Supreme Court Blockbuster Decision

The Case

Before the Supreme Court, the Board argued that the Act only requires it to delegate its authority to a three-member group at the precise time of the delegation ' and the authority of this delegation remains unaffected if a Board member's appointment later expires and brings the group below the three-member requirement. According to the Board, so long as it had at least three members at the time of the delegation of authority, then the remaining two members retain their delegated authority to act. The Court rejected this view in 5-4 decision. The Court held ' in an unusual grouping of justices in an opinion authored by Justice Stevens and joined in by Justices Roberts, Scalia, Thomas and Alito ' that the Act requires the Board to maintain at least three members in the group to which the Board's authority has been delegated for the Board to take valid action. Based on the Supreme Court's ruling, if the number of Board members in the group drops below three at any time the Board cannot act.

Analysis

The New Process Steel case is significant for at least a couple of reasons. First, although it gives clear guidance to the Board as to how to conduct business in the future, the Court never squarely addresses what happens to the nearly 600 cases that the two-member Board has decided. The Court simply reversed the result in New Process Steel and remanded that case back to the Seventh Circuit. The question remains: Are the Board's two-member decisions automatically vacated in light of Court's opinion? The practical effect of this question may be less significant, however, since any reopened cases will likely not result in reversal of those cases or any larger substantial labor law changes.

During the Board's two-member reign, it was balanced by both a Democratic appointee (Wilma Liebman) and a Republican appointee (Peter Schaumber). Obviously, these political counterweights were able to come to agreement only on issues that concerned well-settled aspects of labor law. Controversial cases were untouched and remain backlogged before the Board. Thus, even if the Board's two-member decisions are reopened and reexamined by a now-valid four-member Board, it would probably reach the same result in the overwhelming majority of decisions.

Second, and more significant, one by-product of New Process Steel decision could be felt in Congress as it relates to the pending Board member nominations and the nomination process in general. In recent years, the confirmation process for Board members has become intensely partisan, resulting in protracted confirmation proceedings and lengthy vacancies. Indeed, the Court sympathized with the Board over its two-member decision-making and its “understandable desire to keep its doors open despite vacancies.”

Conclusion

The decision in New Process Steel could increase pressure on Congress to move Board appointments through with less political wrangling ' lest the Board become crippled when it drops below the now-required three members. Responding to this pressure, Congress may fast-track Board appointees through the confirmation process (even controversial ones like Craig Becker). Alternatively, more moderate Board appointees may become the only viable option for a President who knows that a polarizing appointee will not overcome scrutiny.

David P. Radelet is a founding partner of Chicago's Franczek Radelet. He represents private-sector employers in all aspects of labor and employment law. Amy Moor Gaylord, a partner in the firm, represents private and public-sector management clients in all areas of labor and employment law. Mark S. Wilkinson concentrates his practice on labor law, employment law, and general litigation

On June 24, the Supreme Court issued its long-awaited decision in New Process Steel, L.P.v. NLRB, No. 08'1457, June 17, 2010, ruling that the National Labor Relations Board (the Board) does not have the authority to issue decisions without at least three members currently sitting on the Board. The decision invalidates in one fell swoop some 600 decisions that had been issued by the Board during a recent 27-month period in which the Board had only two members. While the Court's ruling is not expected to impact significantly the eventual outcome of those particular cases, it may reenergize the drive by Democrats in Congress to appoint Craig Becker and other union-friendly persons to full terms on the Board, thus creating a dramatic pro-union shift in the labor law landscape for years to come.

Background

By way of background, a fully constituted labor board has five members, but the National Labor Relations Act (the Act) allows the Board to delegate its authority to a group of at least three members. The Act further provides that the Board's three-member group can take action so long as two of the members concur in the decision. However, beginning Jan. 1, 2008, the Board took the position that it could operate with only two members after the appointments of certain Board members expired. The Board issued almost 600 two-member decisions during this time, 69 of which are pending as a result of appeals to the various U.S. Circuit Courts of Appeals. Five of these appellate courts found that the Board could operate with just two members (those were the First, Second, Fourth, Seventh and Ninth Circuits). On the other hand, the D.C. Circuit Court of Appeals ruled to the contrary, and held that the Board's two-member decisions were invalid. The New Process Steel case arose out of an unfair labor practice charge in the Seventh Circuit (which covers Illinois, Indiana and Wisconsin) and the company appealed to the Supreme Court.

The Case

Before the Supreme Court, the Board argued that the Act only requires it to delegate its authority to a three-member group at the precise time of the delegation ' and the authority of this delegation remains unaffected if a Board member's appointment later expires and brings the group below the three-member requirement. According to the Board, so long as it had at least three members at the time of the delegation of authority, then the remaining two members retain their delegated authority to act. The Court rejected this view in 5-4 decision. The Court held ' in an unusual grouping of justices in an opinion authored by Justice Stevens and joined in by Justices Roberts, Scalia, Thomas and Alito ' that the Act requires the Board to maintain at least three members in the group to which the Board's authority has been delegated for the Board to take valid action. Based on the Supreme Court's ruling, if the number of Board members in the group drops below three at any time the Board cannot act.

Analysis

The New Process Steel case is significant for at least a couple of reasons. First, although it gives clear guidance to the Board as to how to conduct business in the future, the Court never squarely addresses what happens to the nearly 600 cases that the two-member Board has decided. The Court simply reversed the result in New Process Steel and remanded that case back to the Seventh Circuit. The question remains: Are the Board's two-member decisions automatically vacated in light of Court's opinion? The practical effect of this question may be less significant, however, since any reopened cases will likely not result in reversal of those cases or any larger substantial labor law changes.

During the Board's two-member reign, it was balanced by both a Democratic appointee (Wilma Liebman) and a Republican appointee (Peter Schaumber). Obviously, these political counterweights were able to come to agreement only on issues that concerned well-settled aspects of labor law. Controversial cases were untouched and remain backlogged before the Board. Thus, even if the Board's two-member decisions are reopened and reexamined by a now-valid four-member Board, it would probably reach the same result in the overwhelming majority of decisions.

Second, and more significant, one by-product of New Process Steel decision could be felt in Congress as it relates to the pending Board member nominations and the nomination process in general. In recent years, the confirmation process for Board members has become intensely partisan, resulting in protracted confirmation proceedings and lengthy vacancies. Indeed, the Court sympathized with the Board over its two-member decision-making and its “understandable desire to keep its doors open despite vacancies.”

Conclusion

The decision in New Process Steel could increase pressure on Congress to move Board appointments through with less political wrangling ' lest the Board become crippled when it drops below the now-required three members. Responding to this pressure, Congress may fast-track Board appointees through the confirmation process (even controversial ones like Craig Becker). Alternatively, more moderate Board appointees may become the only viable option for a President who knows that a polarizing appointee will not overcome scrutiny.

David P. Radelet is a founding partner of Chicago's Franczek Radelet. He represents private-sector employers in all aspects of labor and employment law. Amy Moor Gaylord, a partner in the firm, represents private and public-sector management clients in all areas of labor and employment law. Mark S. Wilkinson concentrates his practice on labor law, employment law, and general litigation