In the wake of the Jan. 25 federal court ruling invalidating three of President Barack Obama’s recess appointments to the National Labor Relations Board, corporations are left in a cloud of doubt. In fact, the “only certainty is there’s a tremendous amount of uncertainty,” veteran appellate attorney Andrew Pincus told Texas Lawyer affiliate CorpCounsel.com on Jan. 28.
The court decision leaves companies wondering how to handle pending NLRB appeals, whether to appeal recent rulings, and even whether to reopen cases that closed in 2012 under what has now been ruled an illegal board, said Pincus, a partner in Mayer Brown in Washington, D.C.
The broad language of the decision also calls into question some 29 other recess appointments, including that of Richard Cordray, the first director of the U.S. Consumer Financial Protection Bureau. And that, in turn, throws a cloud over whether the CFPB’s new rules for financial institutions to protect home buyers from risky mortgages are legal, Pincus added.
The U.S. Court of Appeals for the D.C. Circuit on Jan. 25 dealt only with the NLRB appointments. It said they were unconstitutional because the Senate was not in full recess, and confirmation of the appointments by the Senate was required.
The ruling in favor of the Noel Canning company in Yakima, Wash., impacts every NLRB decision reached since January 2012, because every one involved at least one board member who was recess appointed. It primarily applies to board actions in unfair labor practice appeals or certification of unions.
NLRB chairman Mark Pearce issued a statement saying the board would continue functioning as usual until the matter is resolved.
“The Board respectfully disagrees with [the] decision and believes that the President’s position in the matter will ultimately be upheld,” Pearce said. “In the meantime, the board . . . will continue to perform our statutory duties and issue decisions.”
Pearce also noted that similar questions about recess appointments have been raised in more than a dozen NLRB cases pending in other courts of appeals.
If the board continues business as usual, “The question is, what will those NLRB decisions be worth?” asked Ronald Meisburg, a partner in Proskauer Rose and a former general counsel of the NLRB. He also served as a recess-appointed member of the board for one year.
“Validity of any decision issued by the NLRB in the last year is now called into question, as well as the board’s power to issue decisions going forward,” Meisburg said.
Marshall Babson, a labor relations attorney at Seyfarth Shaw and a former member of the NLRB, says the agency and its acting general counsel, Lafe Solomon, have two key problems now.
First, Babson said, a company didn’t have to raise the issue of unconstitutional recess appointments on its original review by the board, because the Noel Canning company didn’t raise it until its appeal to the D.C. Circuit. (Noel Canning’s lawyer didn’t immediately return calls.)
Second, Babson added, is that the NLRB has to go to court to enforce any order, and federal law allows a company to seek review of that order either where it is doing business or in the D.C. Circuit.
“Everybody can go to the D.C. Circuit, and that’s what they’re going to do,” Babson added. “So any lawyer — company or union — that received an adverse ruling and doesn’t take it to the D.C. Circuit probably should be doing something else for a living.”
Charles Cohen, senior counsel in the labor and employment practice at Morgan, Lewis & Bockius, said the ruling by its terms doesn’t affect about 80 percent of what Solomon, the NLRB GC, does. But it does affect his work with and for the board.
“Solomon probably will be strategizing with the board institutionally about what to argue. And I assume they are counseling with the Department of Justice and recognizing that this is a problem which transcends the board,” Cohen said.
The only question, Cohen noted, is whether they go back to the D.C. Circuit and seek a rehearing en banc, or go straight to the U.S. Supreme Court with a petition.
Mayer Brown’s Pincus said the CFPB’s authority could be worked out in a compromise between President Obama and the Senate.
But most of the experts still expect that eventually the entire question of presidential appointment power will end up in the lap of the Supreme Court. That could come as early as April if there’s an expedited appeal by the NLRB or be delayed until October or even into 2014.
Pincus summed up the situation going forward: “If this rationale is upheld on appeal, there won’t be any more recess appointments. And that means a fundamental change in the functioning of the federal government.”