Fate of two-member NLRB rests with Supreme Court

During oral arguments in a case that could impact employment disputes across the country, several justices of the U.S. Supreme Court seemed skeptical of the National Labor Relations Board’s claim that it had the power to issue opinions with only two members.
The court recently addressed the question in New Process Steel v. NLRB, in which lawyers are challenging a 7th U.S. Circuit Court of Appeals decision allowing the agency to act without a quorum.
John N. Raudabaugh, who served on the NLRB from 1990 to 1993, said the board operated with only two members for more than two years. He said that marked the longest period the NLRB has ever existed with less than a quorum.
Raudabaugh, a lawyer at Nixon Peabody, which has offices in Boston and Providence, R.I., said the only reason the board was allowed to function that way was “pure politics.”
Until the NLRB recently added a third and fourth member, he said, it issued 583 decisions with just the two members.
“I hold Congress at fault here for not allowing real justice to continue, because the system was clearly designed by statutory language to have cases issued by panels of three to purposefully allow for a dissenting view that could then be raised on appeal,” he said. “All we have done here is deep-freeze the law. I simply don’t think that’s the way it should have been done.”
Justin F. Keith of Boston — whose firm, Greenberg Traurig, represented New Process Steel alongside the company’s Texas-based general counsel, Sheldon E. Richie, said that five circuits have ruled that the NLRB had the authority to act with two members.
Only the D.C. Circuit Court of Appeals, he said, has held that the board needs to have at least three sitting members.
The NRLB typically has five members. The National Labor Relations Act, 29 U.S.C. §153(b), requires that the board have a quorum of three “at all times.”
The act also includes the following clause: “except that two members shall constitute a quorum of any group” of three or more members delegated with full powers.
In December 2007, when two of the four members’ terms were about to expire, the board designated full authority to three members, including the two current members, and deemed a two-member quorum was all that was necessary to render opinions.
Several parties to NLRB actions challenged the board’s authority to issue opinions, including New Process Steel, which was found by the two-member board to have violated the NLRA.
In that case, the 7th Circuit held that the board can decide cases with only two members when it has designated full powers to three members.
Phantom group
At oral arguments, Richie argued that the statute’s plain language makes it clear that three members are necessary for the board to operate.
Richie said that the designation of power to three members lost effect as soon as there were no longer three on the board.
“What we have here is a phantom group,” Richie argued. “It says in the minutes that they ‘are continuing to be a two-member quorum of a three-member group.’ It’s a fiction.”
Justice Samuel A. Alito Jr. asked whether the board could apply the same principles as federal appellate judges.
“There is a well-established practice on the Court of Appeals that, when a three-judge panel for some reason loses one of the members, [it] can continue to decide the case if the remaining two judges can agree,” Alito said.
“It’s a different statute,” Richie said. “But I also think the Court of Appeals, which is the delegating body that forms the three-member panels, still is in existence” and therefore retains authority.
Richie also said that, unlike the Courts of Appeals, the NLRB does not review the three-member group’s decisions.
“What’s the use of having a five-member board, then?” Justice Antonin Scalia asked. “We allow the five to convert themselves to three for finally deciding all the cases. What has been accomplished? Nothing.”
Armageddon coming?
On behalf of the government, Deputy Solicitor General Neal K. Katyal argued that the statute provides for a two-member quorum so long as it was properly designated.
“I must say that seems to be a very strange procedure,” Scalia said. “When the board says, ‘Oh, God, we are about to lose our third member — let’s set up a three-member panel with this guy who’s about to go off; it will then become a two-member panel and then we can act with only two members.’”
Scalia added sarcastically: “That’s wonderful.”
When Katyal pointed to the “except that” clause in the statute that allows for fewer members, Justice John Paul Stevens wondered if that was applied only to temporary situations.
“Sure, one member dies, and the other two can finish,” Stevens said. “But you are talking about long-run governance of the board. … Do you think Congress would have authorized this?”
“As opposed to shutting down the entire board? Yes, Justice Stevens,” Katyal replied.
“It depends,” Scalia interjected. “What possible incentive does … Congress have to increase the board to the level that it should be [otherwise]? None. [But] if you want to solve the crisis that you are so worried about, the only way to solve it is to say: ‘Boy, you know, it’s Armageddon coming. We are going to not be able to act at all.’ That would solve the crisis.”
Katyal noted that President Barack Obama has nominated three people to fill the remaining vacancies on the board, but Senate Republicans have already blocked one nominee, and the others are still pending months after they were named.
“I think the politics in Armageddon could cut different ways,” Katyal said.
A decision in the case is expected before the end of the term in June.

Reporter David E. Frank contributed to this story.