iTwo years ago, in NLRB v. Noel Canning, 134 S. Ct. 2550 (2014), the U.S. Supreme Court held unconstitutional President Obama’s January 2012 recess appointments of Members Block, Flynn and Griffin to the National Labor Relations Board (“Board” or “NLRB”). The decision cast into doubt the validity of hundreds of NLRB orders and official actions.
Recently, in Advanced Disposal Services East Inc. v. NLRB, decided April 21, 2016, the employer, Advanced Disposal Services, unsuccessfully attempted to invalidate actions taken by Regional Director Dennis Walsh by arguing the invalid recess appointments meant the Board lacked a quorum when it appointed Walsh as a Regional Director for Philadelphia based Region 4. Advanced claimed Walsh’s appointment was therefore invalid, and he lacked authority to oversee the election involving Advanced’s employees in which those employees elected to be represented by the Teamsters Local No. 384 by a vote of 60-58. Because Walsh’s actions facilitating that election were beyond his power, the election was invalid. Following the Board’s certification of the bargaining unit, Advanced refused to bargain with the union, drawing an unfair labor practice charge.
Absent the Noel Canning-based argument concerning the validity of the Regional Director’s appointment, the case would present nothing more than a garden-variety refusal to bargain case, and the only legal issue would be whether substantial evidence supported the Board’s decision. However, the question as to the appointment of the Regional Director created a closely watched legal issue carrying potential implications for many other employers in similar situations.
The case worked its way to the Third Circuit Court of Appeals, which first had to determine whether Advanced had waived its challenge to Walsh’s appointment by failing to raise the issue prior to the election, as required by the Board. Before the Third Circuit, the Board asserted that had Advanced raised this issue prior to the election, it could have corrected it.
Following the D.C. Circuit while distinguishing contrary precedent from the Eighth Circuit, the Third Circuit held the argument was “not a mere procedural technicality,” but instead implicated the very power of the Board to act. Accordingly, it constituted an “extraordinary circumstance” under the National Labor Relations Act, allowing Advanced to raise the issue for the first time on appeal.
However, that was not the end of the matter. In July of 2014, about one month after Noel Canning was decided, all five members of a properly constituted Board ratified its prior personnel decisions, including Walsh’s appointment. Shortly thereafter, Walsh ratified his prior acts in office, including the election involving Advanced. The Board argued these ratifications meant that the employer’s procedural challenge to the election results must fail.
The Third Circuit held that both the Board and the Regional Director had properly ratified their earlier actions. Thus, the Court agreed with the Board that its actions were ultimately procedurally valid. The only remaining question was whether substantial evidence supported the Board’s decision to overrule Advanced’s objection and its refusal to grant a new election. Finding that the Board’s decision was backed by substantial evidence, the Court denied Advanced’s petition for review and granted the Board’s cross-application for enforcement.
This disposition may represent the likely end of the line for similar challenges to invalid, but subsequently ratified appointments. Unless an employer can show that the ratification was somehow tainted, courts may be inclined to accept that the subsequent ratification makes the challenged determination valid. Epstein Becker Green will continue to monitor this issue.
