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NLRB Acting General Counsel Invalidly Served from January 5, 2011 to November 4, 2013: DC Circuit
Practical Law Legal Update 7-618-0478 (Approx. 7 pages)
NLRB Acting General Counsel Invalidly Served from January 5, 2011 to November 4, 2013: DC Circuit
by Practical Law Labor & Employment
| Law stated as of 21 Mar 2017 • USA (National/Federal) |
In SW General, Inc. v. NLRB, the US Court of Appeals for the District of Columbia Circuit held that former Acting General Counsel of the National Labor Relations Board (NLRB) Lafe Solomon served in violation of the Federal Vacancies Reform Act of 1998 (FVRA).
On August 7, 2015, in SW General, Inc. v. NLRB, the US Court of Appeals for the District of Columbia Circuit held that former Acting General Counsel of the NLRB Lafe Solomon served in violation of the Federal Vacancies Reform Act of 1998 (FVRA) from January 5, 2011 to November 4, 2013 ( (D.C. Cir. Aug. 7, 2015)).
Background
Under the NLRA, the General Counsel of the NLRB must be appointed by the President, with the advice and consent of the Senate (29 U.S.C. § 153(d)). The General Counsel:
- Is primarily responsible for prosecuting unfair labor practice (ULP) cases before the panel (Board) heading the NLRB's judicial functions.
- Must decide whether a ULP charge has merit and issue a formal complaint before the Board can adjudicate a ULP dispute (29 U.S.C. § 160(b); 29 C.F.R. §§ 102.9, 102.15).
- Has delegated his authority to investigate charges and issue complaints to 32 NLRB regional directors (see NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 139 (1975) (citing 29 C.F.R. §§ 101.8; 102.10)).
- Retains "final authority" over ULP charges and complaints and exercises "general supervision" of the regional directors (29 U.S.C. § 153(d)).
In June 2010, Ronald Meisburg resigned as NLRB General Counsel. Therefore:
- The President directed Lafe Solomon, then Director of the Office of Representation Appeals, to serve as the Acting General Counsel, citing the FVRA as the authority for Solomon's appointment.
- On January 5, 2011, six months into Solomon's temporary appointment, the President nominated Solomon to be General Counsel.
- The Senate returned Solomon's nomination.
- On May 24, 2013 the President resubmitted Solomon's nomination, but ultimately withdrew it and nominated Richard Griffin instead.
- Griffin was confirmed by the Senate on October 29, 2013.
In sum, Solomon served as Acting General Counsel from June 21, 2010 to November 4, 2013.
On January 31, 2013, an NLRB regional director issued a ULP complaint against SW General, Inc. (Southwest), an ambulance provider, which an NLRB administrative law judge (ALJ) sustained. Southwest challenged the proceedings and the ALJ's recommended order, arguing, in part, that Acting General Counsel Solomon, under whose authority the complaint issued, was serving in violation of the FVRA.
In May 2014, the Board:
- adopted the ALJ's recommended order with only minor modifications; and
- did not address Southwest's FVRA challenge.
Southwest petitioned the DC Circuit for review and the NLRB cross-petitioned for enforcement of the Board order.
Outcome
The DC Circuit held that:
- Former Acting General Counsel of the NLRB Lafe Solomon was serving in violation of the FVRA when the NLRB regional director issued the ULP complaint against Southwest under his authority.
- The violation requires the DC Circuit to vacate the Board's order.
The DC Circuit therefore granted the petition for review, denied the cross-application for enforcement and vacated the NLRB order.
The DC Circuit noted that:
- The key provision of the FVRA for the purposes of this case is Section 3345 (5 U.S.C. § 3345).
- Solomon became Acting General Counsel under the senior agency employee provision of Section 3345 (5 U.S.C. § 3345(a)(3)). Since he had been Director of the Office of Representation Appeals for the previous ten years, Solomon easily met the salary and experience requirements of that subsection.
- Subsection (b)(1) of Section 3345 prohibits a person from serving as both the acting officer and the permanent nominee unless:
- he served as the first assistant to the office in question for at least 90 of the last 365 days; or
- he was confirmed by the Senate to be the first assistant.
- The exceptions plainly do not apply to Solomon who was never a first assistant. Therefore, the pivotal question is whether the prohibition in Subsection (b)(1) applies to:
- all acting officers (as Southwest contends); or
- just first assistants who become acting officers under Subsection (a)(1) (as the Board contends).
