L OST IN S PACE : T HE NLRB A FTER N OEL C ANNING Francis L. Van Dusen, Jr. and Wayne Landsverk I. SUPREME COURT OVERTURNS 20 MONTHS OF 2012-2013 BOARD DECISIONS IN NOEL CANNING . A. Introduction. On June 26, 2014, the U.S. Supreme Court effectively overturned more than 1,300 published and unpublished National Labor Relations Board (“NLRB” or “Board”) cases decided from January 2012 to August 2013, when the Court unanimously held that three Board members had been improperly appointed by President Obama in “recess appointments.” NLRB v. Noel Canning , No. 12-1281, ___ U.S. ___ (June 26, 2014). The overturned cases included new restrictions placed on employers trying to stop bullying of coworkers and front-line supervisors through abusive use of social media and restrictions on employer confidentiality provisions in workplace investigations. The decision also invalidated the January 2013 appointment of the new regional director, Ronald Hooks in Seattle, and former acting NLRB general counsel, Lafe Solomon. In a unanimous decision, the Court decided that President Obama’s recess appointments of three Board members on January 4, 2013, were unconstitutional because the Senate was not in recess. Law professors may parse through more than 100 pages of conflicting rationales for the Court’s holding. Middle school and high school teachers may use the end result to teach the importance of separation of powers in the U.S. Constitution. For employers, however, the ultimate impact of Noel Canning may be more limited than last summer’s headlines suggested. B. NLRB Noel Canning damage control. The NLRB has been trying to minimize Noel Canning ’s damage to its agenda to encourage unionization and promote employee rights—an agenda that has complicated life for human resources directors during the second decade of the 21st century. The ultimate effect of Noel Canning for employment professionals includes the following: 1. All NLRB opinions from January 2012 to August 2013 are suspect. Given the invalidity of the recess appointments, there were not enough properly appointed and confirmed members to issue decisions during those 20 months. 2. The last time a group of NLRB decisions was invalidated by a Supreme Court ruling, the NLRB set up a process for reviewing these decisions and ultimately affirming the outcome of the overruled decisions in the vast majority of cases. In 2010, the Court held that two members of the five-member Board lacked authority to issue decisions in New Process Steel L.P. v. NLRB , 560 U.S. 674 (2010). -1-
3. Some very significant 2012-2013 decisions are potentially in question as a result of Noel Canning . These include the NLRB’s first Facebook termination cases, a case addressing whether the employer has the right to suspend dues checkoff when a union contract expires, a decision limiting the employer’s confidentiality instructions to employees during workplace investigations, and a case undermining the employment-at-will rule in nonunion workplaces. 4. With the need to reassess these and many other cases, the NLRB’s agenda on other items may be slowed. For example, the resources necessary to reexamine the numerous decisions invalidated by yesterday’s ruling may cause the NLRB’s “ambush” election rule to be delayed. C. Region 19 director Ronald Hooks’s decisions in Seattle under attack. The NLRB took action on July 18, 2014, a few weeks after Noel Canning , and retroactively ratified the appointment of new regional directors, such as regional director Ronald Hooks’ transfer from Memphis to Seattle, replacing retiring director Richard Aharn on January 6, 2013. Region 19 covers all of Alaska, Idaho, Oregon, and Washington plus western Montana. On July 18, 2014, the board voted to ratify its prior actions in transferring and appointing new regional directors such as Mr. Hooks. See Appendix A. Although there is no question that director Hooks has full authority as of July 18 of this year to act as regional director, it is questionable whether the NLRB’s attempt to retroactively approve his earlier authority is effective. Id. Currently pending in the Ninth Circuit is an appeal of an Eastern District of Washington decision in which the Eastern Washington trial judge ruled that Mr. Hooks lacked authority to issue an injunction preventing an employer from engaging in a purported pattern of unfair-labor-practice charges. Hooks v. Kitsap Tenant Support Serv., Inc., No. 13-35912 (9 th Cir.). Because the attack on director Hooks’s authority is jurisdictional and can be raised at any time, any employer appealing a decision from Region 19 that was issued between Mr. Hooks’s transfer on January 6, 2013, and the NLRB meeting on July 18, 2014, should include in its challenge of the regional director’s order a challenge to his authority and the jurisdiction of the administrative law judge or panel hearing the case. D. Employers should anticipate that the Board’s rulings on social media, confidentiality of workplace investigations, and attacks on the employment at-will rule will be reinstated. Of broader significance are the hundreds of cases that were decided by the NLRB between January 6, 2012, the date on which President Obama made the recess appointments, and August 12, 2013, when Congress finally reached a compromise and approved a full Board of five members and new NLRB general counsel Richard Griffin. Employers should anticipate that the significant cases invalidating employers’ rules restricting employee use of social media, attacking confidentiality provisions in workplace investigations, and some employment at-will rules will be reinstated. -2-
1. Unilateral modification of union medical plans. In Mike-Sell’s Potato Chip Co. , 361 NLRB No. 23 (2014), the Board reinstated its March 2013 holding on unilateral charges in a health and welfare plan that the Supreme Court’s ruling in Noel Canning had invalidated. The Board essentially reinstated its 2013 ruling on the same basis a year later after the new Board was correctly appointed and approved by the Senate. In view of the decision of the Supreme Court in NLRB v. Noel Canning . . . , we have considered de novo the judge’s decision and the record in light of the exceptions and briefs. We have also considered the now-vacated Decision and Order, and we agree with the rationale set forth therein. In that case, the Board held that the potato chip manufacturer had unlawfully modified the health and welfare provisions of a collective bargaining agreement with the union by unilaterally changing its unionized employees’ health benefits. The decision upheld the administrative law judge’s findings regarding the 2012 change. Employers can expect the current Board to reinstate virtually all the invalidated 2012 and 2013 cases as soon as it has the opportunity. 2. Dues checkoff at the termination of a collective bargaining agreement. In Lincoln Lutheran of Racine , No. 30-CA-111099 (NLRB Aug. 11, 2014), an administrative law judge ruled that the employer’s unilateral termination of dues checkoff upon expiration of the collective bargaining agreement was lawful under a 1962 case ( Bethlehem Steel Co. , 136 NLRB 1500 (1962)), despite the NLRB’s attempt to overrule 15 years of precedent in WKYC-TV, Inc. , 359 NLRB No. 30 (2012). For 50 years employers have been allowed to unilaterally stop deducting union dues at the expiration or termination of a collective bargaining agreement. Because the NLRB overruled Bethlehem Steel prospectively, and the precedent did not apply to the television station, there was no appeal. But the ALJ in Lincoln Lutheran of Racine ruled that the WKYC decision was not controlling precedent because it had been decided by a panel that was invalidly appointed under the Supreme Court’s decision in Noel Canning . The ALJ ruled that the employer’s unilateral termination of union dues deductions upon expiration of a collective bargaining agreement was lawful under Bethlehem Steel and that the Board had not had jurisdiction to issue its decision in WKYC and thus could not overrule Bethlehem Steel . While everyone should anticipate that the current Board will eventually reinstate its rulings from 2012 and 2013 made by the invalidly constituted Board, until it does, employers may be able to avoid some of the more onerous decisions between January 2012 and August 2013. Still undecided is whether the Board can apply its attempt to reinstate its 2012 and 2013 precedents retroactively. Eventually, these issues will have to be sorted out by the Board and ultimately the courts. -3-
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