An agreement reached on July 16, 2013, between Senate Democrats and Republicans to avoid filibuster reform should result in four new members of the National Labor Relations Board (NLRB) and the reappointment of its controversial chair, Mark Gaston Pearce. Concerned over lengthy delays with confirmation of seven of President Barack Obama’s nominees, including five appointments to the NLRB, Democrats threatened to use the so-called “nuclear option” on Senate rules, a change that would have drawn Republicans ire and stalled major legislation. 

While Democrats hold a majority in the Senate, they lack the 60-vote threshold necessary for closing debate on any issue. Further, current Senate rules allow for one member to hold up any piece of legislation or appointment, making the filibuster a powerful political weapon for minority members of the Senate as a means to block important legislation or appointments they oppose. The “nuclear option” would have changed the Senate rules to allow a closure of debate motion to pass with just 51 votes, depriving the minority party of most of its leverage. As Democrats would have needed only 51 votes to change these rules, Republicans went into these discussions with little bargaining power.  

Under the deal to avoid the “nuclear option,” Democrats agreed to withdraw Sharon Block and Richard Griffin, two contentious nominees to the NLRB, while Republicans agreed to allow confirmation votes on the five nominees to proceed. It has been reported that part of the deal calls for the renomination of NLRB Chair Mark Gaston Pearce. Pearce was first sworn in as a board member on April 7, 2010, following his recess appointment to the NLRB, and was confirmed by the Senate on June 22, 2010, to a term scheduled to end on August 27, 2013. After the term of former Chair Wilma B. Liebman expired, Pearce was named Chairman of the NLRB by President Obama on August 27, 2011. Immediately before joining the NLRB, Pearce was a founding partner of the Buffalo, New York, law firm Creighton, Pearce, Johnsen & Giroux, where he practiced union- and plaintiff-side labor and employment law. President Obama renominated Pearce to serve on the NLRB on April 9, 2013. 

The lone concession given to Senate Republicans is the Democrats’ withdrawal of the Block and Griffin nominations. President Obama named Block and Griffin as “recess appointments” to the Board on January 4, 2012; however, at the time of the recess appointments, the Senate was holding pro forma sessions to prevent the President from acting on such a matter. President Obama had renominated Block and Griffin to the NLRB on February 13, 2013, and the nominations were held up by Senate Republicans. In accordance with the deal, the President replaced the Block and Griffin nominations with two new nominations to the NLRB: Nancy Schiffer, an associate general counsel to the AFL-CIO, and Kent Hirozawa, counsel to NLRB Chair Mark Gaston Pearce. As there is no reason to expect that Schiffer and Hirozawa will be any less pro-labor than Block and Griffin, this concession is seen as little more than face-saving for Republicans.  

It is the recess appointments of Block and Griffin that triggered litigation over whether the NLRB has a valid quorum. On January 25, 2013, the U.S. Court of Appeals for the District of Columbia Circuit, issued its decision in Noel Canning v. NLRB, holding that the NLRB currently does not have a quorum, and indeed has not had a quorum since the beginning of 2012.  Petitioner Noel Canning, a Pepsi bottling company, sought to overturn the February 8, 2012, decision handed down by the NLRB in Noel Canning, A Division of the Noel Corp., 358 NLRB No. 4. Noel Canning argued several grounds for this relief, including that, at the time of the decision, the NLRB lacked a quorum because three of its five members were unlawful recess appointments. Under the Supreme Court’s decision in New Process Steel v. NLRB, 130 S. Ct. 2635 (2010), the NLRB requires a quorum of at least three members to take official action. The three recess appointees were appointed by President Obama on January 4, 2012, without the advice and consent of the Senate, purportedly pursuant to the Recess Appointments Clause of the U.S. Constitution, Article II, Section 2, Clause 3. 

In Noel Canning v. NLRB, the D.C. Circuit agreed with the petitioner that the recess appointments were not authorized by the Recess Appointments Clause. The panel unanimously concluded that the recess appointments power was available to Presidents only between sessions of Congress, and therefore the NLRB did not have a valid quorum at the time it made the challenged February 8, 2012, decision. The court struck the decision in Noel Canning, A Division of the Noel Corp. as having been issued without legal authority. 

The D.C. Circuit’s ruling in Noel Canning v. NLRB is based on two separate Constitutional analyses. First, the court ruled that at the time of the January 4, 2012, appointments, the Senate was not actually in “recess” as the term is defined in the Recess Appointments Clause. According to the court, “recess” means a period of time between Senate sessions; however, at the time of President Obama’s January 4, 2012, appointments, the Senate was actually in session but had merely stopped working for three days pursuant to a unanimous consent agreement. This reason alone was sufficient to vacate the NLRB’s February 8, 2012, decision — and potentially numerous other NLRB actions throughout 2012.

The court’s second Constitutional analysis may be more far-reaching, because it calls into question the way Presidents have made numerous “recess appointments” in the past. The Recess Appointments Clause states: “The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate.” The court ruled this to mean a vacancy actually has to have occurred during a Congressional intersession recess, not at some time prior to a recess. In this case, the three vacancies President Obama intended to fill with his January 4, 2012, recess appointments to the NLRB had not occurred during an intersession recess, but during prior sessions of the Senate.  

