In a landmark decision, the United States Supreme Court ruled yesterday that President Obama’s three recess appointments to the National Labor Relations Board (NLRB) were unconstitutional.  Click here for the ruling.  President Obama had relied upon the Constitution’s Recess Appointments Clause to appoint three members of the NLRB.  The Court ruled, however, that the “pro forma” sessions in January 2012 when the recess appointments were made were not truly a “recess” of the Senate within the meaning of that provision of the Constitution.  Since the NLRB was not lawfully appointed, its decision that the employer in the case, Noel Canning, had violated the law was not a proper finding and was not enforceable against the employer.

The ruling has greater impact, however.  The ruling also calls into question the legality of all other decisions by the NLRB for the approximately 2-year period after the recess appointments in January 2012 until the NLRB became properly constituted by Senate confirmation of the President’s appointments.  Click here for a discussion of some significant NLRB cases that will be impacted by this decision.

Any attempted rule-making by the improperly constituted NLRB is likewise in question.  In addition, other rulings, such as the D.R. Horton ruling, were decided by the NLRB when the slim majority deciding the case included a similar recess appointment.  The D.R. Horton  ruling, which made class action waivers in arbitration agreements illegal, is also now in question.

Of course, with the NLRB now properly constituted, it can make effective rulings going forward.  Look for the following:

  • A litigation “fix” – the NLRB will pursue cases by which to “fix” the rulings now in question.
    • This will take some time, however, as the Board will have to wait for the right cases to proceed through a tedious litigation process.
    • The substantive decisions likely will not change.
    • This approach will reveal continuation of the NLRB’s aggressive litigation positions.
  • A rule-making “fix” – the NLRB will pursue the process of rule-making in order to “fix” any case decisions or rule-making now in question.
    • This already had begun with the so-called “quickie” or “ambush” election rules.
    • This too is a tedious process and requires a notice and comment period.

There is also – and perhaps more significantly – political fallout.  Its practical effect will be to heighten awareness of the NLRB’s positions, with a corresponding scrutiny from both sides.  Labor will increase its outcry for the NLRB to issue rulings to help the downtrodden worker and the embattled middle class; management and employers will increase their outcry that the NLRB’s positions are killing jobs and harming, not helping, working Americans.