The Aftermath of Noel Canning - National Employment Law Council

Report
The Aftermath of Noel Canning—What Now?
The Legal, Policy, and Practical Considerations of How
Employers Should Proceed Before the NLRB
April 24, 2013
Grady B. Murdock
Eric L . Barnum
Deanna W. Dudley
M. Carter DeLorme





The Noel Canning Decision.
Other Pending Cases Raising
the Recess Appointment Issue.
NLRB Actions/Decisions
Implicated by the Noel Canning
Decision.
NLRB Actions/Decisions
Potentially Implicated by the
Noel Canning Decision.
Options for Employers to
Consider.
2
The National Labor Relations Board
cannot function without a quorum
consisting of at least three
members.


In New Process Steel, 130 S. Ct.
2365 (2010), the U.S. Supreme
Court held that the Board
requires a quorum of 3 lawfully
seated members to conduct any
official business.
Because the NLRB at the time
had only two members, the
Court held that its decisions
could not be enforced.
3
NLRB Recess Appointments:
• August 27, 2011: Wilma
Liebman’s term expires,
leaving the NLRB with only
three members.
• One of the three, Member
Craig Becker, was given an
intrasession recess
appointment by President
Obama in March 2010.
January 3, 2012 (or earlier): Member Becker’s
recess appointment expires, leaving only two
members, Brian Hayes and Mark Pearce.
 The U.S. Senate does not go into recess.
 In an effort to prevent recess appointments,
the Senate decides to hold “pro forma”
sessions every 3 days—a tactic used by
Senate Majority Leader Harry Reid to block
President George W. Bush recess
appointments.
January 4, 2012: Notwithstanding Senate
sessions, President Obama makes recess
appointments, announcing three new
appointees to the NLRB.
• Sharon Block
• Terence Flynn
• Richard Griffin
4


Noel Canning Corp. loses appeal
before the NLRB regarding refusalto-bargain allegations.
Noel Canning petitions for review
in the D.C. Circuit, arguing that the
NLRB lacks a quorum because the
January 4, 2012 recess
appointments were invalid.
5

“The President shall have 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.”
Article II, Section 2, Clause 3
6
1.
2.
Narrow: There is no “recess” when the
Senate holds sessions every 3 days.
•
Previously, no President ever tried to
make recess appointments when
Senate holds sessions every 3 days.
Broad: Original meaning of Recess
Appointments Clause.
•
“Power to fill up all Vacancies that
may happen during the Recess of the
Senate.”

Limited to vacancies that arise
during recess.

