Laurel Baye Healthcare of Lake Lanier, Inc. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 4, 2008 Decided May 1, 2009

No. 08-1162

LAUREL BAYE HEALTHCARE OF LAKE LANIER, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

Consolidated with 08-1214

On Petition for Review

and Cross-Application for Enforcement

of an Order of the National Labor Relations Board

Charles P. Roberts, III, argued the cause for petitioner.

With him on the briefs was Clifford H. Nelson, Jr.

James B. Coppess argued on the cause for intervenor. With

him on the brief was James D. Fagan, Jr.

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Ruth E. Burdick, Attorney, National Labor Relations Board,

argued the cause for respondent. With her on the brief were

Julie Broido, Supervisory Attorney, and Jacob Frisch, Attorney.

Ronald Meisburg, General Counsel, John E. Higgins, Jr.,

Deputy General Counsel, John H. Ferguson, Associate General

Counsel, and Linda Dreeben, Deputy Associate General Counsel

also entered an appearance.

Before: SENTELLE, Chief Judge, TATEL, Circuit Judge, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Chief Judge SENTELLE.

SENTELLE, Chief Judge: Laurel Baye Healthcare of Lake

Lanier, Inc. petitions for review of an order of the National

Labor Relations Board finding that Laurel Baye engaged in

unlawful labor practices, and imposing a remedy. The Board

cross-petitions for enforcement of the order. Unlike the typical

petition for review of an NLRB order, Laurel Baye does not

advance allegations of error in the Board’s findings,

conclusions, or remedies, but rather challenges the authority of

the Board to enter the order at all, as the Board had only two

members and therefore did not meet the statutory Board quorum

requirement of three members. The Board argues that because

the Board itself had earlier delegated all of its authority to a

three-member panel of which the two remaining Board members

constituted a quorum, that quorum of the delegee panel had the

authority to enter the order. Because we agree with Laurel Baye

that the Board’s purported order was beyond its lawful authority,

we rule that the purported order is without force, deny the

Board’s cross-petition for enforcement, and remand the matter

for further proceedings before the Board at such time as it may

once again consist of sufficient members to constitute a quorum.

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I. BACKGROUND

A. Legal Background

The National Labor Relations Act (NLRA), now codified as

29 U.S.C. §§ 151–169 (2008), originally provided that the

National Labor Relations Board (Board) would consist of three

members. See Act of July 5, 1935, ch. 372, § 3(a), 49 Stat. 449,

451 (amended 1947). As subsequently amended and at all times

relevant to the current proceeding, the NLRA provides that “the

Board shall consist of five instead of three members.” 29 U.S.C.

§ 153(a). Section 3(b) of the NLRA states, in relevant part, that:

The Board is authorized to delegate to any group of

three or more members any or all of the powers which

it may itself exercise. . . . A vacancy in the Board shall

not impair the right of the remaining members to

exercise all of the powers of the Board, and three

members of the Board shall, at all times, constitute a

quorum of the Board, except that two members shall

constitute a quorum of any group designated pursuant

to the first sentence hereof.

29 U.S.C. § 153(b).

This section encompasses four provisions. First, the

delegation provision states that “[t]he Board is authorized to

delegate to any group of three or more members any or all of the

powers which it may itself exercise.” Id. Second, the vacancy

provision provides that “[a] vacancy in the Board shall not

impair the right of the remaining members to exercise all of the

powers of the Board.” Id. Third, the Board quorum provision

states that “three members of the Board shall, at all times,

constitute a quorum of the Board.” Id. Finally, the delegee

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group quorum provision states that “two members shall

constitute a quorum of any [three-member] group [to which the

Board delegated its powers pursuant to the delegation

provision.]” Id.

B. Factual Background

This case arises out of unfair labor practice charges brought

in 2005 by Intervenor, United Food and Commercial Workers

Union Local 1996 (United), and the General Counsel of the

Board against Petitioner Laurel Baye Healthcare of Lake Lanier,

Inc. (Laurel Baye). On July 12, 2006, after a hearing, an

administrative law judge issued a proposed decision and order

concluding that Laurel Baye had committed violations of

sections 8(a)(1) and (a)(5) of the NLRA. Laurel Baye filed with

the Board exceptions to the ALJ’s decision, which the Board

accepted on September 7, 2006.

