D.R. Horton Ruling May Survive, However

With all due respect, Meatloaf, you were wrong. It turns out that two out of three is, in fact, bad.

The United States Supreme Court held today that President Obama’s 2012 appointments to the National Labor Relations Board were not valid recess appointments under the United States Constitution. NLRB v. Noel Canning, U.S. Supreme Court Case No. 12-1281 (June 26, 2014). At the time of the appointments on January 4, 2012, the Senate was conducting pro forma sessions, which simply consisted of opening and then immediately adjourning every Tuesday and Friday. At the time, three vacancies were open on the National Labor Relations Board, with Presidential nominations pending for each.

The President took the position that the Senate was in a “functional” recess because it was not transacting business, and that he therefore had the power under the Constitution to make recess appointments to the NLRB without the Senate’s advice and consent. Based on this view, President Obama gave recess appointments to all three of his pending NLRB nominees (Sharon Block, Richard Griffin, and Terence Flynn). After receiving an adverse ruling from the NLRB following these appointments, Noel Canning appealed based on its argument that the NLRB was not properly constituted.

The Supreme Court held that the January 2012 appointments presented three questions:

(i)                 Whether the recess appointment power can be exercised during a temporary break that occurs within a Congressional session (an “intra-session recess”), or is instead limited to breaks that occur between formal sessions;

(ii)               Whether the recess power allows the President to fill vacancies that exist at the time of a Congressional recess, or is instead limited to filling vacancies that occur after the commencement of a recess; and

(iii)             Whether Congressional recesses are interrupted by pro forma sessions in which no business is transacted.

The D.C. Circuit Court of Appeals held that the appointments were invalid on the basis that the recess appointment power cannot be exercised during an intra-session recess, and furthermore does not permit the President to fill vacancies that were open prior to the commencement of a recess.

The Supreme Court majority disagreed, and decided the first two questions in the President’s favor on the basis that to hold otherwise might paralyze the federal government during a period in which the Senate is in recess. (Some may question whether that would be a bad outcome, but that is beyond the scope of this article.) Moreover, the majority reasoned that Presidents had frequently exercised the recess power during intra-session recesses to fill pre-existing recesses. On the third question, however, the majority offered a polite “thanks, but no thanks” to the President’s invitation to decide whether a pro forma session interrupts a Congressional recess. Instead, the majority held that the legislature decides when it is and is not in session.

The always-lovable Justice Scalia authored a separate opinion concurring in the judgment, joined by Justices Roberts, Thomas and Alito. While agreeing that the appointments were invalid, Scalia gently excoriated the majority in his own irascible manner for deciding the first two questions in favor of the President. According to Justice Scalia, the majority’s “but, we’ve always done it that way” reasoning allowed expansion of the executive power by “adverse possession.” Scalia at his best, no doubt.

So, that brings us to why two out of three is, in fact, bad, regardless of Meatloaf’s wisdom to the contrary. While the Supreme Court’s opinion will invalidate a number of astonishingly ill-reasoned NLRB opinions (hey, this is an employer blog), it does not invalidate the Board’s D.R. Horton opinion (discussed here). That opinion was issued on January 3, 2012, the day before the recess appointments that were addressed in Noel Canning.

There was some hope that Noel Canning might invalidate the D.R. Horton decision, because outgoing NLRB member Craig Becker had been appointed to a pre-existing vacancy during an intra-session recess in March 2010. Under the D.C. Circuit’s reasoning in Noel Canning, his appointment might have been invalidated as well. Sadly, the Supreme Court held that such exercises of the recess appointment power are legitimate. Of course, the Supreme Court still may reject D.R. Horton on its merits, so the ship hasn’t sailed as of yet.

Bottom Line: While Noel Canning was decided in the employer’s favor, the Supreme Court’s reasoning allows D.R. Horton to survive—at least for now.