Limited to “the recess,” i.e., the
single break at the end of the
year.
7


Court of Appeals adopts
broad originalist
understanding of the
Recess Appointments
Clause.
Recess Appointments only
valid if they occur:
1. During an “intersession”
recess.
2. For vacancies that arise
during the recess.
8
•
•
•
•
•
January 4, 2012 recess appointments
invalidated:
• Sharon Block
• Richard Griffin
• Terence Flynn
Based upon the same reasoning, the
March 2010 recess appointment of
Craig Becker is also likely invalid (not
“intersession”).
Noel Canning decision is binding law
within D.C. Circuit.
Deadline to file Petition for Rehearing
En Banc – 45 Days (March 11, 2013).
Deadline to file Cert. Petition – 90
Days Following Conclusion of En Banc
Activity.
•
•
•
9
Calls into question all
actions, including expedited
election rulemaking and
cases, decided by the Board
at least since August 27,
2011.
Board orders are not selfenforcing.
Any Board order can be
appealed to the D.C. Circuit.
D.C. Circuit (12 cases):
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
Sands Bethworks Gaming v. NLRB, 12-1240;
Milum Textile Services Co. v. NLRB, 12-1235, 121275;
Meredith Corp. v. NLRB, 12-1287;
Aerotek v. NLRB, 12-1271;
Kimberly Stewart v. NLRB, 12-1338;
Keck Hosp. of USC v. NLRB & Sodexo America v.
NLRB, 12-1413, 12-1426;
Fresenius USA Manufacturing v. NLRB, 12-1387,
12-1415;
KAG West v. NLRB, 12-1391;
Vision of Elk River v. NLRB, 12-1403;
Spartan Mining Co. and Alpha Appalachia Holdings
v. NLRB, 12-1400, 12-1401 & 12-1419;
The Finley Hospital v. NLRB 12-1421;
Fort Dearborn Co. v. NLRB, 12-1430.
10
Third Circuit: NLRB v. New Vista
Nursing, 11-3440, 12-1027 & 12-1936;
NLRB v. New Vista Nursing &
Rehabilitation Center, 12-3524; 1621
Route 22 West Operating v. NLRB, 123768.
Seventh Circuit: Richards v. NLRB, 121973; John Lugo v. NLRB, 12-1984;
FTS Int’l Proppants v. NLRB, 12-3322;
Big Ridge v. NLRB, 12-3120.
Ninth Circuit: DirecTV v. NLRB, 1271297, 12-1514 & 12-72526.
Fourth Circuit: NLRB v. Enterprise
Leasing Co. SE, LLC, 12-1514; Nestle
Dreyer’s Ice Cream Co. v. NLRB, 121684; Huntington Ingalls Inc. v. NLRB,
12-2000; Coastal Sunbelt Produce v.
NLRB, 12-2254.
Eleventh Circuit: NLRB v. Gaylord
Chemical Co., 12-15404.
11
Time Period
8/28/11-1/3/12
1/9/12-7/24/12
7/25/12-12/16/12
12/17/12-1/28/12
Totals
NLRB Members
P/H/B
P/H/F/G/B
P/H/G/B
P/G/B
Published
110
86
124
10
330
Unpublished
153
234
208
42
637
NLRB Members
P- Mark Pearce; Senate Confirmed 6/22/10, sworn in 4/7/10
H- Brian Hayes; Senate Confirmed 6/22/10, sworn in 6/29/10; term ended
12/16/12
B- Sharon Block; Recess Appointment, sworn in 1/9/12
G- Richard Griffin; Recess Appointment, sworn in 1/9/12
F- Terrence Flynn; Recess Appointment, sworn in 1/9/12; resigned
7/24/12
B- Craig Becker; Recess Appointment, sworn in 4/5/10; recess ended
1/3/12 with adjournment of 112th Congress, 2d Session
12
NLRB Actions/Decisions Implicated
by the Noel Canning Decision
January 4, 2012 to the Present
13
In WKYC-TV, 359 NLRB No. 30 (Dec. 12, 2012), the Board eschewed 50 years
of precedent by overruling its decision in Bethlehem Steel, 136 NLRB 1500
(1962).
• Board majority held that an employer's obligation to check off union dues
continues after expiration of a collective bargaining agreement containing
such a provision.
• Pearce, Griffin and Block made up the majority, with Hayes dissenting in
part.
In Piedmont Gardens, 359 NLRB No. 46 (Dec. 15, 2012) and Hawaii TribuneHerald, 359 NLRB No. 39 (Dec. 14, 2012), the Board reversed the rule
established in Anheuser-Busch, 237 NLRB 982 (1978) privileging employers to
withhold confidential witness statements obtained by an employer during an
internal investigation.
• The majority in both cases was made up of Pearce, Hayes and Griffin.
• Hayes dissented in Piedmont, and did not participate in Hawaii Tribune.
In IronTiger Logistics, 359 NLRB No.13 (Oct. 23, 2012), the Board held,
contrary to previous precedent, that the employer was required to respond in a
timely fashion to the union's request for information, even when such
information may have been irrelevant.
• Pearce and Block made up the majority, with Hayes dissenting.
• An appeal is currently pending before the D.C. Circuit.
14
In United Nurses and Allied Professionals, 359 NLRB No. 42 (Dec. 14, 2012), the Board
adopted new rules relating to employee union objectors.


