In a May 14, 2012, Memorandum Opinion, the United States District Court for the District of Columbia struck down an NLRB rule that was designed to significantly change the manner in which elections over union representation in businesses would take place. The rule was published on December 22, 2011, and went into effect in Pennsylvania, New Jersey, and every other state in the union on April 30th of this year.
The rule – which was designed to speed up the time in which collective bargaining elections take place – was challenged by the U.S. Chamber of Commerce and the Coalition for a Democratic Workplace on both substantive and procedural grounds. The Court dismissed the rule based on the NLRB’s lack of a quorum when the rule was adopted and never reached the substantive arguments.
Citing the Supreme Court’s holding in New Process Steel, L.P. v. NLRB, the Court stated that the NLRB is a “creature of statute” and “possesses only that power that has been allocated to it by Congress”. When Congress passed the Taft Hartley Act in 1947, it increased the number of board members at the NLRB to 5 and the number required to reach a quorum to 3. Only two members of the Board participated when the final vote on the rule, which is the formal agency action being reviewed, took place. Accordingly, the Court determined that the Board lacked a quorum and its actions were invalid.
The process started in June 2011 when a Notice of Proposed Rule Making was issued to consider making the change and public comment invited. At that time, the Board consisted of 4 members. By November 30, 2011, the Board was down to 3 members after the term of one member expired. Over the course of the following 3 weeks, several different votes determined by the Court to be procedural took place using the Board’s electronic voting system. However, one member of the Board was not given an opportunity to participate when the final rule for publication was circulated electronically on December 16, 2011.
The Board’s custom was to circulate the rule and make sure each member had an opportunity to vote or otherwise voice an opinion on the final rule. It was customary for the chairperson to inquire with a non-responsive board member before final votes were counted and the rule was published. In this case, all 3 board members were aware that one of the Board members objected to the proposed rule. The 2 in favor of the rule assumed that they knew the answer and when they had voted in favor deemed it final and sent it for publication in about two hours time.
The Court held that participation is not required in order to count towards a quorum. However, the failure of the Board to use its normal follow-up procedure and the passage of only 2 hours between the “vote” and publication indicates that the missing board member was not present and able to participate. Accordingly, the quorum requirement was not met and the rule was invalid.
This decision is certainly not the end of the line, as an appeal is expected. It also does nothing to prevent the NLRB from proposing the rule again and bringing it to a formal vote in a way that does not present potential procedural flaws.
We will continue to monitor the situation and update you as things develop.
