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NLRB Regional Directors retain authority to hold elections, certify results even absent Board quorum

By Joy P. Waltemath, J.D.

Granting Chevron deference, a sharply divided D.C. Circuit upheld the NLRB’s interpretation of the ambiguous NLRA provision that allowed it to delegate to Regional Directors the authority to hold a representation election and to certify its results, subject to the Board’s final review if objections are filed, even when the Board lacked a quorum. Critical to the majority’s decision was the fact that the Board’s delegation of authority over representation proceedings, first made in 1961, was not a delegation of its plenary, final authority; it was a delegation of nonfinal authority subject to final Board review if invoked. As a result of that distinction, neither the D.C. Circuit’s 2009 ruling in Laurel Baye Healthcare of Lake Lanier, Inc. v. NLRB nor the U.S. Supreme Court’s 2010 ruling in New Process Steel, L.P. v. NLRB, both of which involved an attempted delegation of final Board authority, foreclosed the result. Dissenting, Judge Silberman found the merits “not particularly important” but found the case itself “of great significance” because he believed the majority ignored binding precedent in Laurel Baye (UC Health v. NLRB, September 18, 2015, Griffith, T.).

The statute. At issue was NLRA Section 3(b) (29 U.S.C. Sec. 153(b)). It authorizes the Board to delegate to Regional Directors the authority to direct representation elections and certify the results, authority the Board first delegated to the Regional Directors in 1961 and has exercised ever since. The statute preserves for the Board the power to review “any action of a regional director” taken pursuant to that delegation, should a party object, meaning that no Regional Director’s actions are ever final on their own; they only become final if the parties decide not to seek Board review or if the Board leaves those actions undisturbed. The NLRA separately permits the Board to delegate “any or all of the powers which it may itself exercise” to panels made up of three or more of its members, and when such a panel is created, the Act provides that two of its members make up a quorum of that group.

Noel Canning’s impact. Because the U.S. Supreme Court held the president’s three recess appointments to the NLRB unconstitutional in Noel Canning, there was a period during which the Board did not have a quorum. During that time, however, Regional Directors continued to hold elections and certify their results in reliance on the Board’s previous delegation of authority. That was the case here; while the Board lacked a quorum, the UC Health Public Safety Union filed a petition seeking to represent a unit of security officers; UC Health and the union entered into a Stipulated Election Agreement; the election was held; the union prevailed by a small margin; and the Regional Director certified the results without objection. However, the company refused to bargain, which resulted in unfair labor practice charges. UC Health’s defense was that the Regional Director had acted without authority because the Board lacked a quorum at the time of the election.

Did Regional Directors retain authority? The sole question before the D.C. Circuit, to which the NLRB had said yes, was whether the Regional Director had authority to hold the representation election and certify its results when the Board lacked a quorum. The appeals court held, on the merits, that he did.

No waiver. Although the Board tried to suggest that the court need not address the issue because UC Health waived its challenge by failing to raise its objection to the Regional Director’s authority at the representation proceeding, the court had held consistently that challenges to the composition of an agency can be raised on review, even when they are not raised before the agency. Nor did the fact UC Health executed the Stipulated Election Agreement change things; signing that form agreement was no waiver of a challenge based on the Board’s lack of a quorum no one knew for certain even existed until the Supreme Court’s Noel Canning decision 14 months after the election.

Chevron deference is the standard. Swatting away the dissenting opinion’s arguments against Chevron deference in a string of footnotes, the appeals court reiterated that Chevron was the standard here: If Congress has addressed whether Regional Directors may continue to act in the absence of a Board quorum, “that is the end of the matter.” If the statute is ambiguous, the question is whether the Board’s interpretation is “a permissible construction of the statute.”