The Board held that lobbying expenses are chargeable to objectors if they are
relevant to bargaining, contract administration, or grievance adjustment.
The Board further held that a union is not required to provide objecting employees
with a copy of the auditor’s verification letter in order to satisfy notice obligations to
objectors.
In Latino Express, Inc., 359 NLRB No. 44 (Dec. 18, 2012), the Board revised rules on
backpay remedies by (1) requiring submission of documentation to the SSA so that
backpay will be allocated to the appropriate calendar quarters, and (2) reimbursing a
discriminatee for any additional Federal and State income taxes owed as a result of
receiving a lump-sum award covering more than one year. The Board invoked its broad
discretionary remedial powers under 10(c) of the Act.
In Alan Ritchey, Inc., 359 NLRB No. 40 (Dec. 14, 2012), the Board held that employers
must give notice and offer to bargain before enforcing discretionary discipline on its union
represented employees. Because such discipline is a mandatory subject of bargaining, the
employer could not unilaterally implement it prior to bargaining with a newly elected
union.
In Chicago Mathematics & Science Academy, 359 NLRB No. 41 (Dec. 14, 2012), the Board
concluded that a nonprofit public charter school was not a government entity exempt
from NLRA Section (2)(2)’s definition of “employer.” Thus, the Board concluded there was
no reason to decline jurisdiction over the case.
In Knauz BMW, 358 NLRB No.
164 (Sept. 28, 2012), the
Board held that:
1.An offensive picture posted
by a lone employee on
Facebook did not constitute
protected activity.
2.Courtesy provision in an
employee handbook violated
the NLRA because employees
would construe the policy to
prohibit discussion about
work conditions.
In Hispanics United of
Buffalo, 359 NLRB No. 37
(Dec. 14, 2012), the NLRB
held that an employer
unlawfully terminated five
employees for posting
comments on Facebook in
response to a co-worker’s
criticism of their job
performance where such
posts were both concerted
activity and related to terms
and conditions of
employment.
16
In DirectTV U.S. DirecTV
Holdings, 359 NLRB No. 54
(Jan. 25, 2013) and Costco,
358 NLRB No. 106 (Sept. 7,
2012) the Board addressed
social media policies, both in
non-union settings, which
prohibited certain types of
electronic communications,
reasoning that employees
could reasonably construe
the policies to prohibit
discussion involving
protected activity.
In Costco Wholesale Corp., 358 NLRB No. 106 (Aug. 27, 2012), FlexFrac Logistics, LLC, 358
NLRB No. 127 (Sept. 11, 2012), and DirectTV U.S. DirecTV Holdings, 359 NLRB No. 54 (Jan. 25,
2013), the NLRB held that certain confidentiality provisions were unlawful based upon the fact
that employees would understand the provisions to restrict discussion of their wages and other
conditions of employment. An appeal is pending in the D.C. Circuit in Costco, and in the 5th
Circuit in FlexFrac.
In Heartland Catfish Co., 358 NLRB No. 125 (Sept. 11, 2012) and Ambassador Services, Inc., 358
NLRB No. 130 (Sept. 14, 2012), the Board invalidated work rules prohibiting employees from
walking off the job without permission because rules would be construed as prohibiting Section
7 activity such as a strike. An appeal is pending before the 11th Circuit in Ambassador
Services.
In Sodexo America, LLC, 358 NLRB No. 79 (July 3, 2012) and J.W. Marriott Los Angeles, 359
NLRB No. 8 (Sept. 28, 2012), the Board further restricted an employer’s ability to implement
and enforce off-duty access policies.
• An appeal in Sodexo is currently pending before the D.C. Circuit, which held the case in
abeyance on January 25, 2013.
17
In Finley Hospital, 359 NLRB No. 9 (Sept. 28, 2012), pet. for review filed, 12-1421 (D.C. Cir.
Oct. 19, 2012) and KAG-West, LLC, 358 NLRB No. 161 (Sept. 28, 2012), pet. for review filed,
12-1391 (D.C. Cir. Oct. 5, 2012), the Board restricted an employers’ rights change employees’
wages, even where no collective bargaining agreement is currently in effect.

The Board in Finley prohibited changes even where the CBA provisions providing for
annual increases explicitly limited them to the contract term.

