"It's better to be lucky than good."
Given their inability to persuade the National Labor Relations Board not to pass the new "quickie" election rule, as well as their inability to convince Member Hayes to step down to prevent its passage, perhaps this is what employers and opponents to the rule are thinking this morning after yesterday's decision by District Court Judge James Boasberg of the District Court for the District of Columbia, in which Judge Boasberg invalidated the NLRB's new "quickie" election rule. Specifically, Judge Boasberg found that the NLRB failed to have a quorum to pass the new election rule. While the decision gives employers at least temporary relief from the new rule, Judge Boasberg's ruling begs the question:
How could the NLRB not have a quorum under New Process Steel when the Board had three members at the time?
As Judge Boasberg's decision lays out, the devil's in the details.
It started on June 22, 2011, when the Board formally proposed to amend its procedures for resolving disputes about union representation in a Notice of Proposed Rulemaking (NPRM), which was issued by a 3-1 vote of the four members holding office at the time. The NLRB received 65,000 written comments in response, and the Board held two full days of hearing on the proposed rule. Again, all four members at the time participated in the hearing. So far so good.
Subsequently, then-Chairman Liebman's term expired leaving three members, current Chairman Pearce, Member Becker, and Member Hayes. In preparation for issuing of the final rule, the three remaining members took steps for issuing the new election rule.
- November 30, 2011: the remaining three members considered a resolution to "[p]repare a final rule to be published in the Federal Register containing" eight of the amendments proposed in the NPRM and to "[c]ontinue to deliberate on the remainder" of the proposed amendments. The resolution passed by a vote of 2-1, with Member Hayes dissenting.
- December 9: Consistent with that resolution, the final rule was prepared and a draft was circulated by Chairman Pearce via email.
- December 12: A second draft was circulated via email.
- December 13: A third draft was circulated in the Board's internal Judicial Case Management System (JCMS).
At this juncture, an explanation of the NLRB's JCMS system is warranted to understand the Board's later misstep:
JCMS is the ordinary procedure for circulating and revising draft decisions, rules, and other documents, and for voting - generally either "approved" or "noted" with an attached dissent or concurrence. The case or rule is moved to issuance when votes are recorded for all Board Members as to the final versions of all circulated documents.
Moreover, and critical to Judge Boasberg's ruling:
In situations where a particular Board Member has not voted and immediate action is desired, the Executive Secretary or Solicitor may convey, by phone or email, a request to act."
It should come as no surprise, then, that it was the Board's failure to follow this custom that ultimately doomed the final rule, as the Board continued to revise the final rule and then rushed the vote and publication for the final version just hours after it was circulated:
- December 14: Chairman distributed by email a draft Order, which directed the Solicitor to publish the final rule in the Federal Register "immediately upon approval of a final rule by a majority of the Board." The Order provided that any concurring or dissenting statements would be published in the Federal Register after publication of the final rule itself, and it also stated that the Order would "constitute the final action of the Board in this matter." All three members voted on this procedural Order by email on December 14 or 15, again a 2-1 vote with Member Hayes dissenting.
- December 15: A fourth draft of the rule was circulated via JCMS. Later that day, an email was sent asking whether Member Hayes wished to include a dissenting statement in the final rule. Member Hayes conveyed that he would not attach any statement to the Final Rule so long as, consistent with the Board's Order, he would be able to add a dissent later on.
- On December 16, the final version of the rule was circulated in JCMS. Both Chairman Pearce and Member Becker voted to approve the rule. As a result, the Solicitor forwarded the rule for publication in the Federal Register that same day.
However, as Judge Boasberg found, Member Hayes never participated in the vote on the rule in its final form:
Hayes did not vote. Nor was he "asked by email or phone to record a final vote in JCMS before or after the Final Rule was modified, approved by Chairman Pearce and Member Becker, and forwarded by the Solicitor for publication on December 16. Hayes has averred that "after he voted against the procedural Order on December 15 and indicated that he would not attach a personal statement to the Final Rule, he gave no thought to whether further action was required on him."
In arguing to the court that there was a quorum, the NLRB asserted that Member Hayes should be considered part of the quorum despite his not having voted on the final rule because Member Hayes:
- participated in two earlier decisions relating to the final rule's publication; and
- was "present" for the December 16th vote to adopt the rule.
Judge Boasberg rejected both arguments:
the December 16th decision to adopt the final rule, not the earlier votes, was the relevant agency action. A quorum, accordingly, must have participated in that decision. And although Hayes need not have voted in order to be counted toward the quorum, he may not be counted merely because he was a member of the Board at the time the rule was adopted. More was required.
Specifically, Judge Boasberg found that Member Hayes "simply did not show up - in any literal or even metaphorical sense," and further concluded that Member Hayes did not exercise a "minority veto" by failing to act as the facts established that the entire Board had a "misimpression" as to whether Member Hayes had "effectively indicated his opposition" to the rule.
Accordingly, the irony of the new election rule's defect is that in the Board's apparent zeal to avoid any quorum issues under New Process Steel with Member Becker's term expiring at the end of 2011, the Board created a new New Process Steel procedural defect.
While employers are elated with the decision, it will surely be short lived. We expect that the Board will move efficiently to pass a new version of the election rule, and it will not make the same mistake twice. However, as we opined on this blog yesterday, that sets the stage for the battle over the recess appointments of Members Block, Flynn, and Griffin.