The U.S. Court of Appeals for the District of Columbia Circuit has held that the National Labor Relations Board (“NLRB” or “Board”) acted without authority in entering an order against a company for alleged unfair labor practices, as the two-member panel did not constitute a quorum as required by the National Labor Relations Act (NLRA). In Laurel Baye Healthcare of Lake Lanier, Inc. v. NLRB (pdf), the only issue before the appellate court was whether the Board had the statutory authority make its decision, not whether its findings, conclusions and remedies were justified.

Prior to issuing its order in the underlying decision, one Board member’s term had expired. The remaining four members of the five-member Board voted to delegate its powers to a three-member group, pursuant to Section 3(b) of the NLRA, which reads:

The Board is authorized to delegate to any group of three or more members any or all of the powers which it may itself exercise. . . . 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.

29 U.S.C. § 153(b).

As two additional members’ terms were set to expire on December 31, 2007, it was anticipated that the Board would be left with only two members due to the Senate’s failure to confirm any new nominees for the open and expiring positions; and President Bush’s inability to make recess appointments for procedural reasons. Thus, according to the D.C. Circuit, the purpose of delegating powers to a three-member group was to ensure that the remaining two Board members whose terms had not yet expired would be able to operate as a fully-functioning Board. The question before the D.C. Circuit, therefore, was whether two members constituted an effective quorum. Finding that they did not, the court reasoned that had Congress intended a two-member Board to be able to function as a quorum “the existing statutory language would be an unlikely way to express that intention.” Thus, according to the D.C. Circuit, three members are necessary for the Board to exercise any real authority. Under that reasoning, any order issued by the two-member Board would be unenforceable.

This issue is far from resolved. The Seventh Circuit also issued a decision today, New Process Steel, L.P. v NLRB (pdf) that upholds a two-member Board decision. In March, the First Circuit similarly upheld the two-member panel’s authority to issue orders in Northeastern Land Services, Ltd. v. NLRB. It is anticipated that other circuit courts that address this question will differ as to the ability of a two-member Board to issue enforceable decisions.

The practical implications of the D.C. Circuit’s decision will be few for employers. President Obama recently announced his decision to nominate Democrats Craig Becker and Mark Pearce to fill two of the three remaining open Board seats.  Obama, however, failed to announce the nomination of a Republican member to fill the remaining seat which may cause Senate Republicans to put a hold on the expected nominations of Becker and Pearce until a Republican is named as well. The longer it takes to fill the vacant seats, the longer it will be until the Board’s orders are deemed legitimate by every appellate court. Assuming Becker and Pearce are eventually seated, they – along with Democratic Chair Wilma Liebman – will constitute a quorum able to re-issue or adopt all of the decisions made by the 2-member Board, including the immediate decision in Laurel Baye.