Between the time that the ALJ issued his decision and the

time that the Board took up review of Laurel Baye’s exceptions

to the decision the previously-five-member Board underwent a

series of dramatic personnel changes. On December 16, 2007,

Board Chairman Robert J. Battista’s term expired, leaving four

members on the Board. On December 20, 2007, the remaining

four members of the Board (Wilma Liebman, Peter Schaumber,

Peter Kirsanow, and Dennis Walsh) unanimously voted to

delegate all of its powers to a three-member group consisting of

Board members Liebman, Schaumber and Kirsanow, effective

December 28, 2007.

The purpose of this delegation of power was simple and

transparent. According to the Board’s minutes on that day, this

action was done in anticipation “that in the near future [the

Board] may for a temporary period have fewer than three

Members,” because the recess appointment terms for Members

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Walsh and Kirsanow were set to expire on December 31, 2007.

The Board was of the view that “this action will permit the

remaining two Members to issue decisions and orders in unfair

labor practice and representation cases after [the] departure of

Members Kirsanow and Walsh, because the remaining Members

[Liebman and Schaumber] will constitute a quorum of the three-

member group [under section 3(b) of the NLRA].” In addition

to its own interpretation of the statutory text, the Board relied on

the legal analysis set forth in a March 4, 2003 Memorandum

Opinion issued by the Office of Legal Counsel of the U.S.

Department of Justice. In its Memorandum Opinion, OLC

concluded, as did the Board, that “if the Board delegated all of

its powers to a group of three members, that group could

continue to issue decisions and orders as long as a quorum of

two members remained.” Quorum Requirements, 2003 WL

24166831 (Mar. 4, 2003).

On December 31, 2007, the recess appointments of

Members Walsh and Kirsanow expired. Since January 1, 2008,

the Board has functioned with the two remaining members,

Liebman and Schaumber, who acted as a two-member quorum

of the three-member delegee group created by the Board’s

December 20, 2007, action. On February 29, 2008, Members

Liebman and Schaumber issued a Decision and Order adopting

the ALJ’s rulings, findings and conclusions, and adopting the

ALJ’s recommended Order in full (with only inadvertent errors

corrected). This Decision and Order was issued under the two

members’ authority as a two-person quorum of the three-

member group designated by the Board. Kirsanow, by that time

no longer a member of the Board, did not take part in hearing or

resolving this case at all.

Laurel Baye petitions this Court for review of the Board’s

decision. In so doing, “Laurel Baye does not challenge the

merits of the Board’s unfair labor practice findings or its

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remedy.” Rather, Laurel Baye contends that the two members

of the Board lacked the power to issue a Decision and Order in

this case. The Board cross-petitions for enforcement of its

unfair labor practice order.

II. ANALYSIS

This case concerns the interplay of the delegation, vacancy,

and quorum provisions of section 3(b) of the NLRA, and

requires us to determine whether, under these provisions, the

two-member delegee group consisting of Members Liebman and

Schaumber could lawfully issue an order finding that Laurel

Baye engaged in unfair labor practices. Laurel Baye challenges

both the legitimacy and continuing nature of the Board’s

delegation. The Board counters that its actions give effect to

every provision within section 3(b). Specifically, the Board

posits that there is a general quorum requirement of three

members, except where powers have been delegated to a group

of three, in which case the two-member delegee group quorum

provision and the vacancy provision allow the remaining two

members of the Board to continue to act as a delegee group.

Laurel Baye argues for the invalidity of the Board’s action

under two rationales. First, it contends that the Board has no

authority to delegate its power to a three-member group that it

knows will be acting as a two-member group due to expected

term expiration. In Laurel Baye’s view, the Board’s delegation

cannot stand because it is simply a sham. The second

formulation of Laurel Baye’s argument is that even if the Board

could make the initial delegation, that delegation cannot survive

the loss of a quorum on the Board itself. Because we find the

second formulation of the argument convincing, we pretermit

the first.

