What the <i>Noel Canning</i> Decision Means for Employers

Banner Health System, 358 NLRB No. 93 (2012) (holding that the employer violated the NLRA by asking an employee who was the subject of an internal investigation to refrain from discussing the matter while the employer conducted the investigation).

Sodexo America LLC, 358 NLRB No. 79 (2012) (holding that an employer's off-duty access rule was invalid because the rule granted the employer “unfettered discretion” to determine which employees could access the facility while off duty).

Marriott Int'l, Inc., 359 NLRB No. 8 (2012) (holding that the employer's policy of prohibiting off-duty employees from accessing the employer's property without managerial approval was unlawful).

WKYC-TV, Gannett Co., 359 NLRB No. 30 (2012) (holding that an employer's duty to collect union dues from employees pursuant to a dues check-off provision continues even after the expiration of the collective bargaining agreement).

Alan Ritchey, Inc., 359 NLRB No. 40 (2012) (holding that unionized employers must give the union notice and an opportunity to bargain before imposing discretionary discipline involving demotions, suspensions, and terminations where the applicable collective bargaining agreement does not establish a grievance-arbitration process).

Ramifications

Noel Canning purports to not only invalidate all post-January 2012 NLRB decisions, but it also invalidates any action the current Board has taken or will take as long as the majority of the Board appointments are deemed unconstitutional.

The ramifications of the Noel Canning decision are not unprecedented. In 2010, the U.S. Supreme Court tossed more than two years of NLRB decisions because the NLRB lacked a quorum. New Process Steel v. NLRB, 130 S. Ct. 2635. At first glance, it seems that employers can proclaim game, set, match! Right? Not quite.

The NLRB has not accepted the D.C. Circuit's ruling in Noel Canning, and is instead conducting business as usual. The NLRB contends that the Noel Canning decision is limited to the litigants in the case ' Noel Canning and the Board ' and other NLRB decisions are unaffected. As such, the NLRB continues to investigate complaints alleging violations of the National Labor Relations Act (NLRA) and continues to issue decisions.

Litigants across the country have pounced on the Noel Canning decision in an effort to obtain relief not only from NLRB decisions, but also from any action (or potential action) taken by the NLRB since January 2012. The U.S. Supreme Court, however, has declined to enter the fray. For example, in Healthbridge Management v. Kreisberg, Healthbridge Healthbridge applied for certiorari and requested that the Court stay a Connecticut District Court order reinstating striking workers to their former positions pursuant to the NLRA. Section 10(j) of the NLRA authorizes reinstatement of striking workers pending final action by the NLRB. Healthbridge contended in its certiorari petition that the reinstatement order should be stayed pending a determination of whether the NLRB is authorized to act at all, in light of the Noel Canning decision that arguably destroys the Board's ability to act. On Feb. 6, 2013, the Supreme Court declined to review Healthbridge's petition.

Until the U.S. Supreme Court decides the constitutionality of the January 2012 appointments to the NLRB, employers cannot be certain whether the appointments were lawful or whether the post-January 2012 Board decisions are enforceable against employers.

What Employers Can Do

Although the current state of our labor laws is uncertain, employers can take certain actions in view of the Noel Canning decision.

1. Appeal Adverse NLRB Rulings Made Since January 2012

Noel Canning provides employers with a basis for arguing that an adverse NLRB decision should be reversed. Until the Supreme Court weighs in on the issue, employers should consider the Noel Canning decision when deciding whether to pursue the appeal of an NLRB ruling. Additionally, employers should consider whether to pursue appeals outside the 60-day filing period. Federal Rule of Appellate Procedure 4(a)(5) permits a party to move for an extension of time to file an appeal upon a showing of good cause. Arguably, good cause exists where, as in this case, an appellate court invalidates an NLRB decision after the expiration of the time to appeal that decision.

2. Make Sure You Understand Which Rules Are Potentially Invalid

Employers should consult with counsel to gain a clear understanding of exactly which NLRB rules are invalidated by Noel Canning. Just because the rule is articulated in a post-January 2012 decision does not mean that the rule is invalid. If the NLRB can show that the rule or opinion articulated in a decision was in existence prior to January 2012, Noel Canning will probably not affect the validity of the rule.

