WASHINGTON, D.C. - (Mealey's) The District of Columbia
U.S. Circuit Court of Appeals on Jan. 25 declined to enforce a National Labor
Relations Board ruling that an employer violated the National Labor Relations
Act (NLRA) by refusing to reduce an oral agreement to writing and signing off
on a collective bargaining agreement (CBA), after finding that the NLRB could
not lawfully issue its February 2012 ruling because it lacked a quorum (Noel
Canning, A Division of the Noel Corporation v. National Labor Relations Board,
No. 12-1115, D.C. Cir.; 2013 U.S. App. LEXIS 1659; See November 2012, Page 70) [an enhanced version of this opinion is available to lexis.com subscribers].
Noel Canning, which bottles and distributes Pepsi-Cola
products, had negotiated a series of CBAs with the International Brotherhood of
Teamsters, Local 760 back to the 1940s. When the most recent agreement expired
April 30, 2010, they began negotiations for a new one.
During five bargaining sessions, the parties resolved all
but two issues - wages and pension plans. Written proposals were exchanged
throughout negotiations, and at the final bargaining session on Dec. 8, 2010,
both oral and written proposals were made. The company made two alternate
proposals, and the union suggested that the membership vote. After the union
reviewed the terms of each proposal while everyone was still at the bargaining
table, all representatives of the parties orally agreed that the company's
treasurer would reduce the proposals to writing, send them to the union and
hold the vote in the company's meeting room.
One of the unit employees who had participated in the
final day of negotiations discussed the proposals with his co-workers, the
majority of whom expressed a preference for one of the proposals over the
other. He also discussed the two proposals with a company representative, who
said both sides got "a good deal." Later that day, the company sent the union
an email titled "Proposals," which contained descriptions of two proposals for
the terms of the new CBA that differed from the previous versions of the
proposals that it had sent. The union replied with an email setting forth the
terms to which the parties had agreed for the vote, and it posted notices that
there would be a vote for a new contract on Dec. 15, 2010, in the company's
A union representative called the company's president to
ask why the proposals had been changed. The president said that it had not been
a written agreement and that it was his right to make decisions on behalf of
the company. The union representative told the president that the vote would be
held on the terms discussed at the Dec. 8 meeting.
The vote was held as scheduled, and the employees voted
37-2 in favor of the first proposal the company had made, the one that the unit
employee who participated in negotiations had favored. When the company's
president was informed, he sent two letters to the union - one stating that it
was not appropriate to vote on an offer that was not made by the employer and
that the parties were now at impasse and the second stating that the union
should direct all future communications to the company's attorney.
When the company received the written CBA and refused to
sign it, the union filed an unfair labor practice charge with the NLRB. It
claimed that the company had violated the NLRA by refusing to sign a CBA
embodying the oral agreements they had reached as to the bargaining unit's
terms and conditions of employment during negotiations. An administrative law
judge (ALJ) found that the parties had verbally agreed to the substantive terms
of a CBA and that the company had violated the NLRA by refusing to abide by
The company filed exceptions with the NLRB. A
three-member panel of the NLRB, composed of members Brian Hayes, Terence F.
Flynn and Sharon Block, affirmed the ALJ's finding in a decision dated Feb. 8,
2012. On that date, the NLRB purportedly had five members. Two members,
Chairman Mark G. Pearce and Hayes, had been confirmed by the Senate on June 22,
2010. The three other members were all appointed by President Obama on Jan. 4,
Block filled a seat that became vacant on Jan. 3, 2012,
when Board Member Craig Beck's recess appointment expired. Flynn filled a seat
that became vacant on Aug. 27, 2010, when Peter Shaumber's term expired. The
third, Richard F. Griffin, filled a seat that became vacant on Aug. 27, 2011,
when Wilma B. Liebman's term expired.
At the time of the president's recess appointments on
Jan. 4, the Senate was operating pursuant to a unanimous consent agreement,
which provided that the Senate would meet in pro forma sessions every
three business days from Dec. 20, 2011, through Jan. 23, 2012.
Noel Canning petitioned the Circuit Court for review of
the NLRB's decision finding that it violated the NLRA. The NLRB
cross-petitioned for enforcement of its order.
Noel Canning argued that the NLRB did not have a quorum
for the conduct of business on Feb. 8, 2012, because the last three members of
the NLRB were invalid under the "recess appointments clause" of the
Constitution, Article II, Section 2, Clause 3. The NLRB argued that despite the
president's failure to comply with the "senate vacancies clause" (Article II,
Section 2, Clause 2), he validly made the appointments under the recess
appointments clause, which provides that "[t]he President shall have Power to
fill up all Vacancies that may happen during the Recess of the Senate, by
granting Commissions which shall expire at the End of their next Session." Noel
Canning countered that that clause is inapplicable because the Senate was not
in the recess at the time of the appointments and the vacancies did not happen
during the recess of the Senate.
Agreeing with Noel Canning, Chief Judge David B. Sentelle
wrote for the panel: "In short, we hold that 'the Recess' is limited to
intersession recesses. The Board conceded at oral argument that the
appointments at issue were not made during the intersession recess: the
President made his three appointments to the Board on January 4, 2012, after
Congress began a new session on January 3 and while that new session continued.
. . . Considering the text, history, and structure of the Constitution, these
appointments were invalid from their inception. Because the Board lacked a
quorum of three members when it issued its decision in this case on February 8,
2012, its decision must be vacated."
In addition, the appellate panel found that the relevant
vacancies did not arise during the intersession recess of the Senate thus
allowing for a recess appointment.
Judges Karen LeCraft Henderson and Thomas B. Griffith
joined in the opinion.
Gary E. Lofland of Lofland & Associates in Yakima, Wash.,
represents Noel Canning.
Linda Dreeben, John H. Ferguson, Jill A. Griffin and
Elizabeth A. Heaney of the NLRB in Washington and Beth S. Brinkmann, Sarang V.
Damle, Stuart F. Delery, Scott R. McIntosh, Melissa N. Patterson and Benjamin
M. Shultz of the U.S. Department of Justice in Washington represent the NLRB.
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