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“A cardinal principle of interpretation requires us to

construe a statute ‘so that no provision is rendered inoperative

or superfluous, void or insignificant.’” Asiana Airlines v. FAA,

134 F.3d 393, 398 (D.C. Cir. 1998) (quoting C.F. Commc’ns

Corp. v. FCC, 128 F.3d 735, 739 (D.C. Cir. 1997)). The

Board’s interpretation of section 3(b), however, violates this

principle of statutory interpretation by eschewing various

portions of the statutory language. Specifically, the Board’s

position ignores the requirement that the Board quorum

requirement must be satisfied “at all times.” 29 U.S.C. § 153(b)

(emphasis added). Moreover, it ignores the fact that the Board

and delegee group quorum requirements are not mutually

exclusive. The delegee group quorum provision’s language does

not eliminate the requirement that a quorum of the Board is

three members. Rather, it states only that the quorum of any

three-member delegee group shall be two. Id. The use of the

word “except” is therefore present in the statute only to indicate

that the delegee group’s ability to act is measured by a different

numerical value. See id. The Board quorum requirement

therefore must still be satisfied, regardless of whether the

Board’s authority is delegated to a group of its members.

Reading the two quorum provisions harmoniously, the result is

clear: a three-member Board may delegate its powers to a three-

member group, and this delegee group may act with two

members so long as the Board quorum requirement is, “at all

times,” satisfied. Id. But the Board cannot by delegating its

authority circumvent the statutory Board quorum requirement,

because this requirement must always be satisfied.

Indeed, if Congress intended a two-member Board to be

able to act as if it had a quorum, the existing statutory language

would be an unlikely way to express that intention. The quorum

provision clearly requires that a quorum of the Board is, “at all

times,” three members. 29 U.S.C. § 153(b). A modifying

phrase as unambiguous as this denotes that there is no instance

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in which this Board quorum requirement may be disregarded.

Contrary to the Board’s contentions, Congress did not intend to

use the delegee group quorum provision as an exception to the

requirement that the Board quorum requirement must be met “at

all times.” Though the delegee group quorum provision is

preceded by the prepositional phrase “except that,” id.,

Congress’s use of differing object nouns within the two quorum

provisions indicates clearly that each quorum provision is

independent from the other. The establishment of a two-member

quorum of a subordinate group does not logically require any

change in the provision mandating a three-member quorum for

the Board as a whole. In fact, it does not seem odd at all that a

sub-unit of any body would have a smaller quorum number than

the quorum of the body as a whole. Quorums, after all, are

usually majorities. A majority of three is smaller than a majority

of five. It therefore defies logic as well as the text of the statute

to argue, as the Board does, that a Congress which explicitly

imposed a requirement for a three-member quorum “at all times”

would in the same sentence allow the Board to reduce its

operative quorum to two without further congressional

authorization. Congress provided unequivocally that a quorum

of the Board is three members, and that this requirement must be

met at all times. The delegee group quorum provision does not

eliminate this requirement.

The strained interpretation by the Board is contrary to basic

tenets of agency and corporation law. As the Restatement

(Third) of Agency sets forth, an agent’s delegated authority

terminates when the powers belonging to the entity that

bestowed the authority are suspended. Restatement (Third) of

Agency § 3.07(4) (2006). An agent’s delegated authority is also

deemed to cease upon the resignation or termination of the

delegating authority. 2 William Meade Fletcher, Fletcher

Cyclopedia of the Law of Corporations § 504 (2008); see

Emerson v. Fisher, 246 F. 642, 648 (1st Cir. 1918) (holding that

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a corporate treasurer’s resignation terminated any authority

delegated by the treasurer to other individuals). Moreover, as

Fletcher notes, a delegating board of directors’s powers are

suspended whenever the board’s membership falls below a

quorum. See 2 Fletcher Cyclopedia of the Law of Corporations

§ 421 (“If there are fewer than the minimum number of directors

required by statute, [the remaining directors] cannot act as a

board.”). In the context of a board-like entity, a delegee’s

authority therefore ceases the moment that vacancies or

disqualifications on the board reduce the board’s membership

below a quorum. It must be remembered that the delegee

committee does not act on its own behalf. The statute confers no

authority on such a body; it only permits its creation. The only

authority by which the committee can act is that of the Board.

If the Board has no authority, it follows that the committee has

none. The delegee’s authority to act on behalf of the Board

therefore ceased the moment the Board’s membership dropped

below its quorum requirement of three members.