Appeals are pending before the D.C. Circuit in both cases.
In Cofire Paving Corp., 359 NLRB No. 10 (Sept. 28, 2012) and Des Moines Cold
Storage, Inc., 358 NLRB No. 58 (June 15, 2012), the Board restricted an
employers’ right to make unilateral modifications to employee benefit
programs during and after contract expiration.
• An appeal is currently pending before the 2nd Circuit.
18
Strikes
Lockouts
Retaliatory
Lawsuits
Investigations
In Coca Cola Puerto Rico Bottlers, 358 NLRB No. 129 (Sept. 18, 2012), the Board held
that employees who stopped working for two hours were engaged in a protected strike
and could not be disciplined by the employer.
In Dresser-Rand Co., 358 NLRB No. 97 (Aug. 6 2012), the Board determined that unfair
labor practices committed after a lockout could be used to retroactively support the
inference that union animus motivated the lockout. An appeal is currently pending
before the 5th Circuit.
In J.A. Croson Co., 359 NLRB No. 2 (Sept. 28, 2012) and Federal Security, Inc., 359 NLRB
No. 1 (Sept. 28, 2012), the Board held that preempted state court lawsuits violated
employees’ Section 7 rights. Under these recent decisions, employers’ lawsuits can
constitute unfair labor practices even if they are not objectively baseless.
In Banner Estrella Medical Center, 358 NLRB No. 93 (July 30, 2012) and Fresenius USA
MFG., Inc., 358 NLRB No. 138 (Sept. 19, 2012), the Board restricted the ability of
employers to comply with federal laws requiring employers to investigate allegations of
workplace harassment. Appeals are pending before the D.C. Circuit in both cases.
19
NLRB Actions/Decisions
Potentially Implicated
by the Noel Canning Decision
August 27, 2011 to January 4, 2012
20

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On December 16, 2011, the NLRB adopted its final
rule on representation case procedures.
The Chamber argued that Hayes did not participate
in the decision, leaving only Members Pearce and
Becker to issue the final rule.
In Chamber of Commerce v. NLRB, Case No. 125250, the District Court for the District of Columbia
agreed that, because Hayes was absent Dec. 16,
2011 when the final rule was approved, the Board
did not have a quorum.
The Board appealed to the D.C. Circuit, where
briefing was completed January 16, 2013.
On January 30, 2013, the Chamber of Commerce
filed a Rule 28(j) letter with the Court, asserting that
the Noel Canning decision provides an additional
reason that the Board lacked a quorum when issuing
the final rule.
The Chamber argued that under Noel Canning,
Member Becker’s recess appointment on March 27,
2010 was unconstitutional for the same reasons set
forth in that decision.
21
In D.R. Horton, Inc., 357 NLRB No. 184 (Jan. 3, 2012), the Board addressed whether
employers could require employees, as a condition of employment, to sign an arbitration
agreement preventing them from filing joint, class or collective claims.
• This decision is currently on appeal to the 5th Circuit.
• On January 29, 2013, D.R. Horton filed a 28(j) letter with the Fifth Circuit, arguing that
the appointment of NLRB member Craig Becker was also invalid under the Noel Canning
decision. As such, D.R. Horton argued that the Board had only two properly appointed
members and no quorum to act.
•


