The U.S. Court of Appeals for the D.C. Circuit shook up both Washington and Wall Street last Friday, when it invalidated President Obama’s January 2012 recess appointments of three members of the National Labor Relations Board. The decision also threatened Obama’s appointment of Richard Cordray to lead the Consumer Financial Protection Bureau, since Cordray was appointed at the same time as the NLRB members, and it raised serious questions about the CFPB’s ability to police the financial industry without a director at its helm.
Now D.R. Horton, a company that’s been tangling with the NLRB in a key case dealing with employer arbitration agreements, wants the U.S. Court of Appeals for the Fifth Circuit to extend the D.C. Circuit’s reasoning to another NLRB member who was appointed nearly three years ago. If the Fifth Circuit agrees, it could pose major problems for the NLRB, including undermining the agency’s year-old holding in the Horton case that companies can’t compel employees to waive their rights to collective action through private arbitration agreements.
On Tuesday Horton counsel Ron Chapman Jr. of Ogletree Deakins filed a letter with the Fifth Circuit, arguing that the appointment of NLRB member Craig Becker, whom Obama named to the five-seat board with a recess appointment on March 27, 2010, was also invalid under the D.C. Circuit’s ruling Friday in Noel Canning v. NLRB. In that case, the D.C. Circuit found that the president’s three recess appointments on Jan. 4, 2012 were invalid because the Senate was still meeting in “pro forma” sessions at the time, and because the board vacancies didn’t arise during an official recess. According to Tuesday’s letter, the same situation applied in March 2010, when Becker was named via recess appointment to a stint on the NLRB’s board that ran through Jan. 3, 2012.
“Just like the situation in Noel Canning, the vacancy Mr. Becker filled did not arise during the Senate’s recess, nor did the president appoint him during that recess,” Chapman wrote.
A finding that Becker’s appointment was invalid could throw decisions from Becker’s 21-month tenure into legal limbo. Specifically, Chapman told us Wednesday, it would affect all NLRB decisions issued when the board had only three members during Becker’s term, and any decisions where Becker’s vote was necessary for a majority.
Most significantly for D.R. Horton and other employers, such a finding could force the NLRB to scrap its Jan. 3, 2012 ruling curtailing class action waivers in its case against Horton. As we’ve reported, the NLRB’s decision in the Horton case, which the company immediately appealed to the Fifth Circuit, was widely seen as clashing with the U.S. Supreme Court’s 2011 ruling in AT&T Mobility v. Concepcion, which made it easier for defendants to enforce arbitration agreements with would-be class action plaintiffs.
Industry groups and employee advocates have filed a flurry of amicus briefs in Horton’s appeal before the Fifth Circuit. Ogletree’s Chapman told us in an email Wednesday that the appellate court will consider Tuesday’s letter during oral arguments on Feb. 5.
NLRB public affairs director Nancy Cleeland didn’t respond to a request for comment.