Eighth Circuit Joins One Circuit Split and Creates Another, Holds Employer's Challenge to NLRB Recess Appointments Is Nonjurisdictional and Waived | Practical Law

Eighth Circuit Joins One Circuit Split and Creates Another, Holds Employer's Challenge to NLRB Recess Appointments Is Nonjurisdictional and Waived | Practical Law

 In NLRB v. RELCO Locomotives, Inc., the US Court of Appeals for the Eighth Circuit held that an employer waived its argument that two adverse unfair labor practice (ULP) decisions were invalid because the recess appointments to the National Labor Relations Board (NLRB) were unconstitutional and precluded the NLRB from having a lawful quorum when it issued them. The Eighth Circuit held the recess appointment issue is nonjurisdictional, was waived when the employer failed to raise it before the NLRB and was not such an "extraordinary circumstance" that the court should consider it despite the waiver.

Eighth Circuit Joins One Circuit Split and Creates Another, Holds Employer's Challenge to NLRB Recess Appointments Is Nonjurisdictional and Waived

by Practical Law Labor & Employment
Published on 22 Aug 2013 • USA (National/Federal)
In NLRB v. RELCO Locomotives, Inc., the US Court of Appeals for the Eighth Circuit held that an employer waived its argument that two adverse unfair labor practice (ULP) decisions were invalid because the recess appointments to the National Labor Relations Board (NLRB) were unconstitutional and precluded the NLRB from having a lawful quorum when it issued them. The Eighth Circuit held the recess appointment issue is nonjurisdictional, was waived when the employer failed to raise it before the NLRB and was not such an "extraordinary circumstance" that the court should consider it despite the waiver.
On August 20, 2013, In NLRB v. RELCO Locomotives, Inc., the US Court of Appeals for the Eighth Circuit issued an opinion enforcing the NLRB's orders despite the employer's assertion that the panel (Board) heading the NLRB's judicial functions was comprised of invalidly appointed members depriving it of the quorum necessary under the NLRA for it to issue decisions (see New Process Steel).
A three member panel of the Board (comprised of recess appointees, Sharon Block, Terence Flynn and Richard Griffin) affirmed two NLRB administrative law judge (ALJ) decisions finding that RELCO Locomotives, Inc. (RELCO) committed unfair labor practices (ULPs). In May and June of 2012, RELCO petitioned the Eighth Circuit for review of those rulings without having raised the recess appointment issue before the Board either when filing exceptions to appeal the ALJ decisions or through a motion for reconsideration. The NLRB cross applied for enforcement of the Board's orders.
Before the Eighth Circuit held oral argument in the case, the US Court of Appeals for the District of Columbia Circuit issued Noel Canning v. NLRB (see Legal Update, DC Circuit Rules NLRB Recess Appointments Were Unconstitutional; Enforceability of All Recess Appointees' Decisions in Doubt). On February 19, 2013, RELCO filed a Rule 28(j) letter alerting the Eighth Circuit to the holding in Noel Canning and asserting that the Board's orders should be vacated for the additional reason that the Board was not properly constituted of validly appointed members and lacked the required quorum when it issued the orders.
On August 20, 2013 the Eighth Circuit held that:
  • RELCO's challenge to the NLRB recess appointments (and alleged consequent lack of quorum) was a nonjurisdictional, and therefore waivable, issue (see Freytag v. Commissioner). The Eighth Circuit:
    • joined the US Courts of Appeals for the DC, Fourth and Sixth Circuits in this conclusion (see Noel Canning, GGNSC Springfield LLC and NLRB v. Enterprise Leasing Co. Se., LLC); and
    • disagreed with the US Court of Appeals for the Third Circuit, which found the quorum challenge was jurisdictional (see New Vista Nursing & Rehab).
  • RELCO waived the recess appointment issue under §10(e) of the NLRA, which, absent extraordinary circumstances, requires parties to raise issues before the Board to preserve them for appellate review (29 U.S.C. § 160(e)).
  • No extraordinary circumstance warranted review of the waived recess appointment argument. The Board did not exceed its authority and the recess appointment issue could have been argued before because it was not based on new facts or new law. The Eighth Circuit:
    • is the first circuit court to find the recess appointment issue is not an extraordinary circumstance. The Sixth Circuit suggested this but declined to decide the issue because it granted an employer's petition for review and vacated a Board decision for other reasons (see GGNSC Springfield LLC); and
    • disagreed with the DC and Fourth Circuits which found the recess appointment issue was an extraordinary circumstance (see Noel Canning and Enterprise Leasing Co. Se., LLC).
Judge Smith dissented in part from the Eighth Circuit majority, finding that:
  • RELCO did not waive the recess appointment issue.
  • Even if it had waived the issue, extraordinary circumstances required it to consider the issue because:
    • the recess appointment clause was violated; and
    • RELCO's challenge on this issue implicates the "very validity of the underlying proceeding."
The circuit court splits on the nature of NLRB recess appointment challenges, whether they are waivable and whether extraordinary circumstances preserve a waived argument for appeal will likely be short-term phenomena. The Supreme Court has already granted certiorari to hear the NLRB's appeal of Noel Canning and will likely resolve the splits in authority (see Legal Update, US Supreme Court to Review Noel Canning, Scope of President's Recess Appointment Authority). However, employers with adverse decisions by Board panels comprised of recess appointees should:
  • Expect the NLRB's office of the General Counsel to petition the 8th Circuit (and perhaps the 6th Circuit) for enforcement when permitted to select a forum under Section 10(e) of the NLRA.
  • If they did not raise the recess appointment issue at the Board, consider petitioning for review in circuits that would not deem the issue waived, including:
    • the Third Circuit, if the employer has operations in Delaware, New Jersey, Pennsylvania or the US Virgin Islands;
    • the DC Circuit, regardless of where the employer has operations; or
    • the Fourth Circuit, if the employer has operations in Maryland, North Carolina, South Carolina, Virginia or West Virginia.
  • Before petitioning for review of those orders in the Eighth Circuit (or circuits that have not analyzed preservation of the recess appointment challenge), consider moving for the Board to reconsider the recess appointees' decision in light of favorable circuit court precedent, if the limitations period for that option has not run.
Court documents