As a countermeasure against class action employment litigation, many employers have
implemented compulsory arbitration procedures with class action waivers.
The U.S. Supreme Court recently held that such arbitration agreements were valid and
enforceable under Federal law. See AT&T Mobility v. Concepcion, 131 S. Ct. 1740
(2011).
Notwithstanding the Supreme Court’s approval, the Board held that employers cannot
require that employees, as a condition of employment, sign an arbitration agreement
that prevents them from filing joint, class or collective claims against the employer.
22
In Venetian Casino Resort, LLC, 357 NLRB No. 147 (Dec. 21,
2011), the Board held that the employer violated the NLRA
when it called law enforcement in response to picketing. This
constituted an unfair labor practice.
In M.S. Management Associates, Inc., 357 NLRB No.
157 (Dec. 30, 2011), the Board addressed the rights
of employees to access employers’ premises for
purposes of picketing and other forms of protest,
holding that the employer violated the NLRA by
prohibiting maintenance contractor employees from
distributing handbills on employer property.
23
M.S. Management
Associates, Inc.
In DTG Operations, Inc., 357 NLRB No. 175 (Dec. 30, 2011), Odwalla, Inc., 357 NLRB No. 132
(Dec. 9, 2011), and Northrop Grumman Shipbuilding, Inc., 357 NLRB No. 163 (Dec. 30,
2011), the Board addressed the issue of how to apply the standard set forth in Specialty
Healthcare, 357 NLRB No. 83 (2011), where the Board overturned decades of precedent by
allowing employees to form several smaller bargaining units at any single facility. In these
cases, the Board expanded Specialty Healthcare’s “overwhelming community of interests”
test to other industries.
In Entergy Mississippi, Inc., 357 NLRB No. 178 (Dec. 30, 2011) and DirecTV, 357 NLRB No.
149 (Dec. 22, 2011), the Board addressed the definition of “supervisor” under the Act.
• Both cases held that the employees in question were not supervisors.
• In Entergy, the employees were included in the bargaining unit.
• In DirecTV, the employee’s pro-union activity in the pre-election period did not
constitute objectionable conduct.
24
In 2 Sisters Food Group, Inc., 357 NLRB No. 168 (Dec. 29, 2011), the Board
addressed whether re-run elections held on an employer’s premises were
improper. Although the Board did not announce a per se rule requiring re-run
elections to be held offsite, the Board remanded the case to the Regional Director
to re-consider the union’s objection under four factors: (1) the union’s objection
to having the election rerun on the employer’s premises against the employer’s
request it be held on site; (2) the employer’s alleged unlawful conduct; (3) the
advantage the employer would enjoy from having the election held on premises it
owns or controls; and (4) potential alternative sites.
In Newburg Eggs, Inc., 357 NLRB No. 171 (Dec. 31, 2011), the Board held an employer
violated the Act by announcing prior to the election the hiring of a bilingual human resources
manager to improve workplace communication, reasoning that employees could reasonably
construe the comments as an announcement of improved working conditions.
In Ridgewood Country Club, 357 NLRB No. 181 (Jan. 3, 2012), the Board set aside an
election where the employer timely filed the Exelsior list with the Region, but the Region
failed to provide the list in a timely fashion. The Board reasoned that the union was entitled
to a presumption of prejudice.
25
1. Under Noel Canning, all Board actions and decisions since August 27, 2011
are called into question.
2.

The logical implication of the case is that no order issued since that
date can be enforced until a quorum is restored through lawful
appointments.

NLRB announced that the Agency will continue to operate with recess
appointees Griffin and Block, and Chairman Pearce.
Noel Canning decision is binding law in the D.C. Circuit unless overturned.

Board orders are not self-enforcing.

Any Board order can be appealed in the D.C. Circuit.

NLRB can file petition for enforcement in other circuits.
3. All petitions for review of NLRB orders should be expeditiously filed in the
D.C. Circuit, unless good reason to bring elsewhere.
4. In cases pending in other circuits, where the recess appointment issue has
not been decided, and a case raising such issue is procedurally ahead of your
case, consider requesting that court hold your case in abeyance, including the
briefing schedule.
26
1.
2.
3.
In any Board-related matter pending in any
circuit court of appeals, consider raising the
issue of the lack of a Board quorum.
If briefing has already been completed, and
even if oral argument has been held, consider
filing a 28(j) letter arguing that the Board
order was issued without a proper quorum.
As the D.C. Circuit held in Noel Canning,
parties should be able to raise this issue in
court even if you did not raise it before the
Board.
27
1.
2.
3.
4.
In any matter pending at the administrative level, consider
raising the issue of the lack of a Board quorum:
 Petitions
 Unfair labor practice charges
 Complaints
 Subpoenas, if issued by Block/Griffin
If initial answer already filed, consider filing an amended
or supplemental answer.
On any appeal from an adverse decision of an
Administrative Law Judge or Regional Director, consider
raising the issue of the lack of a Board quorum.
If initial briefing has already been completed, consider
raising the matter in a supplemental pleading -- this issue
should not be time-barred, because it raises a
jurisdictional defect in the proceeding.
28



Consider challenging actions and decisions of Regional
Directors who were appointed by Boards that lacked a
proper quorum (18 out of 28 Regional Directors may be
subject to such a challenge).
Consider challenging delegations by a Board that lacked
proper quorum to its Acting General Counsel, especially
with respect to 10(j) injunction matters.
Consider challenging any type of Board action taken prior
to August 27, 2011 where the Board, at the time such
action was taken, lacked the required quorum.
29
Grady B. Murdock
Littler Mendelson – Chicago
312-795-3233
[email protected]
Eric L. Barnum
Schiff Hardin – Atlanta
404-437-7013
[email protected]
Deanna W. Dudley
Kaiser Permanente – Oakland
(510) 267-4280
[email protected]
M. Carter DeLorme
Jones Day - Washington
202-879-4643
[email protected]

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