Supreme Court Rules Labor Board Had No Authority to Issue Hundreds of Decisions

Posted: June 18, 2010

Roger S. Kaplan

The U.S. Supreme Court has ruled that the National Labor Relations Board lost its statutory authority to issue decisions when its membership dwindled to only two in early 2008. The Court’s 5-4 decision calls into question the finality of nearly 600 decisions issued by the two-member Board (which, at full staff, is comprised of five members) between January 2008 and April 2010. While the majority in an opinion written by retiring Justice John Paul Stevens acknowledged the NLRB’s “understandable desire to keep its doors open despite vacancies,” the Court’s decision was guided by the language of the National Labor Relations Act. The Court determined the NLRA does not “authorize the Board to create a tail that would not only wag the dog, but would continue to wag after the dog died.” New Process Steel v. NLRB, No. 08-1457 (June 17, 2010).

Background

The Board had functioned with only two members - Chairman Wilma Liebman and Member Peter Schaumber - from January 2008 to April 2010. In December 2007, when the Board still had four members (with two recess appointments about to expire), it delegated its powers to a three-member panel. When Board membership shrank to two in January 2008, the agency said the NLRA allowed it to continue operation. It pointed to the critical section of the NLRA (Section 3(b)), which provides:

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.

Between January 2008 and April 2010, when President Barack Obama’s recess appointments of Craig Becker and Mark Pearce to the NLRB took effect, the two-member Board issued nearly 600 decisions. Two of those decisions involved unfair labor practices complaints against New Process Steel, the petitioner in the case before the Supreme Court. New Process Steel LP, 353 N.L.R.B. No. 25 (2008); New Process Steel LP, 353 N.L.R.B. No. 13 (2008). The Board ruled against the company, which appealed to the U.S. Court of Appeals for the Seventh Circuit. The Seventh Circuit rejected the company’s assertion that the two-member Board did not constitute a quorum of the Board and did not have authority to issue decisions.

Meanwhile, other litigants also challenged the authority of the two-member Board in other circuits across the country. The resulting decisions, largely favoring the Board, produced a conflict in the circuit courts as to whether the Board is authorized to act with only two members. (For more information, see our article, U.S. Supreme Court May Take Up Appeals Court Conflict Over NLRB Quorum.)

Supreme Court Decision

A 5-4 majority of the Supreme Court on June 17, 2010, reversed the Seventh Circuit decision, finding the two-member Board did not have the authority to issue decisions. The Court determined that the NLRA requires at least three of the Board’s five seats filled for the Board to act.

With respect to the argument that Congress in the delegation clause of the NLRA (Section 3(b)) “intended to authorize the two members to act on an ongoing basis,” the Court responded that Congress “could have used straightforward language.”

The Court described the Board’s 2007 delegation of authority sarcastically:

The Rube Goldberg-style delegation mechanism employed by the Board in 2007-delegating to a group of three, allowing a term to expire, and then continuing with a two-member quorum of a phantom delegee group-is surely a bizarre way for the Board to achieve the authority to decide cases with only two members.

Further, “allow[ing] two members to act as the Board ad infinitum, [would] dramatically undercut the significance of the Board quorum requirement by allowing its permanent circumvention,” Justice Stevens wrote on behalf of the majority. “Requir[ing] that the Board’s delegated power be vested continuously in a group of three members is the only way to harmonize and give meaningful effect to all of the provisions in §3(b),” Justice Stevens concluded.

The majority found additional support in the Board’s own practices. Justice Stevens observed that “throughout its history[, the Board has] allowed two members of a three-member group to issue decisions when one member of a group was disqualified from a case,… [but] … has not (until recently) allowed two members to act as a quorum of a defunct three-member group.”

The Dissent

The dissent, authored by Justice Anthony Kennedy, conceded that Congress “did not expect a two-member quorum to operate as the Board for extended periods.” In the four dissenting Justices’ view, however, “a result opposite to the one reached by the Court” would better “ensure orderly operations when the Board is not at full strength as well as efficient operations when it is.”

* * *

Though the Supreme Court’s decision may be straightforward, its implications are less so. Noticeably absent from the majority’s opinion is any discussion of the fate of the hundreds of cases decided by the two-member panel.

In a press release issued shortly after the Supreme Court handed down its decision, the NLRB said it expected more than 70 pending appeals of its decisions to be remanded to the Board. The current four-member Board, it said, “will decide the appropriate means for further considering and resolving [the cases].”

Jackson Lewis attorneys are available to answer inquiries regarding this case and other laws affecting the employers.