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Courts of Appeals Reach Different Conclusion Regarding Whether Two-Member NLRB Properly Constituted


May 5, 2009

For the last 16 months, the National Labor Relations Board (NLRB or the Board) has operated with two members, instead of the full compliment of five due to the unfilled expired terms of the remaining three members. On Friday, in Laurel Baye Healthcare of Lake Lanier, Inc. v. NLRB, the U.S. Court of Appeals for the District of Columbia Circuit found that a decision rendered by the two-member NLRB was invalid. In Laurel Baye, the two-member NLRB found that the employer had committed violations of the National Labor Relations Act (NLRA). The employer appealed the Board's ruling to the D.C. Court of Appeals on the grounds that the NLRB did not have the authority to render a decision with only two members. The NLRB argued that because it had delegated decision making authority to a three-member panel it could issue decisions with the necessary quorum of the three-member panel. The court disagreed and found that the Board's Laurel Baye decision was invalid because the NLRB lacked the authority to render the decision. The court held that under the NLRA, the NLRB must have a quorum of three members "at all times" in order to render decisions. The court distinguished a prior First Circuit Court of Appeals decision which upheld a decision of the two-member NLRB because it found that the question of quorum was not specifically presented.

On the same day the Laurel Baye decision was issued, the U.S. Court of Appeals for the Seventh Circuit in New Process Steel, L.P. v. NLRB, reached a different conclusion on the validity of the two-member NLRB's rulings. The court held that the NLRB could issue decisions because it delegated its authority to decide cases to a three-member panel. Thus, the court found that the two-member Board constituted a quorum of the three-member panel, and the decisions rendered by the Board were valid.

Ultimately, this issue may be resolved by the Board if and when President Obama's NLRB nominees are confirmed and seated should the new Board adopt the two-member NLRB's decisions in whole or in part. Nevertheless, the Laurel Baye decision potentially opens the door for challenges to the two-member NLRB's decisions. The decision also raises questions about the two-member Board's previous rulings regarding reinstatement of employees, back pay awards and other remedial orders.

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