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The Federal Appeals Court for the D.C. Circuit (in Noel Canning v. NLRB No. 12-1115) decided on January 25, 2013 that President Obama’s recess appointments from January 4, 2012 were unconstitutional. The appointments included three members of the NLRB, including Sharon Block, Terence F. Flynn and Richard F. Griffin. The specific holding was that no “recess” existed on January 4, 2012, making the Recess Appointment Clause inapplicable. Because of the profound constitutional issues presented, and conflicting opinions from other Appeals courts, this case is likely bound for the U.S. Supreme Court. In the meantime, some legal and practical observations are in order.

First, the decision concerning the NLRB appointments, when read with the Supreme Court’s 2010 ruling on “quorum” in NLRB cases, negates a full year of NLRB decisions.1 That is, the recess appointments at issue provided the necessary quorum to allow the NLRB to have legal, binding authority. Negating the appointments negates the quorum, and the absence of a quorum invalidates all of the decisions over the past year. For employers, this means that the “law” on a number of important issues returns to that which existed prior to January 4, 2012. Litigants, who paid fines, moved their businesses, or, otherwise “complied” with NLRB rulings over the last year are now free to have courts “overturn” those remedies.

For other employers with cases currently before the Board, the practical effect of the ruling is to paralyze further action. That is, respondents to significant charges or complaints brought by the various NLRB Regional Directors will have no incentive to settle the charges, and rulings made by Administrative Law Judges will be appealed (in most cases) to the Board. This administrative gridlock will require some creative actions by the Administration, or political agreement on new members to be appointed. Both options carry significant risk.

Employers involved in controversies before the Board should review their options immediately regarding how to proceed. While the Obama Administration is asserting that the ruling is limited to the parties before the Court, future Board actions are potentially invalid as a matter of law. Because all Regional offices are really extensions of the authority given to the Board, future decisions and demands for action by those offices are possibly invalid as well.

The constitutional issues at stake regarding the separation of powers between the Executive and Congress are significant and the ultimate decision will likely please neither political party. A better solution is for both sides to recognize the stalemate and negotiate an acceptable political accommodation. In the meantime, employers, unions, employees and advocates on all sides are in unchartered waters.

The labor and employment group at McDonald Hopkins will continue to monitor and update on further developments in this matter.

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1New Process Steel, L.P. v. NLRB, 130 S. Ct. 2635 (2010)

For more information, please contact:

Victor T. Geraci

216.430.2026

vgeraci@mcdonaldhopkins.com

James J. Boutrous

248.220.1355

jboutrous@mcdonaldhopkins.com

Labor and Employment

We have an impressive team of labor and employment attorneys who specialize in representing management in all aspects of labor and employment law at both the state and federal level. They have significant expertise in counseling clients on labor, employment and human resources issues and representing employers in state and federal courts and administrative agencies in all aspects of labor and employment-related litigation.

For more important legal and business information relating to employers, please visit our blog, the Employer Legal Advocate.

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