The U.S. Supreme Court just issued a few rulings on major cases, some of which impact employers. This week I’m just going to talk about one of them, Noel Canning v. N.L.R.B. Now I know, I’ve written about the N.L.R.B. several times, specifically, here, here, here, here , here, here, here, and here but this is different — really! I can assure you that I wouldn’t bother you with just another NLRB case if it didn’t have any relevance to you as an employer, so join The Emplawyerologist after the jump to get a glimpse at this case and how it could matter to you!
First things first: Noel Canning is a Pepsi Cola Distributor. While this case does involve a union, for our purposes it really does not matter. You may remember that the NLRA also applies to non-union “shops”.
So, what’s the story? The N.L.R.B. found that Noel Canning unlawfully refused to enter into and sign a collective bargaining agreement with a labor union. The Board then ordered Noel Canning to execute a collective bargaining agreement and to make its employees whole for any resulting losses. Noel Canning appealed the Board’s order to the D.C. Circuit Court of Appeals. Here is where it starts to get interesting: The distributor said that three out of the five Board members, Sharon Block, Richard Griffin, and Terrence Flynn, were not validly appointed, leaving the Board without a quorum ( a minimum of three out of five members). The U.S. Supreme Court ruled in 2010 in New Process Steel , L.P. v. N.L.R.B. 560 U.S. 674, 687-688 that the Board cannot rule if it does not have a lawfully appointed quorum. (I’ll come back to this in a moment.)
Why were Block, Griffin and Flynn’s appointments invalid? Briefly, here’s why: The general rule is that the President can appoint Board members after obtaining “the Advice and Consent of the Senate” (See U.S. Const., Art. II, Sec. 2, Cl. 2) President Obama did not get the Senate’s consent, though. In all fairness, he nominated each of the three in 2011. On January 4, 2012, after waiting about a year for Senate confirmations, he invoked the Recess Appointments Clause (U.S. Const., Art. 2, Sec. 2, Cl. 3), which gives the President alone the power to “fill up all vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session” and appointed all three to the Board. There was only one problem: Noel Canning challenged the Senate was not in Recess when the President made the appointments. The D.C. Circuit Court of Appeals agreed and invalidated the appointments. The N.L.R.B then appealed to the United States Supreme Court. While the Court unanimously affirmed the D.C. Circuit’s judgment, it did so based on different reasoning. I will not bog us down with how the Court determined that the Senate was not in recess. Those of you who are interested can find the U.S. Supreme Court’s opinion here.
Why does this case matter? Having found that the President exceeded his authority under the “Recess Clause), his three appointments are retroactively invalidated. The problem is that the Board, while Block, Griffin and Flynn were on it, decided some 700 cases. See where this is going? The invalid appointments leading to the absence of a quorum means that all those decisions are now invalid— at least for now. (More on that in a moment). If you have read prior Emplawyerologist posts about the N.L.R. B., then you have some familiarity with some of those decisions. I will name just three to give you a taste of what this decision could mean:
- Costco Wholesale Co. invalidating an employer’s handbook policy prohibiting electronic posting of any statements that damage the company, defame an individual or damage any person’s reputation because an employee could think s/he cannot engage in concerted activity (such as discussing working conditions with other employees, union organizing, etc.) which is protected under N.L.R.A. Section 7.
- Banner Health invalidating employer’s policy prohibiting employees participating in internal investigations from discussing the matter while the investigation.
- D.R. Horton invalidating an employer’s mandatory arbitration policy, requiring individual arbitration of all disputes and barring class or collective litigation/arbitration as an unfair labor practice.
The N.L.R.B. must now reconsider these and all other rulings from that time period. Appointments of Regional Directors by this Board may also be invalid, which means rulings or other actions by those Regional Directors may similarly be invalid.
Now what? The above decisions and many others, which struck down many cornerstone employer practices are technically and temporarily invalid. Why “technically and temporarily”? This Board (consisting of appointees that have been confirmed by the Senate) can reconsider and re-adopt some or all of the invalidated decisions. Given that the current members seem to have ruled similarly to the previous Board that is a distinct possibility, with one likely exception. The Fifth Circuit has already struck down D.R. Horton, and other courts have followed its reasoning. Reviving that decision could prove very difficult, so employers with mandatory arbitration policies may have caught a break. The truth is, only time will tell. The smart move then, would be to continue using the same caution you have been using since those invalidated decisions until further notice — and to call your friendly labor and employment attorney if you are unsure!
See you back here next week when we talk about the Hobby Lobby ruling! Happy 4th!
Disclaimer: This post’s contents are for informational purposes only, are not legal advice and do not create an attorney-client relationship. Always consult with competent local employment counsel on any issues discussed here.
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