3. Weigh the Pros and Cons

When deciding whether to interpret Noel Canning as invalidating all post-January 2012 NLRB decisions and acts, an employer should weigh the potential costs and benefits of its decision. For example, an employer should consider whether the benefit of not following a rule outweighs the cost of responding to a charge that it is engaging in unfair labor practices. On the other hand, employers should refrain from making immediate and sweeping changes to its policies in accordance with post-2012 NLRB decisions because those changes might be unnecessary if the decisions underlying the changes are declared void.

Before deciding to ignore or follow decisions of the current NLRB, an employer should weigh the costs (e.g., the expense of litigating the matter against the NLRB, the potential disruption to the workplace, the costs of rewriting and distributing policies) against any benefits gained by choosing not to comply with post-January 2012 NLRB decisions. Remember, the NLRB's position is “full steam ahead,” and that means continuing to issue decisions that will be consistent with current precedent, including these controversial 2012 decisions. Employers should keep in mind that disputing an unfair labor practice charge and making global changes to company-wide policies are costly processes and Noel Canning does nothing to mitigate those costs.

4. Understand the Risks

As with all labor relations and employment decisions that implicate your company's exposure to adverse rulings and judgments, consult with counsel to determine what relief your employees might be entitled to receive if you ultimately end up on the wrong side of the Noel Canning argument.

Conclusion

So, what is the bottom line? Before an employer pops the cork on the champagne in celebration of what appears to be the administrative death of certain NLRB decisions (past and future), it should carefully consider the potential risks and consequences of disregarding the NLRB's decisions, which may (or may not) ultimately be deemed valid by the United States Supreme Court.

Matthew C. Lonergan is a partner with Bradley Arant Boult Cummings LLP in Nashville. He can be reached at [email protected] or 615-252-3802. Summer Austin Davis is an associate in the Litigation Group, resident in the firm's Birmingham, AL, office. She can be reached at [email protected]'or 205-521-8916.

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After the D.C. Circuit Court's ruling in Noel Canning v. NLRB, No. 12-1115, slip. op. (D.C. Cir. Jan. 25, 2013) that a majority of the NLRB members were appointed unconstitutionally, many employers celebrated the apparent demise of NLRB decisions that they viewed as unfavorable. Some of the most employer-unfriendly and controversial decisions include the following:

Costco Wholesale Corp ., 358 NLRB No. 106 (2012) (holding that an employer's social media policy prohibiting electronic postings that “damage the Company, defame any individual or damage any person's reputation” unlawfully restricted employees' protected rights; also adopting the Administrative Law Judge's ruling that the employer's rule prohibiting employee discussion of “private matters of members and other employees” was unlawfully overbroad).

Karl Knauz Motors, Inc., 358 NLRB No. 164 (2012) (holding that an employer's handbook rule prohibiting “disrespectful” language or “any other language which injures the image or reputation of the Dealership” was unlawful).

Banner Health System, 358 NLRB No. 93 (2012) (holding that the employer violated the NLRA by asking an employee who was the subject of an internal investigation to refrain from discussing the matter while the employer conducted the investigation).

Sodexo America LLC, 358 NLRB No. 79 (2012) (holding that an employer's off-duty access rule was invalid because the rule granted the employer “unfettered discretion” to determine which employees could access the facility while off duty).

Marriott Int'l, Inc., 359 NLRB No. 8 (2012) (holding that the employer's policy of prohibiting off-duty employees from accessing the employer's property without managerial approval was unlawful).

WKYC-TV, Gannett Co., 359 NLRB No. 30 (2012) (holding that an employer's duty to collect union dues from employees pursuant to a dues check-off provision continues even after the expiration of the collective bargaining agreement).

Alan Ritchey, Inc., 359 NLRB No. 40 (2012) (holding that unionized employers must give the union notice and an opportunity to bargain before imposing discretionary discipline involving demotions, suspensions, and terminations where the applicable collective bargaining agreement does not establish a grievance-arbitration process).

Ramifications

Noel Canning purports to not only invalidate all post-January 2012 NLRB decisions, but it also invalidates any action the current Board has taken or will take as long as the majority of the Board appointments are deemed unconstitutional.

The ramifications of the Noel Canning decision are not unprecedented. In 2010, the U.S. Supreme Court tossed more than two years of NLRB decisions because the NLRB lacked a quorum. New Process Steel v. NLRB , 130 S. Ct. 2635. At first glance, it seems that employers can proclaim game, set, match! Right? Not quite.

