A dramatic jurisdictional split among the federal circuit courts of appeal has put in jeopardy more than 400 cases decided by the National Labor Relations Board over the past year-and-a-half.

The issue revolves around whether the board has the authority to decide cases and issue orders in unfair labor practice disputes with only two of its five members seated — something it has been doing since Jan. 1, 2008.

Calling it a “huge problem,” Justin F. Keith, of Greenberg Traurig in Boston, said “it’s up in the air, depending on which circuit you ask, whether the NLRB exists today as a functioning body, [where] they only have two members. I know that sounds kind of glib and sarcastic, but that’s what it is right now.”

Although federal law calls for a panel of five members, §3(b) of the National Labor Relations
Act requires the board, which adjudicates labor cases across the country, to operate “at all times” with a quorum of at least three members.

Two of the 13 circuits — including the 1st U.S. Circuit Court of Appeals, in the March 13 Northeastern Land Servs. Ltd. d/b/a NLS Group v. NLRB ruling — recently answered the question in the affirmative by granting the NLRB the power to conduct business without a quorum.

But less than two months later, the U.S. Court of Appeals for the D.C. Circuit, which has concurrent jurisdiction over any case decided in the country, came to the opposite conclusion in the widely followed Laurel Baye Healthcare of Lake Lanier Inc. v. NLRB decision.

“If Congress intended a two-member board to be able to act as if it had a quorum, the existing statutory language would be an unlikely way to express that intention,” Chief Judge David B. Sentelle wrote on behalf of the court in Laurel Baye.

Because lawyers have the option to appeal most cases to the panel in D.C., whose rulings, most agree, carry more weight, they say the different opinions have created a conundrum.
“It really is crazy, because if you’re in the 1st Circuit and you receive an adverse decision from one of these two-member boards, it’s technically valid according to [Northeastern Services]. But you could just run to D.C., and it is going to get vacated on the basis of Laurel Baye,” said Keith. “I haven’t seen one of those petitions filed yet, but I’m sure they’re going to be coming very soon in the D.C. Circuit.”

‘Chaotic’ split

Asked how Laurel Baye will affect parties on the losing end of an NLRB case, Robert H. Morsilli, a labor lawyer in the Boston office of Jackson Lewis, said all an aggrieved party has to do right now is travel to Washington and file an appeal on jurisdictional grounds.

“The chances are, given the D.C. Circuit’s recent holding, that most employers would avail themselves of that opportunity,” he said. “I think most employers would take the position that the reasonable thing to do would be to file the appeal in the D.C. Circuit because, given the court’s decision in Laurel Baye, the outcome would seem predetermined in your favor.”

Boston lawyer Ellen C. Kearns, whose firm Constangy, Brooks & Smith successfully argued Laurel Baye, said in addition to board decisions, other NLRB powers — such as certification of election results, pursuit of certain injunctions and authority over cases involving reinstatement and back pay relief — have been called into question. With the quorum issue pending in seven circuits, she said the U.S. Supreme Court should step in and settle the matter.

“This has really created a chaotic situation,” Kearns said, “and one of the key functions of the Supreme Court is to resolve this kind of serious split among the circuit courts.”

An end in sight?

That day may be coming sooner rather than later in the 7th U.S. Circuit Court of Appeals’ New Process Steel v. NLRB case.

In New Process Steel, the court — as the 1st Circuit did — granted the board the power to operate with only two members.

Keith, along with Sheldon E. Richie and Greenberg Traurig’s Joseph W. Ambash, recently co-authored a petition for writ of certiorari to the Supreme Court on the case.
In seeking review, Keith said Laurel Baye, for which the NLRB has now sought en banc review, has cast into doubt the validity of hundreds of decisions and has left employees, employers and unions unclear as how to proceed.

Acknowledging that only a small percentage of cases ever see the light of day before the Supreme Court, Keith said the importance of the issues presented require his petition to be allowed.

“This is a problem that has the potential to come up time and time again, and we’ve already seen just in these three circuits the uncertainty and the chaos it creates,” he said. “This is a case that demands Supreme Court review because we essentially have an administrative agency, which is responsible for creating and enforcing all of the United States’ labor policy, acting with a minority membership, and no one knows whether that is legitimate or not.”

Filling the seats

Vacancies on the board first became an issue on Dec. 20, 2007, when the NLRB chairman’s term expired. The remaining four members voted at that time to delegate the chair’s powers to three of the members, effective Dec. 28, 2007.

With the terms of two members set to end on Dec. 31, 2007, the vote was taken in anticipation of the fact that the NLRB was likely to have fewer than three members. It was the board’s position, according to multiple sources, that its remaining two members would then be able to issue decisions and orders.

Due to political party fighting, which left more than 200 nominees for federal appointments unconfirmed over the past two years, efforts to fill the NLRB seats were unsuccessful.
Some of the current uncertainty may be cleared up with President Barack H. Obama’s April 24 nominations of labor lawyers Craig Becker and Mark G. Pearce to fill two of the vacant NLRB seats. While the quorum concerns will be resolved when and if their nominations are confirmed by the Senate, the question of what to do with cases decided since Jan. 1, 2008, will remain unanswered.

Richard D. Wayne, of Hinckley, Allen & Snyder in Boston, pointed out that, under the law, the board must have five members. “Because they don’t have a quorum, my feeling is they should not have the authority to issue a ruling,” he said.

Wayne unsuccessfully presented that argument in Northeastern Land Services, in which 1st Circuit Chief Justice Sandra L. Lynch, in a case of first impression, upheld the NLRB’s authority to issue decisions with a two-member board.

“The Board’s delegation of its institutional power to a panel that ultimately consisted of a two-member quorum because of a vacancy was lawful under the plain text of section 3(b),” she wrote. “The vacancy which left the two-member quorum remaining, may not, under the terms of the [statute], impair the right of the two-member quorum to exercise all powers of the Board.”

But on May 1, the D.C. Circuit issued Laurel Bay, remanding the case to the NLRB for re-determination when the agency achieves a legal quorum.

Business as usual

Although an NLRB spokesman declined to comment to New England In-House, the agency said in a May 18 statement that it plans to continue operating with only two members.

“After very careful consideration, we have determined that, as a quorum of the National Labor Relations Board, we will continue to issue decisions and orders in unfair labor practice and representation cases,” wrote NLRB Chairman Wilma B. Liebman and member Peter C. Schaumber. “While a recent panel decision of the United States Court of Appeals for the District of Columbia Circuit held that we lack the authority to do so, two appellate courts have upheld our authority, and the issue is pending before seven other Circuits.”

The decision to proceed with two members, they added, was supported by a legal opinion the board had sought from the Department of Justice’s Office of Legal Counsel.

“We believe that the Board has an important public duty to keep functioning, and to avoid an indefinite shutdown in its decision-making, where (as here) there is a reasonable legal basis for concluding that the Board can act,” the statement said. “We remain convinced, as the First Circuit and Seventh Circuit have held, that such a basis for action exists under our statute.”

The statement noted that many parties in cases decided by the NLRB have accepted the board’s decision and that, even in cases where the merits of a board opinion have been challenged, the authority of the board to act has not been attacked.

“With great respect for the District of Columbia Circuit Court and the panel that decided Laurel Baye Healthcare, we believe that the panel decision was incorrect,” the statement said. “Accordingly, we intend, by the end of May, to petition the panel, and the full Court, to revisit the panel’s ruling.”

The Supreme Court is expected to make a decision on the certiorari petition this fall.

Editor’s note: At press time, the White House had sent three nominations for the vacancies on the NLRB to the Senate.