An unexpected Supreme Court ruling has vacated hundreds of labor decisions, casting years of labor precedent into doubt. From 2008 until the middle of 2010, a two-member panel of the National Labor Relations Board (the "Board") issued almost 600 decisions in labor cases. In its June 17, 2010 decision in New Process Steel LP v. NLRB, however, the Supreme Court held that the National Labor Relations Act (the "Act") did not authorize decisions by a two-member panel. In so doing, the Supreme Court has invalidated more than two years of Board precedent.
The Board, the federal agency that rules on labor cases, typically consists of five members. However, long-settled law has allowed the Board to operate with only three members, known as a "quorum of the Board." The "quorum" function stems from the Act, which states that when there are vacancies on the Board, the remaining members may "exercise all of the powers of the Board, and three members of the Board shall, at all times, constitute a quorum of the Board."
In December of 2007, the Board consisted of four members. Two of those members' terms were about to expire however, and, due to executive inattention and confirmation gridlock, no replacements were pending. Anticipating the vacancies, the Board delegated its powers to a three person "quorum." The three-person quorum in turn delegated its powers to just two members, Wilma B. Liebman (D) and Peter C. Schaumber (R). Starting in January 2009, Liebman and Schaumber began issuing opinions in labor cases as a two member panel. They did so until late March 2010, ultimately issuing approximately 600 decisions.
Nationwide, approximately 75 losing parties challenged the two-member Board decisions in court. Some of these challenges were heard at the appellate level, and a circuit split developed. The DC circuit, forecasting the eventual Supreme Court decision, held that the two-member panel was invalid. The First, Second, Fourth and Seventh circuits disagreed, however, and held that the two-member "quorum" was valid under the Act.
Due in part to the weight of appellate precedent, most observers believed the Court would uphold the validity of the two-person delegation, and the Board itself appeared confident its position would prevail. Writing for the majority, however, Justice Stevens ruled that the Act does not permit the Board to issue decisions with only two members. Notably, Justice Stevens, one of the court's liberal stalwarts, was joined by the Court's conservative bloc of Justices Roberts, Scalia, Thomas, and Alito. A dissent by Justice Kennedy was joined by Justices Ginsburg, Breyer, and Sotomayor.
The full impact of the decision is not yet known. It is not clear, for instance, whether new Board appointees Becker (D) or Pearce (D) will join a panel with Liebman and Schaumber to reassess the cases, or if they ultimately will be resolved in another manner. The new Democratic majority on the Board may result in some divergent outcomes. Whatever the ultimate result, the Supreme Court decision has caused a scramble by the Board, labor attorneys, and parties to the affected decisions. Employers with unionized workforces, particularly those who have been involved in proceedings at the Board in the past few years, should contact their labor attorneys for an assessment of the likely impact of this decision on their businesses.
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