U.S. Supreme Court Rules 5-4: Two-Member National Labor Relations Board Lacked Authority to Act
by:Labor and Employment Practice
In New Process Steel, L.P. v. Nat'l Labor Relations Bd., No. 08-1457, decided June 17, 2010, the U.S. Supreme Court held that Section 3(b) of the Taft-Hartley Act requires that the National Labor Relations Board (the Board) maintain a membership of three in order to exercise its authority. This decision places into question the fate of more than 500 cases decided by the two-member Board over a 27-month period, including five other cases pending before the Supreme Court and approximately 70 cases pending before various federal courts of appeals challenging the validity of the two-member rulings.
At the end of 2007, the Board-which normally comprises five members appointed by the President-had four members with one vacancy. Two more vacancies were anticipated by the end of 2007, when the recess appointments of Members Kirsanow and Walsh were to expire. Those departures would leave the Board with only two members. With no pending appointments on the horizon, the four-member Board made a delegation of its authority on December 20, 2007, relying upon the text of Section 3(b) of the Taft-Hartley Act, as well as an opinion issued by the Office of Legal Counsel (OLC) in 2003, which stated that "if the Board delegated all of its powers to a group of three members, that group could continue to issue decisions and orders as long as a quorum of two members remained."
The Board delegated "to Members Liebman, Schaumber and Kirsanow, as a three-member group, all of the Board's powers, in anticipation of the adjournment of the 1st Session of the 110th Congress." In doing so, the Board opined that its action would permit the remaining two members to exercise the powers of the Board "after [the] departure of Members Kirsanow and Walsh, because the remaining Members will constitute a quorum of the three-member group."
On December 28, 2007, the Board's delegation to the three-member group of Members Liebman, Schaumber, and Kirsanow became effective. On December 31, 2007, Member Kirsanow's recess appointment expired. The two-member Board was active-deciding more than 500 cases-until March 27, 2010, when President Obama made two recess appointments to the Board, returning its membership to at least three members.
The Supreme Court Decision
Writing for the five-justice majority, Justice Stevens, joined by Chief Justice Roberts and Justices Scalia, Thomas, and Alito, held that the delegation clause of Section 3(b) "requires that a delegee group maintain a membership of three in order to exercise the delegated authority of the Board[,]" thereby invalidating the two-member Board's authority to act over the period January 1, 2008 through March 27, 2010.
Importantly, the majority noted that "[t]he delegation clause still operates to allow the Board to act in panels of three, and the group quorum provision still operates to allow any panel to issue a decision by only two members if one member is disqualified." Likewise, the Court did not question the validity of the Board's delegation "to its regional directors its powers under section 159 . . . to determine the unit appropriate for the purpose of collective bargaining, to investigate and provide for hearings, and determine whether a question of representation exists, and to direct an election or take a secret ballot under subsection (c) or (e) of section 159 of this title and certify the results thereof[,]" thereby seemingly limiting its decision to invalidating the powers of the Board itself where it lacks at least three members.
Nevertheless, the holding throws more than two years' worth of Board law into doubt and calls into question the outcome of more 500 individual cases involving
a wide variety of disputes over union representation and allegations of unfair labor practices, including cases involving employers' discharges of employees for exercising their statutory rights; disputes over secret ballot elections in which employees voted to select a union representative; protests over employers' withdrawal of recognition from union representatives designated by employees; refusals by employers or unions to honor their obligations to bargain in good faith; and challenges to the requirement that employees pay union dues as a condition of employment.
The Court made no determination regarding the fate of any of these cases. Instead, the matter was remanded to the Court of Appeals for the Seventh Circuit "for further proceedings consistent with this opinion."
What This Means for Employers
The Court's opinion raises many questions as to the resolution of the affected cases and will create issues for employers, some immediate. As an initial matter, it is expected that the remaining five cases pending before the Supreme Court and the 69 cases pending before the Courts of Appeals, each questioning the two-member Board's authority to act, will be remanded to the current four-member Board for reconsideration.
The fate of the remainder of the cases actually decided by the two-member Board remains to be seen, particularly those cases that were not petitioned to a Court of Appeals for review. It is important to note that Section 10(f) of the National Labor Relations Act, which allows "[a]ny person aggrieved by a final order of the Board granting or denying in whole or in part the relief sought" an opportunity to petition a Court of Appeals for review, does not include a limitations period for such petitions. Any aggrieved party should still have an opportunity to request review at this time based upon the Supreme Court decision.
It is possible that the current Board may simply offer to rehear all of the cases decided by the two-member Board anew before they are brought to the Courts of Appeals, or simply adopt and ratify each of the decisions issued by the two-member Board. As many of the two-member Board decisions have been fully complied with and closed, it is uncertain as to whether the Board will offer to reopen those cases.
The Supreme Court's decision also potentially calls into question the two-member Board's denials of requests for review of representation cases. There were approximately 250 denials during the period in question. To the extent that these denials are found to be invalid, it is not clear how the Board could legitimately remedy these matters, particularly where the requesting party subsequently negotiated and executed a collective bargaining agreement with the union.
In any event, the only Republican Board member, Member Schaumber, is set to leave in August of this year when his term expires. It is likely that the current four-member Board will want to resolve as many of these cases as possible before his departure. As a practical matter, then, we believe the Supreme Court's opinion will slow the Democratic Board's internal agenda for change, as it is clear that the Board will be consumed with addressing and resolving the cases affected by yesterday's ruling.
It is expected that the Court's opinion will lead to renewed efforts at getting a full Board confirmed as soon as possible. If that cannot be accomplished, expect to see further recess appointments. It is unlikely that any administration will allow the Board to be reduced to two members in the future.
If you have a matter affected by the Supreme Court's decision or would like more information on any of the issues discussed in this LawFlash, please contact any of the following Morgan Lewis attorneys:
Philip A. Miscimarra
Paulo B. McKeeby
A. John Harper II
Clifford D. Sethness
David A. McManus
Richard G. Rosenblatt
 Section 3(b) states, in relevant part: "The Board is authorized to delegate to any group of three or more members any and 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." 29 U.S.C. § 153(b).
 See Dept. of Justice, OLC, Quorum Requirements (2003).
 See Minutes of Board Action (Dec. 20, 2007).
 See Opinion in Dissent, at 9 (quoting Respondent's Brief, at 6-7).
 29 U.S.C. § 160(f).