With respect to the second analysis, the D.C. Circuit’s January 25, 2013, ruling in Noel Canning has created a split within the circuits. This second analysis would make it impossible for a President to make a recess appointment even during an acknowledged Senate recess if the vacancy (s)he seeks to fill did not occur during an intersession recess; however, Presidents historically have asserted Executive authority to make intrasession appointments. The Eleventh Circuit upheld the legality of intrasession appointments in its en banc opinion in Evans v. Stephens. Since Noel Canning, two other Circuit Courts of Appeal have invalidated NLRB recess appointments: the Third Circuit in Philadelphia and the Fourth Circuit in Richmond, Virginia. 

The D.C. Circuit’s ruling in Noel Canning and subsequent circuit decisions alike invite significant doubt over all decisions and rules that the NLRB has issued during the past year and will issue going forward. It is estimated that the Pearce/Block/Griffin board issued 221 published decision and 483 unpublished decisions prior to the D.C. Circuit Court’s decision. On May 16, 2013, the Third Circuit Court of Appeals invalidated President Obama’s March 2010 recess appointment of Craig Becker, which may invalidate an additional 110 published decisions and 153 unpublished decisions. Because the NLRB has continued to hear and decide cases notwithstanding its loss in the D.C. Circuit, a further 103 published decisions and 237 unpublished decisions after the Noel Canning decision was issued are subject to inquiry. 

Given the high stakes for organized labor and employers, the NLRB announced in March that it would seek review of the D.C. Circuit Court’s decision directly from the Supreme Court. The Supreme Court then announced on June 24, 2013, that it will hear the NLRB’s appeal of the Noel Canning decision. Unless the Supreme Court overturns Noel Canning, all of the decisions and appointments made by the Pearce/Block/Griffin board from the January 3, 2012, expiration of Becker’s recess appointment will be invalid under New Process Steel v. NLRB. As set forth above, the term of the only confirmed member of the NLRB expires on August 27, 2013. If the Supreme Court upholds the ruling, absent new appointments to the board, the entire NLRB would be vacant on August 28, 2013, undoubtedly creating a severe backlog of unfair labor practices. 

It appears that the Senate will vote on all of President Obama’s NLRB nominations under the recent deal in short order, and there is no reason to believe that there will not be a quorum in the NLRB in the near future. Within the next two weeks, the Senate will also vote on two Republicans nominated by President Obama on April 9, 2013, to serve on the NLRB:

• Harry Johnson, a lawyer with Arent Fox LLP in Los Angeles who covers management-side Labor and Employment Law; and 
• Philip Miscimarra, a partner in the Labor and Employment practice group of Morgan Lewis & Bockius LLP in Chicago. 

Although there may soon be a fully-staffed NLRB, the new board will have a tremendous backlog of cases that were decided by the Pearce/Block/Griffin board to review, in addition to handling the NLRB’s regular volume of cases. However, once this quorum issue is resolved, we can expect the NLRB to renew its agenda of vigorously expanding board jurisdiction into issues such as internal investigations and social media policies and make new attempts at rulemaking on election procedures or posting notices of employee rights. 

Will NLRB Have a General Counsel? 

There is no indication whether the Senate will act on the long-pending nomination of Lafe Solomon to serve as NLRB General Counsel. Solomon has been serving as Acting General Counsel since June 21, 2010. Accordingly, Solomon has been a leading driver of the pro-union agenda of the board on issues such as micro bargaining units, remedies, the duty to provide information, social media policies, and the expansion of section 7 rights.  

Solomon’s three-year stint as Acting General Counsel appears to be at odds with section 3(d) of the National Labor Relations Act (NLRA), which limits the period that an individual may act as General Counsel to 40 days in most cases. The Obama Administration has taken the position that the Federal Vacancy Act, not section 3(d) of the NLRB, applies to vacancies in the Office of General Counsel. Since all NLRB complaints are brought in the name of the General Counsel, respondents at the board may still have a jurisdictional objection to raise in NLRB cases. 

President Obama last sent Solomon’s nomination to the Senate on May 23, 2013; however, the Senate has never voted on his confirmations, and Solomon has publicly stated that he doubts that he will ever be confirmed. Many Republicans in Congress have made Solomon their lightning rod for criticism of the activist board, most notably Utah Senator Orrin Hatch. And unless the agreement to avoid the “nuclear option” includes an agreement to confirm Solomon, we can expect continued strong opposition to his permanent appointment.

For more information about how this case may impact your business, contact: 

• Sean P. Beiter (716.566.5409; sbeiter@goldbergsegalla.com)
• Caroline J. Berdzik (609.986.1314; cberdzik@goldbergsegalla.com)
• Matthew C. Van Vessem (716.566.5476; mvanvessem@goldbergsegalla.com)
• Or another member of the Goldberg Segalla Labor and Employment Practice Group.