Ambiguous. Although the Board’s explanation of its interpretation of the statute was brief, that did not mean that it considered the statute to be unambiguous. Instead, the Board’s reasoning below rested on its interpretation of its prior delegation of authority to the Regional Director, backed by its reading of New Process Steel. The court was not convinced that the statutory text and structure unambiguously required the UC Health’s interpretation that the statute expressly limited those wielding delegated Board authority in the same fashion that the Board itself is limited—that “neither may act unless the Board has a quorum.” Rather, the Act’s plain language applies the quorum requirement to the Board’s authority to act, not the Regional Directors’ ability to wield delegated authority, said the court, finding the structure of the statute supported the Board’s interpretation just as well as it could support UC Health’s interpretation. At the first step of Chevron, the court found the statute silent on the Regional Director’s power to act when the Board lacks a quorum—it addressed unambiguously only the Board’s own ability to function without a quorum.

Reasonable, permissible. In considering the unfair labor practice charge against UC Health, the Board explained that it interpreted the NLRA to permit the delegation of authority to the Regional Director and concluded that “NLRB Regional Directors remain vested with the authority to conduct elections and certify their results, regardless of the Board’s composition at any given moment.” This was a reasonable, sensible interpretation that the appeals court found in no way contrary to the text, structure, or purpose of the statute, one that gave effect to each part of the statutory provision. Plus, it was consistent with the policy allowing delegation to Regional Directors in the first place: “Permitting Regional Directors to continue overseeing elections and certifying the results while waiting for new Board members to be confirmed allows representation elections to proceed and tees up potential objections for the Board, which can then exercise the power the NLRA preserves for it to review the Regional Director’s decisions once a quorum is restored.” Accordingly, the appeals court deferred to the Board’s interpretation under Chevron and upheld the Regional Director’s authority to direct and certify the union election even while the Board itself had no quorum.

Impact of Laurel Baye. A significant part of the majority opinion, and much of the dissent, was UC Health’s argument that the Board’s interpretation was foreclosed by the D.C. Circuit’s decision in Laurel Baye Healthcare of Lake Lanier, Inc. v. NLRB. The majority said that Laurel Baye had no direct application “because it addressed different statutory questions involving different and highly distinguishable statutory language and altogether different facts.” To the majority, Laurel Baye addressed the lawfulness of the Board’s effort to evade the quorum requirement imposed on its own activities, not the status of nonfinal authority previously delegated to the Regional Directors in the event the Board lacked a quorum, which was the issue here.

In its discussion of Laurel Baye, the appeals court also discussed language in the Supreme Court’s New Process Steel opinion, which also addressed the Board’s authority to act without a quorum. The D.C. Circuit cited footnote language in New Process Steel explaining that “failure to meet a quorum requirement [does not] necessarily establish that an entity’s power is suspended so that it can be exercised by no delegee. . . . [The] conclusion that the delegee group ceases to exist once there are no longer three Board members to constitute the group does not cast doubt on the prior delegations of authority to nongroup members, such as the regional directors . . . .”

As a result, the appeals court found crucial the distinction between the two types of authority the Board may delegate to different actors. The Board may delegate its plenary, final authority to decide cases to a subgroup of its own members. It may also delegate nonfinal authority to supervise elections, subject to review and approval by the Board itself, to “nongroup” actors like the Regional Directors. Laurel Baye considered the former. This case presented a different question: “whether the statute vitiates nonfinal authority already delegated to individuals outside the Board’s membership when the Board loses its quorum.” Because any contested decision a Regional Director makes is not final until the Board acts, it is immaterial whether the Board had a quorum at the time the Regional Director conducted the election, the appeals court concluded.

As the concurring and dissenting opinions illustrated, the real battle in the case was over how to apply precedent, specifically the decision in Laurel Baye. Judge Edwards, concurring, found the dissent “mistaken in suggesting that if the rationale or logic supporting a decision in one case is stated broadly enough to cover future cases not at issue, the latter cases are necessarily controlled by the earlier case.” He found Laurel Baye only “superficially similar” in some respects but not controlling. But Judge Silberman, dissenting (who did not find the merits of the case “particularly important”), found the logic of Laurel Baye’s holding determinative and would bind the court here.