Two for One: Noel Canning and D.R. Horton Continue to Generate Waves at the NLRB

By: Steven M. Swirsky, Adam C. Abrahms, and D. Martin Stanberry

In case you were hoping that the Supreme Court’s recent decision in Noel Canning would finally put to bed any questions regarding President Obama’s recess appointments to the NLRB, or that the Fifth Circuit’s rejection of the Board’s decision in  D.R. Horton might alter the NLRB’s position on the right of employers to require employees to abide by mandatory arbitration agreements , think again.

In Fuji Food Products a decision issued on July 15, 2014, NLRB Administrative Law Judge Jeffrey D. Wedekind held that former NLRB Board Member Craig Becker’s recess appointment was valid and that Fuji Food Product’s arbitration agreement, which required  employees  to arbitrate all federal claims,  was unlawful.

Specifically, the ALJ concluded  that Member Becker’s recess appointment was valid under Noel Canning because unlike the others appointments made by President Obama, his occurred during a 17-day intra-session recess, during which  no sessions of the Senate (pro-forma or otherwise) took place. For a closer look at the Noel Canning decision and its impact on the Board’s decisions from August 27, 2011 through July 17, 2013 read our earlier post.

With regards to D.R. Horton, the ALJ acknowledged that the Fifth Circuit Court of Appeals had rejected the Board’s conclusion upon which his decision was based, but he explained that because of the doctrine of non-acquiescence, he was “required to follow Board precedent unless and until it is reversed by the Supreme Court.” Our analysis of the Fifth Circuit’s decision in D.R. Horton v. NLRB can be read here.

ALJ Wedekind’s decision is evidence that significant questions remain in the post-Noel Canning world and that the principle in D.R. Horton is far from a settled matter.

The holding that former Member Becker’s appointment was valid may determine whether those decisions issued by the Board between August 27 and December 31, 2011 were valid. A finding that Member Becker’s appointment was unconstitutional and invalid would leave the Board without the requisite three members needed to issue decisions as established in New Process Steel.

The ALJ’s non-acquiescence to the Fifth Circuit Court of Appeals decision in D.R. Horton v. NLRB is also intriguing, although not surprising.  Indeed, NLRB ALJs are loath to disregard Board precedent even where federal courts have overturned their holding. As a practical matter, this means that ALJs will continue to find similar binding arbitration agreements unlawfully interfere with employees’ rights under the National Labor Relations Act unless and until the Supreme Court rules on the issue.  Don’t expect that any time soon however, the NLRB’s decision not to petition the Supreme Court for a writ of certiorari challenging the Fifth Circuit Court of Appeals decision, which it would have had to file earlier this month to be timely, means that the NLRB will likely continue to rely upon its holding in D.R. Horton for the foreseeable future.