Panel of two is not sufficient for NLRB authority

Kimberly Harding is a summer associate at Akin Gump.

This morning, in New Process Steel v. National Labor Relations Board (No. 08-1457), the Court held that, under Section 3(b) of the National Labor Relations Act, a delegee group must have three members to exercise the delegated authority of the National Labor Relations Board (“Board”). [Earlier today, Kevin Russell assessed the implications of the decision for this blog. In addition, Dina Guzovsky’s preview and recap of the oral argument are available here and here.]

The Taft-Hartley Act, enacted in 1947, expanded the Board from three to five members and permitted the Board to delegate any or all of its powers to “any group of three or more members.”  It also provided that a “vacancy in the Board shall not impair the right of the remaining members to exercise all of the powers of the Board, and three members of the Board shall, at all times, constitute a quorum of the Board, except that two members shall constitute a quorum of any group designated pursuant to the first sentence hereof.”

At the end of 2007, the four members of the Board delegated all of its authority to a three-member group.  Three days later, the recess appointment of one of those three members expired, leaving the remaining two members as the only members of the Board.  For more than two years, those two members acted as a quorum, deciding nearly six hundred cases.  The petitioner in this case, New Process Steel, challenged two such decisions, arguing that the two-member Board lacked the authority to issue the orders.

The court of appeals rejected New Process Steel’s contentions.  In its view, the plain meaning of the statute supported the Board’s delegation procedure:  the two members of the Board constituted a quorum of the three-member group to which the Board had delegated its authority.  Moreover, the court noted, its reading comported with the legislative history of the statute, which was enacted to make the Board more efficient and to better manage the delays that had plagued the Board in the past.

In an opinion by Justice Stevens, joined by the Chief Justice and Justices Scalia, Thomas, and Alito, the Court reversed and remanded.  First, the Court reasoned that requiring the delegee group to have at least three members was the only way to harmonize and give meaningful effect to all of the provisions in Section 3(b).  By contrast, reading the statute to allow two members to act as the Board would allow the permanent circumvention of the quorum requirement and would give no meaningful effect to the command that the Board’s full power be vested in no fewer than three members.

Second, the Court emphasized that if Congress had intended to authorize just two members to act for the Board on an ongoing basis, it could have said so in straightforward language.  Instead, Congress required the Board to delegate authority to no fewer than three members, and to have three participating members to constitute a quorum.

Third, the Court recognized that its decision was consistent with the Board’s longstanding practice of reconstituting a delegee group when one member’s term expired.  The quorum provisions, as the Court understood them, merely define the number of members who must participate in a decision, while the vacancy clause determines whether vacancies in excess of that number have any effect on an entity’s authority to act.

Justice Kennedy filed a dissenting opinion, which was joined by Justices Ginsburg, Breyer, and Sotomayor.  In his view, the Board’s interpretation of the statute is supported by the plain text:  “Because the [three-member] group was properly designated . . . and a two-member quorum of the group was authorized to act under the statute’s plain terms, its actions were lawful.”  The Court’s contrary conclusion, Justice Kennedy posited, rested on the idea that “Congress did not intend to allow two members” to act as the Board for extended periods of time; even so, he contended, Congress certainly “did not intend that the Board would cease operating altogether for an extended period of time.”  And Justice Kennedy downplayed the significance of the Board’s prior practice of reconstituting panels that drop below three members by virtue of a vacancy; in his view, the fact that “the Board respects the superiority of three-member groups” does not mean that “a two-member group lacks the authority to act when recomposition is not an option.”