Supreme Court Effectively Invalidates Hundreds of National Labor Relations Board Decisions

Another fine state of affairs created by the inaction and political games by our friends in Washington:

Supreme Court Effectively Invalidates Hundreds of National Labor Relations Board Decisions - A K&L Gates Labor and Employment Alert

by Michael J. Schrier, Mark S. Filipini
July 2, 2010

In an opinion that effectively invalidates more than two years worth of National Labor Relations Board ("NLRB" or "Board") decisions, the United States Supreme Court held recently that the NLRB lacked authority to issue decisions in unfair labor practice and representation cases when it was composed of fewer than three members between January 2008 and March 2010.

By law, the NLRB should have a complement of five members, with the longstanding practice that the President appoints three members of his own party and two members from the opposition. Like many senior administrative positions, NLRB members are subject to confirmation by the Senate. While the political nature of the appointment process has historically resulted in temporary vacancies from time to time, the NLRB recently endured an unprecedented twenty-seven month stretch with three vacancies starting in January 2008. The two remaining members, now-Chairman Wilma Liebman (a Democrat) and Member Peter Schaumber (a Republican), attempted to carry on the Board's business by issuing decisions where both could agree on the outcome. Despite their philosophical differences and their purposeful avoidance of issues they perceived as controversial or novel, Liebman and Schaumber managed to issue 595 decisions before President Obama made two recess appointments effective in April 2010 to temporarily bring Board membership back up to four, and a further appointment in June 2010 to bring the Board membership up to five.

In New Process Steel, LP v. NLRB, No. 08-1457 (June 17, 2010), the Supreme Court ruled that it was contrary to the agency's governing statute for the NLRB to issue any decisions when it had fewer than three members. This ruling has short and long term consequences for employers. The immediate impact of this decision will be felt in pending appeals involving cases decided by the two-person Board - five before the Supreme Court and 90 before the various federal Courts of Appeals. On July 1, 2010, the Board announced its intention to seek a remand in each of these appellate cases for further consideration by a three member panel of the Board.

At this point, it is unclear how the Supreme Court’s decision will directly impact the roughly 500 other NLRB decisions issued by Liebman and Schaumber. The five-member Board may decide to quickly reissue some or all of the decisions, assuming that one or more of the recess appointees agree with the holdings. More likely, the Board may address the issue if and when prior litigants raise it. Because the parties to any particular dispute may have settled, complied with the Board rulings or otherwise moved on, this approach could help reduce the impact on the Board. Moreover, as a practical matter, it may not make sense for employers to seek to reopen a case based on the Supreme Court’s decision, as the Board is now more likely to side with labor in any dispute. However, the tactical calculus could be different for an employer deferred back to an administrative law judge by the two-member Board for further proceedings. The bottom line is that employers affected by any of the two-member rulings should engage in a careful analysis of the facts and legal issues in their particular case(s) to sort through the issues and opportunities raised by New Process Steel.

In terms of the potential long term consequences, employers should assume for now that the Supreme Court has likely eliminated all precedential value in the 595 two-member NLRB decisions issued by Liebman and Schaumber. More importantly, in light of the frequent difficulties with the political appointment and confirmation process, it is possible that the NLRB could again become temporarily incapable of issuing new opinions due to a lack of members in the future based on the New Process Steel decision.

Contacts:
Michael J. Schrier, +1.202.778.9249, michael.schrier@klgates.com
Mark S. Filipini, +1.206.370.8111, mark.filipini@klgates.com

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