June 18, 2010

Supreme Court Rules That NLRB Lacked Authority to Issue Approximately 600 Decisions Between January 2008 and March 2010

In a landmark decision on June 17, 2010, the United States Supreme Court in New Process Steel LP v. National Labor Relations Board determined that the National Labor Relations Board did not possess the authority to issue decisions while only two members of a possible five-member Board were seated. The ruling reverses a decision by the Seventh Circuit Court of Appeals which upheld the Board's authority to decide cases while three Board vacancies existed.

The Board functioned with only two members from January 2008 until President Obama used recess appointment to seat Members Becker and Pearce in March 2010. During this period, the Board continued to issue rulings, albeit with only two members.

In a 5-4 majority opinion written by Justice Stevens, who was joined by Chief Justice Roberts and Justices Scalia, Thomas and Alito, the Supreme Court recognized that Section 3(b) of the National Labor Relations Act authorizes the Board to delegate its authority to a three-member group and permits the three-member group to act on behalf of the Board as long as a quorum of two members participate in its decisions. However, the Supreme Court held that the language of Section 3(b) could only be given meaningful effect if the Board's delegate group maintained at least three members "at all times." In reaching its decision, the Supreme Court reasoned that Congress, if it wanted, would have granted express authorization for the Board to function on a continuing basis with two members only, but the statute includes no such provision.

The Court's decision calls into question almost 600 decisions issued by Chairwoman Liebman and Member Schaumber during the period of January 2008 until March 2010. Approximately 75 of the decisions issued by Chairwoman Liebman and Member Schaumber are pending appeal and are now expected to be remanded to the Board for further consideration. The Supreme Court's decision will likely create a backlog at the Board as it determines how to address the chaos resulting from the Supreme Court's determination that it could not issue decisions with only two members – while at the same time continuing to work on its existing caseload. The overall impact of the decision remains unclear, but at a minimum, the decision may forestall the Board from implementing the expected pro-union agenda ushered in by Obama appointees Becker and Pearce. Employers who have received an unfavorable Board decision since January 2008 should contact their labor counsel to evaluate their options. Notably, however, as the Board is presently composed of three Democrats and one Republican, employers should expect that the Board's present makeup will favor union interests.

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