Supreme Court Voids Two-Member NLRB
Employers have been closely following, for the past few years, the question of whether the two-member National Labor Relations Board acted appropriately in issuing decisions. The U.S. Supreme Court recently answered that question with a solid "no" in New Process Steel v. National Labor Relations Board, No. 08-1457 (U.S. June 17, 2010). In a decision that called into question almost 600 NLRB decisions, the Supreme Court held that for a two-year period that only ended recently, the Board had been acting without statutory authority because vacancies had left it without the statutorily-required "quorum." In the 5-4 decision, the Court decided that the two remaining Members of the NLRB did not form a quorum, and so, could not issue decisions during periods when three of the remaining five seats on the Board were vacant.
As we have written about previously, the Board consisted of five Members, as the National Labor Relations Act directs, prior to December of 2007. On December 16 of that year one Member's term expired. On December 20 of that year the remaining four Members delegated the Board's powers to a three-member group. The Board took this action knowing that two of the Members' commissions would expire soon thereafter. Thus, between January 1, 2008 and March 27, 2010, the NLRB had only two members - Wilma Liebman and Peter Schaumber - and decided almost 600 cases.
One of the Board's decisions during that time period involved New Process Steel. In September 2008, the two-Member Board sustained two unfair labor practice complaints against the steel company. The company challenged the authority of the two-member board to issue orders. The Seventh Circuit Court of Appeals rejected the company's arguments and agreed with the NLRB that the remaining two members constituted a valid "quorum" of a three-member group to which the Board had legitimately delegated all its powers in anticipation of the vacancies. However, in a separate decision on that same day, Laurel Baye Healthcare of Lake Lanier Inc. v. NLRB, the D.C. Circuit reached the opposite conclusion, holding that the NLRB cannot issue decisions without a three-Member quorum.
In New Process Steel, the majority of the Supreme Court rejected the Seventh Circuit's reasoning and ruled that the two Members did not constitute a valid quorum. In the opinion, Justice Stevens stated: "The Rube Goldberg-style delegation mechanism employed by the board in 2007 - delegating to a group of three, allowing a term to expire and then continuing with a two-member quorum of a phantom delegee group - is surely a bizarre way for the board to achieve the authority to decide cases with only two members." The Court's majority stated there was no indication that Congress intended to authorize such a procedure. The Court's majority noted that the two-member Board extending for more than two years was "unprecedented in the history of the post-Taft-Hartley Board."
The majority reasoned that the Taft-Hartley Act amended the NLRA to expand the number of Board Members from three to five and to increase the quorum requirement for the Board from two to three Members. If Congress had wanted to allow the Board to continue to operate with only two Members "it could have kept the board quorum requirement at two."
Justice Stevens also stated that, going forward, "if Congress wishes to allow the board to decide cases with only two members, it can easily do so." Chief Justice Roberts, and Justices Scalia, Thomas, and Alito joined the majority opinion.
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©2010 Sherman & Howard L.L.C. July 7, 2010