Supreme Court Rules against Two-Member NLRB; Decision May Reopen Disputes

The National Labor Relations Board soon will be back up to five members. But for more than two years it was short by three. Observers wondered how it managed to function. The U.S. Supreme Court last Thursday ruled it shouldn’t have. By a 5-4 margin, the High Court ruled that the NLRB, its ranks diminished by congressional gridlock, had violated its statutory authority in deciding cases during that time. Justice John Paul Stevens, writing for the majority in New Process Steel v. NLRB (U.S. No. 08-1457), termed the two-member board’s operations a “Rube Goldberg-style delegation mechanism…surely a bizarre way for the Board to achieve the authority to decide cases.” The decision could reopen up to 600 NLRB decisions. That’s a workload the board no doubt wishes it could do without.

Congress established the National Labor Relations Board as an independent federal agency to adjudicate disputes falling under the jurisdiction of the 1935 National Labor Relations Act (NLRA), the basic template for protecting the right of private-sector workers to form unions and engage in collective bargaining. The board and its more than two dozen regional offices investigate violations of NLRA, adjudicate grievances and supervise elections for union representation. By longstanding political custom, the board has three members of one major political party and two of the other.  Thus, under a Democratic administration (like now) a full NLRB, for practical purposes, means three Democrats and two Republicans. Each board member serves a five-year renewable term by way of presidential appointment subject to Senate approval. With steady turnover comes potentially unfilled vacancies. We’ve seen a few of those lately.

In December 2007, the NLRB, then with four members, was about to become two: Peter Schaumber, a Republican, and Wilma Liebman, a Democrat (see photo). The Democrat-controlled Congress refused to approve the Bush White House nominees to replace the two departing members, while the Bush people refused to accept the Democrat-sponsored alternatives. The stalemate left the pair with a dilemma: Should the board continue to operate with just two members or should it go into temporary remission? In January 2008 Schaumber and Liebman decided upon the former course. The caseload was high and patience was low. In a press release last week, Schaumber recalled the choice:

In early 2008, then-Board Member Liebman [Note: she is now chairman] and I made the decision to continue issuing decisions as a two-member quorum of a former three-member Board. Last week, the Supreme Court ruled against the Board requiring that the decisions we issued be set aside.

The Court’s decision and the litigation it has had the benefit of drawing public attention to the problem of Board member vacancies. The absence for long periods of time of a confirmed five-member Board prevents the Board from effectively performing its statutory duties. Even though Chairman Liebman and I were able to reach agreement in nearly 90% of the cases presented to us for decision, the Board’s major cases – those that establish new Board law or reverse prior precedent – were left undecided. This was so because the Board by practice and tradition does not establish new law or reverse prior precedent without three affirmative votes and typically does so only when there is a Board of four or five members.

The Act contemplated the nomination and confirmation of one Board member each year as a term expired. The practice has developed in recent years, however, of packaging nominees for two or more vacancies and of using short-term recess appointments to fill in while the package is nominated and confirmed. The result is a merry-go-round in Board appointments with resulting delays in the issuance of the Board’s most significant cases.

After 27 months with only two members, the NLRB merry-go-round finally stopped in late March of this year. Prominent union lawyer Craig Becker, a Democrat firmly aligned with the Left, gained a spot on the board via a one-year temporary recess appointment by President Obama following a less-than-filibuster-proof Senate vote of approval. Another Democrat, Mark Pearce, a Buffalo-based labor lawyer, also won an appointment in this manner. Both were sworn in office in April.  This Tuesday, June 22, the Senate confirmed Pearce for a full term and approved the board’s second Republican, Brian Hayes, who serves as GOP labor policy director for the Senate Committee on Health, Education, Labor and Pensions. He is set to take office shortly.

Even with a five-member board, relief is well in the distance. Thanks to the Supreme Court decision, which resulted from differing conclusions at the circuit level, NLRB members may have to revisit as many as 600 cases on which Liebman and Schaumber have ruled. This does not even include about 60 cases in which the pair was deadlocked or another 60 Liebman and Schaumber indefinitely set aside due to precedent-setting potential. Raising further the likelihood of review is the fact that there are 74 pending cases challenging the two-member board’s authority – five before the U.S. Supreme Court and 69 before federal appeals courts. Meanwhile, the board’s roster may fall once more. Schaumber’s term expires this August, and Liebman’s next year. NLRB, with about 800 professional field employees, is a busy agency. In fiscal 2009 it handled nearly 23,000 unfair labor practices cases, plus nearly another 3,000 cases involving issues of union representation. It can’t afford prolonged vacancies at the top.

Organized labor seems especially dissatisfied over the prospect of a review of prior rulings. “As has become the norm, workers are once again penalized by corporate stall tactics,” said AFL-CIO General Counsel Lynn Rhinehart. “We regret that as a result of the Court’s decision, workers in these cases will have to wait longer still for justice.” The vote breakdown underscores her concern. Joining Justice Stevens in the majority were Chief Justice Roberts and Justices Scalia, Alito and Thomas, all conservatives. The minority consisted of Justices Breyer, Ginsberg, Kennedy and Sotomayor. Yet representatives of business groups see little to be gained from a dysfunctional NLRB. “People in the business community aren’t opposed to having a functioning NLRB,” remarked Katie Packer, executive director of an employer-supported nonprofit group, the Workforce Fairness Institute. What they’re opposed to, she said, is unions using the stalemate to their own advantage.

Over the long run, the way out of this paperwork pileup is making labor law less prone to litigation. Even with ramped-up staff, NLRB will be swamped if it faces tens of thousands of grievance complaints each year. Few would dispute NLRA’s protection of an individual employee’s right to join a union without employer interference. But unfortunately, the law also grants private-sector unions exclusive representation rights and (in non-Right to Work states) authority to get non-joining or fee-paying employees fired. And Congress, with the full support of the White House, is moving in the direction of granting unions even more monopoly power – that’s what the Employee Free Choice Act is all about. Curbing that power could go a long way in unclogging the NLRB caseload.


Obama Bypasses Senate; Appoints Becker to NLRB.

Senate Blocks Becker Nomination to NLRB.

Senate Committee Approves Radical Obama NLRB Nominee; Filibuster Likely.