D.C. Circuit: Labor Board Lacked Quorum In February 2012

D.C. Circuit: Labor Board Lacked Quorum In February 2012

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].

Oral Agreement

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 meeting room.

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 them.

Board Consideration

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, 2012.

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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