You are on page 1of 30

The Aftermath of Noel CanningWhat 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


Carter DeLorme

M.

Agenda
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.

The NLRB Quorum Requirement


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.

Recess
Appointments

NLRB Recess Appointments:


August 27, 2011: Wilma
Liebmans 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 Beckers


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 daysa 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

The Noel Canning Challenge

Noel Canning Corp. loses


appeal before the NLRB
regarding refusal-to-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.

The Recess Appointments


Clause

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

Noel Canning Two


Arguments
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

The Noel Canning Decision: D.C.


Circuit
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
8
arise during the

The Noel Canning Decision: Effects on NLRB

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.

Pending Cases Raising the Recess Appointment Issue:


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,
12-1275;
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, 121387, 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 & 121419;
The Finley Hospital v. NLRB 12-1421;
Fort Dearborn Co. v. NLRB, 12-1430.
10

Pending Cases Raising the Recess Appointment Issue: Other


Circuits

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 Intl 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
Dreyers 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

NLRB Decisions: August 28, 2011 to January 31, 2013


Time Period NLRB Members
Published
Unpublished
8/28/11-1/3/12
P/H/B
110
153
1/9/12-7/24/12
P/H/F/G/B
86
234
7/25/12-12/16/12
P/H/G/B
124
208
12/17/12-1/28/12
P/G/B
10
42
Totals
330
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 112 th Congress, 2d Session
12

NLRB Actions/Decisions Implicated


by the Noel Canning Decision
January 4, 2012 to the Present

13

Decisions Overruling NLRB Precedent


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
Tribune-Herald, 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
In IronTiger Logistics, 359 NLRB No.13 (Oct. 23, 2012), the Board
Tribune.
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

Decisions on Novel Issues


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 auditors 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.

Social Media

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 coworkers 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.

Employment Policies &Work Rules


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
employers 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

Unilateral Changes: Wages and Benefits

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

Other Decisions
Strikes

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.

Lockouts

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.

Retaliatory
Lawsuits

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.

Investigations

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

NLRBs Final Rule on Representation Case Procedures

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.
12-5250, 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 Beckers recess
appointment on March 27, 2010 was
unconstitutional for the same reasons set
21
forth
in that decision.

Arbitration and Class Action Waivers


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 Courts 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

Picketing
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.

Bargaining Units and Supervisors

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 Healthcares 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 employees pro-union activity in the pre-election period did
not constitute objectionable conduct.
24

Election Procedures and Election Interference


In 2 Sisters Food Group, Inc., 357 NLRB No. 168 (Dec. 29, 2011), the
Board addressed whether re-run elections held on an employers
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 unions
objection under four factors: (1) the unions objection to having the
election rerun on the employers premises against the employers
request it be held on site; (2) the employers 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

Going Forward.
1.Under Noel Canning, all Board actions and decisions since August 27,
2011 are called into question.

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.

2.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

Additional Circuit Court Considerations


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

Administrative Proceedings
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
28

Other Administrative Issues

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

Thank you & Questions?


Grady B. Murdock
Littler Mendelson Chicago
312-795-3233
gmurdock@littler.com
Eric L. Barnum
Schiff Hardin Atlanta
404-437-7013
ebarnum@schiffhardin.com
Deanna W. Dudley
Kaiser Permanente Oakland
(510) 267-4280
Deanna.W.Dudley@kp.org
M. Carter DeLorme
Jones Day - Washington
202-879-4643
cdelorme@jonesday.com