Noel Canning ruling a setback for Obama and NLRB

Efforts by the Obama administration to pursue an aggressive pro-union agenda via the National Labor Relations Board (NLRB) suffered a major setback earlier today. A three-judge federal appeals court in the Noel Canning case unanimously found that recent recess appointments of NLRB board members violated the Constitution, ruling that "Because none of the three appointments were valid, the Board lacked a quorum and its decision must be vacated."

If today's ruling is upheld by the Supreme Court, to which the Obama administration is expected to appeal the case, it would be a long-awaited victory for Republicans and business organizations who have long objected to the Board's growing reach into non-union workplaces and increasingly pro-union rulings. It would also be vindication for Senate Republicans who have sought to check the administration's political agenda via the confirmation process which the recess appointments bypassed.

In the case, attorneys for Noel Canning, a Washington State canning and bottling company, argued that NLRB seats were filled in violation of the Constitution, Article II, Section 2, Clause 3, which allows Presidents to fill posts by recess appointments only when the Senate is in recess. Their position was that because the Senate was still meeting in pro forma session when the Obama administration filled vacant NLRB seats via recess appointments, three of five seats were improperly appointed. This would mean the Board would not have a legitimate quorum of at least three members and would therefore have no power to make rulings such as the one which Noel Canning appealed. The three Board members whose appointments were challenged by the suit were:

• Sharon Block, who filled a seat that became vacant on January 3,  2012,  when Board member Craig Becker’s recess appointment expired. Block was a former Deputy Assistant Secretary for Congressional Affairs at the U.S. Department of Labor, Senior Labor and Employment Counsel for the Senate HELP Committee, where she worked for Senator Edward M. Kennedy and received the John F. Kennedy Labor Law Award.
• Terence F. Flynn, who filled a seat that became vacant on August 27, 2010, when Peter Schaumber’s term expired. Flynn, who has since left the Board, was previously Chief Counsel to former Board Members Brian Hayes and Schaumber, as well as an attorney in private practice, specializing in employment and labor law.
• Richard F. Griffin, who filled a seat that became vacant on August 27, 2011, when Wilma B. Liebman’s term expired. Previously, Griffin was General Counsel for International Union of Operating Engineers and served on the board of directors for the AFL-CIO Lawyers Coordinating Committee.

In the ruling, the Appellate Court found that:

It is undisputed that the Board must have a quorum of three in  order to  take  action. It  is further undisputed  that  a quorum of three did not  exist on the  date of the order under review unless the three disputed members (or at least one of them) were validly appointed.  It is further agreed  that  the members of the Board are “Officers of the United States” within the meaning of the Appointments Clause of the Constitution, which provides that the President “shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law.” (p. 15)

Presently the board has three members, including Griffin and Block (Flynn left the board in July of last year). Their removal from the board would leave it unable to issue further rulings, as well as invalidate a number of recent Board rulings. This could impact a number of NLRB initiatives, including:

• The Poster Rule, which would require workplaces to post notices about employees' right to organize a union, remains on hold while the case is being appealed following split rulings where a South Carolina federal court struck the rule down and a Washington D.C. court upheld the Rule.
• Several rulings in which the Board ruled the language of employee handbooks in non-union workplaces placed restrictions upon employee communication, which could inhibit the ability of employees to organize a union if they chose to do so (Hyundai America Shipping Agency Inc. and Karl Knauz Motors).
• A ruling (WKYC-TV, Gannet Co., Inc.) which overturned a five-decade precedent by directing employers to continue to withhold union dues after the expiration of a collective bargaining agreement.

Republicans were quick to seize upon the ruling as a chance to go after the NLRB. Tennessee Senator Lamar Alexander, the ranking Republican on the Senate Health, Education, Labor and Pensions Committee demanded the resignations of those board members whose appointments were challenged in the ruling, calling the ruling "proof that the administration defied the Constitution’s separation of powers and its concept of checks and balances, which are the guard against an imperial presidency."

Allen Gray, a lobbyist with Carolinas AGC, a construction industry association based in North and South Carolina, and head of the industry association's human resources committee, said the court "followed the letter of the law" and predicted the ruling would "force the President to choose between picking nominees with more moderate positions who could win a confirmation vote or not appointing anyone at all." Likewise, Senator Tim Scott expected that future NLRB nominees sent to the Senate for confirmation should be willing to take less pro-union stances. The South Carolina Republican warned "the agency's pattern of punishing states like South Carolina for their successful right-to-work policies has to end. Any future nominees must demonstrate a commitment to treat the families and businesses of pro-worker states just the same as anyone else."

In addition to allowing many of the Board's recent rulings to be vacated, the appellate court's ruling - if upheld - could affect other recess appointments made by the Obama administration, most notably that of Rich Cordray, the head of the Consumer Financial Protection Bureau, who has come under fire from the banking industry for advocating excessive regulations and oversight.

The Obama administration is expected to appeal this ruling to the Supreme Court instead of conceding defeat to Republicans who are eager to force President Obama to moderate the political tone of his nominees. With the GOP getting more aggressive about using the confirmation process to check Obama's agenda, it's clear that a high-stakes game between Congressional Republicans and the White House is underway. Should the Supreme Court uphold the appellate court's ruling, it would be a major setback for the administration and a major victory for those who've sought to rein in the NLRB's radical pro-union agenda.