed NLRB rulings issued since Jan. 4, 2012, a clear path to seek appellate relief. Because parties in NLRB cases have the option to petition for enforcement or review in the D.C. Circuit or their local circuit, employers looking to benefit from the holding in Noel Canning should move quickly to determine whether review in the D.C. Circuit may still be timely and is appropriate.