The DC Circuit found that:
- The first independent clause of Subsection (b)(1), which states that "a person may not serve as an acting officer for an office under this section" (5 U.S.C. § 3345(b)(1)), is the clearest indication of its overall scope because:
- the term "a person" is broad, covering the full range of possible candidates for acting officer;
- the phrase "this section" plainly refers to Section 3345 in its entirety; and
- if Congress had wanted to enact the NLRB's understanding, it would have said "first assistant" and "that subsection" instead of "a person" and "this section."
- The plain language of Subsection (b)(1) means that no person can serve as both the acting officer and the permanent nominee (unless one of the exceptions in Subsections (b)(1)(A) or (b)(2) applies).
- Neither the legislative history nor purported goal of the FVRA aid the NLRB's contention.
- Its decision is in agreement with the two other courts that have considered this question (see Hooks v. Remington Lodging & Hospitality, LLC, 8 F.Supp.3d 1178, 1187-89 (D. Alaska 2014); Hooks v. Kitsap Tenant Support Servs., Inc., , at *2 (W.D. Wash. Aug. 13, 2013) and Legal Update, NLRB Regional Director Had No Authority to Issue Complaint when Board Lacked Quorum and Acting General Counsel Was Not Validly Appointed: W.D. Wa.).
- The prohibition in Subsection (b)(1) applies to all acting officers, no matter whether they serve under Subsection (a)(1), (a)(2) or (a)(3).
- Because Solomon was never a first assistant and the President nominated him to be General Counsel on January 5, 2011, the FVRA prohibited him from serving as Acting General Counsel from that date forward.
- Because Solomon could not serve as Acting General Counsel after he was nominated to be General Counsel:
- he lacked authority to issue ULP complaints or delegate authority to regional directors to issue complaints at the time the regional director issued the complaint against Southwest; and
- the complaint against Southwest was invalid.
The DC Circuit emphasized the narrowness of its decision, specifically noting that:
- Although it concluded that Solomon served in violation of the FVRA from January 5, 2011 to November 4, 2013, this case:
- will not have the reach of Noel Canning (see Legal Update, Supreme Court Holds 2012 Recess Appointments to the NLRB Were Invalid, Effectively Invalidates 20-Months of NLRB Decisions and Article, Expert Q&A on Noel Canning and Its Aftermath); and
- is not expected to retroactively undermine a host of NLRB decisions.
- It had the authority to address the FVRA objection in this case only because the petitioner raised the issue in its exceptions to the ALJ decision as a defense to an ongoing enforcement proceeding (29 U.S.C. § 160(e)). It is unlikely that an employer that failed to timely raise an FVRA objection, whether enforcement proceedings are ongoing or concluded, would have the same success.
Practical Implications
As the DC Circuit observed, this will not likely overturn hundreds of Board decisions, especially as we approach two years since the last of the Acting General Counsel's direct actions. However, employers have raised FVRA challenges:
- In some cases that the Board has only recently decided and still may be ripe for appeal (for example, see Chesapeake Energy Corp., 362 N.L.R.B. No. 80 (Apr. 30, 2015); Legal Update, Mandatory Arbitration Agreement with Class Action Waiver Violates NLRA as Supervisor Alleged: NLRB).
- Various cases challenging the actions of regional directors appointed by the Acting General Counsel (for example, see Paulsen v. All Am. School Bus Corp., at *5-6, 967 F.Supp.2d 630 (E.D.N.Y. 2013) and the cases that decision cites).
Employers involved in NLRB litigation may consider:
- Investigating whether the Acting Regional Director or a regional director he appointed when he was not properly serving materially affected their NLRB ULP or representation cases.
- Preserving any unwaived argument that the NLRB Acting General Counsel, or his appointees lacked authority, according to this court's analysis, based on the NLRB Acting Regional Director's invalid appointment under the FVRA.
UPDATE: The US Court of Appeals for the Ninth Circuit agreed with the DC Circuit's analysis of the Acting General Counsel's appointment under the FVRA (Hooks v. Kitsap Tenant Support Servs., Inc., (9th Cir. Mar. 7, 2016). The Ninth Circuit affirmed the dismissal of Section 10(j) petition filed by a regional director appointed by the Acting General Counsel after his invalid recess appointment (see Legal Update, NLRB Regional Director Had No Authority to Issue Complaint when Board Lacked Quorum and Acting General Counsel Was Not Validly Appointed: W.D. Wa.).
UPDATE: On March 21, 2017, in NLRB v. SW General, Inc., the US Supreme Court affirmed the DC Circuit's decision (137 S. Ct. 929 (2017)). Once the President submitted his nomination to permanently fill the general counsel position, subsection (b)(1) of FVRA prohibited Solomon from continuing his acting service. Since the President did not appoint someone else as the acting GC, Solomon's continued service violated the FVRA.