The NLRB has not accepted the D.C. Circuit's ruling in Noel Canning, and is instead conducting business as usual. The NLRB contends that the Noel Canning decision is limited to the litigants in the case ' Noel Canning and the Board ' and other NLRB decisions are unaffected. As such, the NLRB continues to investigate complaints alleging violations of the National Labor Relations Act (NLRA) and continues to issue decisions.

Litigants across the country have pounced on the Noel Canning decision in an effort to obtain relief not only from NLRB decisions, but also from any action (or potential action) taken by the NLRB since January 2012. The U.S. Supreme Court, however, has declined to enter the fray. For example, in Healthbridge Management v. Kreisberg, Healthbridge Healthbridge applied for certiorari and requested that the Court stay a Connecticut District Court order reinstating striking workers to their former positions pursuant to the NLRA. Section 10(j) of the NLRA authorizes reinstatement of striking workers pending final action by the NLRB. Healthbridge contended in its certiorari petition that the reinstatement order should be stayed pending a determination of whether the NLRB is authorized to act at all, in light of the Noel Canning decision that arguably destroys the Board's ability to act. On Feb. 6, 2013, the Supreme Court declined to review Healthbridge's petition.

Until the U.S. Supreme Court decides the constitutionality of the January 2012 appointments to the NLRB, employers cannot be certain whether the appointments were lawful or whether the post-January 2012 Board decisions are enforceable against employers.

What Employers Can Do

Although the current state of our labor laws is uncertain, employers can take certain actions in view of the Noel Canning decision.

1. Appeal Adverse NLRB Rulings Made Since January 2012

Noel Canning provides employers with a basis for arguing that an adverse NLRB decision should be reversed. Until the Supreme Court weighs in on the issue, employers should consider the Noel Canning decision when deciding whether to pursue the appeal of an NLRB ruling. Additionally, employers should consider whether to pursue appeals outside the 60-day filing period. Federal Rule of Appellate Procedure 4(a)(5) permits a party to move for an extension of time to file an appeal upon a showing of good cause. Arguably, good cause exists where, as in this case, an appellate court invalidates an NLRB decision after the expiration of the time to appeal that decision.

2. Make Sure You Understand Which Rules Are Potentially Invalid

Employers should consult with counsel to gain a clear understanding of exactly which NLRB rules are invalidated by Noel Canning. Just because the rule is articulated in a post-January 2012 decision does not mean that the rule is invalid. If the NLRB can show that the rule or opinion articulated in a decision was in existence prior to January 2012, Noel Canning will probably not affect the validity of the rule.

3. Weigh the Pros and Cons

When deciding whether to interpret Noel Canning as invalidating all post-January 2012 NLRB decisions and acts, an employer should weigh the potential costs and benefits of its decision. For example, an employer should consider whether the benefit of not following a rule outweighs the cost of responding to a charge that it is engaging in unfair labor practices. On the other hand, employers should refrain from making immediate and sweeping changes to its policies in accordance with post-2012 NLRB decisions because those changes might be unnecessary if the decisions underlying the changes are declared void.

Before deciding to ignore or follow decisions of the current NLRB, an employer should weigh the costs (e.g., the expense of litigating the matter against the NLRB, the potential disruption to the workplace, the costs of rewriting and distributing policies) against any benefits gained by choosing not to comply with post-January 2012 NLRB decisions. Remember, the NLRB's position is “full steam ahead,” and that means continuing to issue decisions that will be consistent with current precedent, including these controversial 2012 decisions. Employers should keep in mind that disputing an unfair labor practice charge and making global changes to company-wide policies are costly processes and Noel Canning does nothing to mitigate those costs.

4. Understand the Risks

As with all labor relations and employment decisions that implicate your company's exposure to adverse rulings and judgments, consult with counsel to determine what relief your employees might be entitled to receive if you ultimately end up on the wrong side of the Noel Canning argument.

Conclusion

So, what is the bottom line? Before an employer pops the cork on the champagne in celebration of what appears to be the administrative death of certain NLRB decisions (past and future), it should carefully consider the potential risks and consequences of disregarding the NLRB's decisions, which may (or may not) ultimately be deemed valid by the United States Supreme Court.

Matthew C. Lonergan is a partner with Bradley Arant Boult Cummings LLP in Nashville. He can be reached at [email protected] or 615-252-3802. Summer Austin Davis is an associate in the Litigation Group, resident in the firm's Birmingham, AL, office. She can be reached at [email protected]'or 205-521-8916.

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