Since the Supreme Court’s rulings in Loper Bright and Jarkesy, employers have wondered to what degree the High Court’s rulings would affect the National Labor Relations Board (NLRB), which has long regarded itself as being apart from the concerns facing other agencies. Recent actions by the courts, however, have begun to challenge the Board’s self-regard.
Perhaps the most successful Supreme Court challenge to the Board involved its standards for seeking 10(j) injunctions. In a ruling perhaps more important for its implications than its outcome, the Court stripped the Board of its special status and directed federal judges to treat the Board’s requests for injunctions the same way they would any other petition for a preliminary injunction. The Board’s special status had been frequently cited as a protection from judicial intervention post-Loper Bright. That is in serious doubt.
Jarkesy and the NLRB
In the wake of Jarkesy, employers faced with unfair labor practice charges have begun raising constitutional challenges both to the NLRB’s authority to impose monetary penalties and to the basic legality of its quasi-judicial structure. The fact that NLRB administrative law judges (ALJs) are protected from removal by the president without a finding of “good cause” by the Merit System Protections Board and the NLRB members’ consent has been a particular target of the litigants.
In the past, these arguments—most notably raised by Space X and Starbucks—have created delays, mandated discovery, or changed venues. However, courts have begun to hear and rule on direct challenges to the Board’s constitutionality.
Jarkesy, the 5th Circuit, and the NLRB
When the Supreme Court issued its Jarkesy decision, it didn’t address all of the findings of the court below, the U.S. 5th Circuit Court of Appeals.
Among the rulings untouched by the Supreme Court was one finding that the Securities and Exchange Commission’s (SEC) ALJs were unconstitutionally appointed because their removal protections violated “the appointments clause” of Article II of the Constitution. That means that in the 5th Circuit (Texas, Louisiana, and Mississippi), SEC ALJs cannot function as before, if at all. The question remained whether the 5th Circuit’s ruling reached beyond the SEC. That question has been given a resounding, albeit preliminary, answer.
Aunt Bertha v. NLRB
Not long after Aunt Bertha (doing business in Texas as Findhelp) was unionized, unfair labor practice charges were filed against the company. In response, the company sought an injunction barring the NLRB from proceeding because the agency’s judges are unconstitutionally shielded from removal by the U.S. president.
An identical argument had been recently rejected in Michigan where the judge found no harm in permitting the unfair labor practice charge to proceed (YAPP USA Automotive Systems Inc.), but in that jurisdiction, there was no precedent such as existed before Judge Mark Pittman in Texas.
Citing Jarkesy, Judge Pittman found the cases to be “on all fours”:
Specifically, the 5th Circuit found the removal restrictions to be unconstitutional because the SEC ALJs were insulated by two layers of for-cause removal protection. In this case, the NLRB ALJs are afforded the same two layers of for cause removal protections that the 5th Circuit found to be unconstitutional with regard to the SEC ALJs. In fact, the NLRB has not, and cannot, offer any distinction between the relevant provisions or the protections they confer upon the ALJs. The final ruling was not in doubt: the injunction was granted regarding the administrative proceedings at the National Labor Relations Board because the employer was likely to succeed on the merits of its argument that agency judges are unconstitutionally shielded from removal by the U.S. president.
The implications of this case are profound. If the adjudication of every unfair labor practice charge must first be deemed constitutional under Article II, the NLRB would be unable to function. But more than the NLRB is at risk—the entire ALJ system is vulnerable. If ALJs are deemed illicitly appointed, an overwhelmed court system may soon be asked to adjudicate every administrative complaint, making justice delayed the norm.
The Supreme Court will have to find a way out of the chaos it has caused, and soon.
Written by editors of the Federal Employment Law Insider.