We reach this conclusion despite the Board’s contention

that this court has permitted other agencies to continue to

function with fewer than a majority of their membership

positions filled. Specifically, the Board cites to two cases from

this court: Railroad Yardmasters of America v. Harris, 721 F.2d

1332 (D.C. Cir. 1983), and Falcon Trading Group, Ltd. v. SEC,

102 F.3d 579 (D.C. Cir. 1996).

In Yardmasters, we held that the two sitting members of the

National Mediation Board (NMB) could properly delegate the

NMB’s powers to one of the members, despite the fact that one

of the two delegating members resigned later that day, thereby

leaving a single NMB member to conduct the NMB’s business.

Yardmasters, 721 F.2d at 1342-45. The Board argues that our

reasoning in Yardmasters enables the Board to take action to

continue to operate. In Yardmasters, we noted that if the NMB

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“can use its authority to delegate in order to operate more

efficiently, then a fortiori the Board can use its authority in

order to continue to operate when it otherwise would be

disabled.” Id. at 1340 n.26. Similarly, the Board argues that

allowing the Board to act to preserve its continuity would give

effect to the language and purpose of the NLRA. After all, the

Board contends, the inclusion of the delegation provision was

designed to ensure that the Board was able to operate more

efficiently. Moreover, the NLRA was designed to prevent

“industrial strife.” 29 U.S.C. § 151. As a result, the argument

goes, the NLRB’s reliance on a combination of its delegation,

vacancy, and quorum provisions to ensure that it would continue

to operate despite upcoming vacancies was consistent with the

purpose of the NLRA, and was therefore proper.

We are unmoved. Our reasoning in Yardmasters does not

apply to this case. In that case, we went to great lengths to note

the “narrowness of our holding.” Yardmasters, 721 F.2d at

1344. We expressly noted that our holding governed only

whether the NMB was able to delegate its authority to a single

NMB member. See id. at 1344-45. Further, we stressed that the

holding was not meant to extend to agencies such as the NLRB,

in light of the fact that the NLRB was “principally engaged in

substantive adjudications [concerning] unfair labor practices

[and] enforc[ing] individual rights . . . .” Id. at 1345. We

conclude that Yardmasters’ reasoning is limited to its statutory

context. Therefore, the principle set forth in Yardmasters that

an agency board’s delegation of power is “not affected by

changes in personnel” due to it being “[i]nstitutional” in nature

does not apply here. Id. at 1343. In response to the dissent’s

concerns that the court’s validation of the NMB’s delegation

could lead to abuse of power, the Yardmasters court specifically

stressed the fact that the NMB’s functions were entirely unlike

the functions of the National Labor Relations Board, which

“adjudicate[s] unfair labor practices [and] seek[s] to enforce

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individual rights under the Act.” Yardmasters, 721 F.2d at

1345. We emphasized that “the [NMB’s] role is perhaps best

illustrated by its critical duty . . . of notifying the President that

a labor dispute threatens ‘substantially to interrupt interstate

commerce to a degree such as to deprive any section of the

country of essential transportation service.’” Id. (quoting 45

U.S.C. § 160 (1976)). Our reliance on this distinction as a basis

for our holding in Yardmasters strongly suggests–if not

expressly states–that Yardmasters’ holding was not intended to

apply in cases involving the adjudication of unfair labor

practices, such as the case before us now.

Likewise, Falcon Trading offers no support to the Board.

In that case, we approved the SEC’s promulgation of a new

quorum rule, which stated that the SEC’s quorum would equal

the number of remaining commissioners if the number of

remaining commissioners fell below the normal three-

commissioner quorum; we also upheld an SEC opinion issued

by a two-member Commission acting pursuant to this quorum

provision. Falcon Trading, 102 F.3d at 582. We held that, “[i]f

not otherwise constrained by statute, an agency sufficiently

empowered by its enabling legislation may create its own

quorum rule.” Id. (emphasis added). We approved the SEC’s

power to determine how many members constituted a quorum

because Congress “specifically bestowed [that power] on the

Commission.” Id. Further, we noted that the SEC’s quorum

determination was lawful because it was “not countermanded

elsewhere by Congress, as for example in an explicit statutory

quorum provision.” Id.

