New Process Steel, L. P. v. National Labor Relations Board
2010 U.S. LEXIS 4973, 560 U.S. 674, 177 L. Ed. 2d 162 (2010)
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Rule of Law:
Under § 3(b) of the National Labor Relations Act, a delegee group of the National Labor Relations Board must continuously maintain a membership of three in order to validly exercise the Board's delegated authority. When the group's membership falls to two, it can no longer act, even if two members would ordinarily constitute a quorum of a three-member group.
Facts:
- In late 2007, the National Labor Relations Board (NLRB), which normally has five members, had four members and anticipated that the expiration of two recess appointments would soon leave it with only two.
- To preserve its ability to function, the four-member Board delegated all of its powers to a three-member group consisting of Members Liebman, Schaumber, and Kirsanow, effective December 28, 2007.
- The Board made this delegation with the express understanding that after Member Kirsanow's term expired, the remaining two members would constitute a valid quorum of the three-member group.
- On December 31, 2007, Member Kirsanow's recess appointment expired, leaving only Members Liebman and Schaumber on both the delegee group and the full NLRB.
- Over the next 27 months, the two-member Board, acting as a purported quorum of the now-defunct three-member group, decided almost 600 cases.
- During this period, the two-member Board issued two decisions sustaining unfair labor practice complaints against New Process Steel, L.P.
Procedural Posture:
- The two-member National Labor Relations Board issued decisions sustaining unfair labor practice complaints against New Process Steel, L.P.
- New Process Steel, L.P. sought review of the orders in the U.S. Court of Appeals for the Seventh Circuit, challenging the authority of the two-member Board.
- The Seventh Circuit ruled in favor of the NLRB, holding that the two members constituted a valid quorum of a properly delegated three-member group.
- The U.S. Supreme Court granted certiorari to resolve a conflict among the circuit courts on this issue.
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Issue:
Does § 3(b) of the National Labor Relations Act permit a two-member quorum of a three-member National Labor Relations Board group to continue to issue decisions after a vacancy on the Board reduces the group's membership to two?
Opinions:
Majority - Justice Stevens
No. Section 3(b) of the National Labor Relations Act requires that the Board’s delegated power be vested continuously in a group of three members for the delegation to remain valid. A two-member quorum of a delegee group cannot continue to exercise the Board's authority once the group's membership falls below three. The court's reasoning is based on three main points. First, this interpretation is the only way to harmonize and give meaningful effect to all of § 3(b)'s provisions, particularly the requirement that the Board delegate to a 'group of three or more members' and that the Board itself maintain a quorum of three 'at all times.' The government's contrary reading would render these provisions functionally void by allowing a two-member Board to operate indefinitely. Second, if Congress intended to authorize a two-member Board, it could have done so directly rather than through the 'Rube Goldberg-style delegation mechanism' used here. Third, the Board's own longstanding practice of reconstituting delegee groups when one member's term expired supports the conclusion that the group's authority ceases when it no longer has three members. A quorum of two can only transact business for a validly constituted body, and a group of two is not the 'group of three' to which power was delegated.
Dissenting - Justice Kennedy
Yes. Section 3(b) permits a two-member quorum of a properly designated three-member group to continue to issue decisions, even after a vacancy reduces the group's membership to two. The statute's plain text authorizes this action. The Board delegated its power to a 'group of three,' and the statute explicitly states 'two members shall constitute a quorum of any group designated.' The majority's holding is also contrary to the statute's vacancy clause, which states 'A vacancy in the Board shall not impair the right of the remaining members to exercise all of the powers of the Board.' By invalidating the actions of the remaining two members, the Court allows a vacancy to impair their rights. The majority's interpretation effectively rewrites the statute and creates an outcome Congress did not intend: the complete shutdown of the Board for an extended period, which harms the promotion of industrial peace.
Analysis:
This decision strictly interprets the structural requirements of the National Labor Relations Act, prioritizing the integrity of the three-member quorum and delegation rules over the Board's functional continuity. The ruling invalidated approximately 600 decisions issued by the two-member Board over a 27-month period, creating significant administrative disruption and forcing relitigation of numerous labor disputes. The case serves as a powerful illustration of how vacancies resulting from the political appointments process can paralyze an administrative agency. It establishes a clear precedent that statutory quorum and delegation requirements cannot be circumvented through creative interpretations, even in the face of exigent circumstances.
