Supreme Court Opinion Calls into Question Hundreds of NLRB Rulings

The Corporate Counselor

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On Thursday, June 26, 2014, the Supreme Court issued its long-awaited Noel Canning decision (NLRB v. Noel Canning, 572 U.S. ____ (2014)), and invalidated President Obama’s January 2012 appointments of three individuals to the National Labor Relations Board (the “NLRB” or “Board”), Terence Flynn, Richard Griffin, and Sharon Block. The Court held that while the President can make appointments during a Senate recess under the Constitution's recess appointments clause, the Senate's break in January 2012 was too short to constitute a recess. The Board cannot conduct business without a three-member quorum, so the holding calls into question hundreds of labor decisions issued while those appointees were seated. The NLRB decided 436 cases without a quorum during the 18 months that two of the appointees served on the Board (the third stepped down after only several months).

The current Board, all of whose members were confirmed by the Senate, must now decide if revisiting each of the 436 rulings will be necessary to preempt additional challenges. Reconsideration of the decisions is unlikely to make a difference in most cases, as both the previous and current Boards have been Democratic-controlled. Companies have challenged over 100 of these NLRB opinions in federal court, and at least one case is pending in each of the 12 federal circuit courts. The courts will likely remand these cases to the Board for reconsideration. "We are analyzing the impact that the court's decision has on Board cases in which the January 2012 recess appointees participated," said NLRB Chairman Mark Pearce, the only current Board member who served alongside the invalidated appointees. He also remarked that the Board “is committed to resolving any cases affected by [the Supreme Court’s] decision as expeditiously as possible.”

i. NLRB Opinions At Issue

While the majority of the 436 decisions are insignificant, several controversial opinions are noteworthy. Among these are Albertson's, LLC, 359 N.L.R.B. No. 147, 196 LRRM 1453 (July 2, 2013); WKYC-TV, 359 N.L.R.B. No. 30, 194 LRRM 1289 (Dec. 12, 2012); Banner Estrella Medical Center, 358 N.L.R.B. No. 93, 193 LRRM 1161 (July 30, 2012); Costco Wholesale Corp., 358 N.L.R.B. No. 106, 193 LRRM 1241 (Sept. 7, 2012); Hispanics United of Buffalo Inc., 359 NLRB No. 37 (Dec. 14, 2012); and Piedmont Gardens, 359 NLRB No. 46 (Dec. 15, 2012).

The Board’s Albertson’s , WKYC-TV, and Piedmont Gardens decisions all carry significance because they overturned decades-old precedent. Albertson's overruled Wm. T. Burnett & Co., 273 NLRB 1084, 1086, 118 LRRM 1502 (1984), holding that soliciting grievances may be unlawful under the National Labor Relations Act, even if the solicited employee declines to raise a grievance in response. In December 2012, the Board found in its WKYC-TV opinion that employers were required to continue deducting union fees from worker paychecks per the arrangement set forth in the governing collective bargaining agreement, even after that collective bargaining agreement had expired. The ruling flew in the face of precedent dating back to 1962, which set forth that employers could stop deducting union dues after the applicable contract had ended. The NLRB also handed down its Piedmont Gardens decision in December 2012, which overturned a long-established rule insulating companies from being forced to provide unions with witness statements concerning employee discipline. The Board eliminated a “categorical exemption” that protected the confidentiality of witness statements made in the course of an employer’s internal investigation. In place of the exemption, the Board adopted a balancing test. Under the test, confidentiality is no longer guaranteed; instead, a statement will remain confidential only when a witness is reluctant to give an open statement due to the risk of intimidation, harassment, or other threatening circumstances.

The Board’s July 2012 Banner Estrella Medical Center opinion is noteworthy because of its significant consequences for employers. The Board struck down Banner Health System’s policy that prohibited employees from discussing ongoing investigations into potential employee misconduct. The Board held that an employer’s interest in maintaining an internal investigation’s integrity did not outweigh the potential restrictions the policy imposed on an employee’s right to concerted action. This decision impacts any private sector employer, regardless of whether its employees are unionized.

Two additional controversial opinions issued under the invalidated appointees, Costco Wholesale Corp. and Hispanics United of Buffalo Inc., concerned social media policies. In September 2012, the Board ruled against Costco Wholesale Corporation’s social media policy as overly broad, because it could be construed as a ban on employee criticism of the company or its working conditions. In December 2012, the NLRB issued another social media-related decision, finding against Hispanics United of Buffalo, Inc. for firing five employees for responding on Facebook to a coworker’s remarks on their job performance. The NLRB found the Facebook posts constituted protected concerted action under the National Labor Relations Act, despite the company’s assertion that the employees were fired for harassing a coworker.

While the decisions issued during the tenure of the invalidated appointees’ service are easily identifiable, the NLRB’s trouble may not be limited to that window. The Board may additionally face challenges of opinions issued after the invalidated appointees had resigned. To the extent NLRB decisions issued after August 2013 relied on the “precedent” of the opinions handed down by a quorum-less Board, these new decisions may now be subject to collateral challenge even though they were issued under a quorum of rightfully appointed Board members.

ii. Déjà Vu

The Board has faced a similar predicament before. In 2010, the Supreme Court of the United States handed down its New Process Steel opinion that the NLRB could not conduct official business without a quorum of three validly appointed members. New Process Steel, L.P. v. NLRB, 130 S. Ct. 2635 (2010). Following that ruling, the Board had to reconsider approximately 600 decisions. In that scenario, the Board simply invited litigants to file motions for reconsideration based on any factual developments since the issuance of the original decision. The Board is likely to follow a similar procedure in light of Noel Canning.

iii. Considerations for Employers

The National Labor Relations Act imposes no statute of limitations for appealing a Board order, so an employer may still challenge an adverse determination issued during the invalidated Board appointees’ tenure. Before moving forward, however, employers should consult with counsel to fully understand which NLRB rules are invalidated by Noel Canning. If the NLRB can show that the rule articulated in a decision was in existence prior to January 2012, Noel Canning is unlikely to affect the validity of the rule.

When deciding whether to challenge an NLRB decision, an employer must weigh the costs that such a challenge will carry with it. An employer should consider, for example, the expenses of litigating the matter against the NLRB, the potential disruption to the workplace, and the costs of rewriting and distributing employment policies. While Noel Canning may provide legal footing for an employer to challenge a ruling, it does nothing to mitigate the costs and potential complications of bringing that challenge to bear.

Republished with permission. This article first appeared in The Corporate Counselor in August 2014.