This highlights the fundamental problem with the Board’s

reasoning. The Securities Exchange Commission was

sufficiently empowered by its enabling legislation; the Board is

not. Indeed, Congress has spelled out precise quorum provisions

for the Board. Congress provided that a quorum of the Board is

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three members. The Board does not have three members. It

cannot act. Though section 3(b) gives the Board power to

delegate its authority to a group of members, this authority is

necessarily limited by the fact that the delegation authority

allows the Board to grant its power only to a group of three or

more members. See 29 U.S.C. § 153(b). The Board’s

delegation power is also obviously limited by the fact that the

Board quorum provision establishes that the power of the Board

to act exists when the Board consists of three members. Id. The

delegee group’s delegated power to act, however, ceases when

the Board’s membership dips below the Board quorum of three

members. See supra at pp. 7-9. It therefore follows that where,

as here, a delegee group acts on behalf of the Board, see id., the

Board quorum requirement still must be satisfied.

Further, the Board’s interpretation is not supported by the

text of the vacancy provision. The vacancy provision states only

that “[a] vacancy in the Board shall not impair the right of the

remaining members to exercise all of the powers of the Board.”

29 U.S.C. § 153(b) (emphasis added). One reading of this text

would suggest the Board’s ability to act is impaired if there is

more than one vacancy on the Board. The Board quorum

provision, however, clarifies that “three members of the Board

shall, at all times, constitute a quorum of the Board.” Id. A

quorum is defined as “[t]he minimum number of members (usu.

a majority of all the members) who must be present for a

deliberative assembly to legally transact business.” Black’s Law

Dictionary 1284 (8th ed. 2004). The Board’s ability to legally

transact business exists only when three or more members are on

the Board. Considering the language of the vacancy and Board

quorum provisions in tandem, it is clear that the vacancy

provision allows the Board to function fully with at most two

vacancies. This is the maximum number of vacancies that the

Board can sustain and still maintain a quorum. This is consistent

with the delegation provision’s requirement that the Board may

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delegate its authority only to groups of three or more members.

29 U.S.C. § 153(b).

After oral argument, the Board called our attention to a new

decision, Northeastern Land Services, Ltd. v. NLRB, No. 08-

1878, 2009 WL 638248 (1st Cir. Mar. 13, 2009). The Board

asserts that the First Circuit decided the same issue as the one

before us and decided it in favor of the Board. We note that the

First Circuit decided the case in terms of the continuing validity

of a three-member delegee group after the expiration of the term

of one member. The determination of that issue is not necessary

to our decision, given that we have determined that the lack of

a quorum on the Board as a whole is the determining factor.

Concededly, the Board prevailed before the First Circuit on facts

parallel to those before us. But the First Circuit did not decide

the same issue. In any event, the First Circuit’s decisions are not

binding precedent upon us. We are bound only by the decisions

of our circuit and the Supreme Court. This is in keeping with

the Supreme Court’s recognition that each court of appeals has

a duty to resolve the rules independently of each other. See

United States v. Mendoza, 464 U.S. 154, 160 (1984) (“Allowing

only one final adjudication would deprive this Court of the

benefit it receives from permitting several courts of appeals to

explore a difficult question before this Court grants certiorari.”

(citing E.I. du Pont de Nemours & Co. v. Train, 430 U.S. 112,

135 n.26 (1977))).

III. CONCLUSION

Finally, we acknowledge that the case before us presents a

close question, and that neither OLC’s interpretation nor the

Board’s desire to continue to function is entirely indefensible.

Both were undoubtedly born of a desire to avoid the

inconvenient result of having the Board’s adjudicatory wheels

grind to a halt. Nevertheless, we may not convolute a statutory

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scheme to avoid an inconvenient result. Our function as a court

is to interpret the statutory scheme as it exists, not as we wish it

to be. Any change to the statutory structure must come from the

Congress, not the courts. U.S. Const. art. I, § 1. Perhaps a

properly constituted Board, or the Congress itself, may also

minimize the dislocations engendered by our decision by

ratifying or otherwise reinstating the rump panel’s previous

decisions, including the case before us. See, e.g., FEC v. Legi-

Tech, Inc., 75 F.3d 704 (D.C. Cir. 1996) (affirming properly re-

constituted FEC Board’s ratification remedy for its

unconstitutional membership).

In the meantime, however, because we determine that the

Board was not properly constituted and it did not have the

authority to issue the order before us, we grant the petition of

Laurel Baye Healthcare and order that the decision of the NLRB

be vacated, and the case remanded for further proceedings

before the Board at such time as it may once again consist of

sufficient members to constitute a quorum. We also deny the

Board’s cross-petition for enforcement of its invalid order.

So ordered.