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

Supreme Court. U.S.

Pe FILED

a eg

how f {g.’ OCT 2- 2009

— No. 69-377 OFFICEOF THECLEAK |

Hn The

Supreme Court of the Anited States

NATIONAL LABOR RELATIONS BOARD,

Petitioner,

ws

LAUREL BAYE HEALTHCARE

OF LAKE LANIER, INC.,

Respondent.

On Petition for Writ of Certtorari

to the United States Court of Appeals

for the District of Columbia Circuit

BRIEF OF RESPONDENT

CLIFFORD H. NELSON, JR. CHARLES P. Roserts III

CONSTANGY, BROOKS & Counsel of Record

SMITH, LLP CONSTANGY, BROOKS &

230 PEACHTREE STREET, NW SMITH, LLP

SUITE 2400 100 N. CHERRY STREET

ATLANTA, GA 30303 SuITE 300

(404) 230-6714 WINSTON-SALEM, NC 27101

(404) 525-6955 Fax (336) 721-6852

(336) 748-9112 Fax

Counsel for Respondent

Cctober 2, 2069

Becker Gallagher - Cincinnati, OH - Washington, D.C. + 800.890.5001

QUESTION PRESENTED

Whether Section 3(b) of the National Labor

Relations Act, 29 U.S.C. § 153(b), authorizes the

National Labor Relations Board to act when only two

of its five positions are filled, if the Board has

previously delegated its full powers to a three-member

group of the Board that includes the two remaining

members.

ii

CORPORATE DISCLOSURE STATEMENT

Laurel Baye Healthcare of Lake Lanier, Inc.

certifies that it has no parent companies and there are

no publicly-held companies having a 10 percent or

greater ownership interest in the corporation.

lll

TABLE OF CONTENTS

Question Presented ........ ccc ccc cc ccccsccens 1

Corporate Disclosure Statement .............. li

fe re ee iii

TONG OF AUCHOTINIOS . ow cect esc aee iv

NI Sc eda a Gea iby wn ele Wlalere ele ea 8 1

Ng Oe re ee ee ee eee 1

Statutory Provisions Involved ................ 1

Statement of the Case ............ccccccvvecs 2

I, ea og argo a are appa wikis erk eee 5

I. The Four Courts That Have Considered the

Two-member Board Issue Have Applied

Four Unique Analyses ................. 6

A. The First Circuit’s Analysis ........... 6

B. The Seventh Circuit’s Analysis ........ 7

C. The Second Circuit’s Analysis ......... 8

II. This Case Should Be Consolidated with New

Process Steel for Briefing and Argument . 11

Se de a aa ee 12

lv

TABLE OF AUTHORITIES

Cases

Chevron U.S.A., Inc. v. Nat'l Res. Def: Council, Inc.,

467 U.S. Gar Cees wc cee 10

Comm’r of Internal Revenue Serv. v. Engle,

459 U.S. Tae Gee et ccc eee 11

Employment Div., Dep’t of Human Res. v. Smith,

485 U.S, Ge Cees cece. 11

New Process Steel, LP v. NLRB,

No. 08-1457 (U.S. filed May 22, 2009) .... 6,12

New Process Steel, L.P. v. NLRB,

564 F.3d 840 (7th Cir. 2009) .......... 7, 8,11

Northeastern Land Servs., Ltd. v. NLRB,

560 F.3d 36 (Ist Cir. 2009) ........eeeee. 6, 7

Snell Island SNF, LLC v. NLRB,

568 F.3d 410 (2d Cir. 2009) ....... 8,9, 10, 11

Traynor v. Turnage,

480 U.S. BiG Cea ce 11

Statutes

29 U.S.C. © Rie a ss cc cee l

29 U.S.C. © Bis oc ce ee 2

20 U.S.C. § PE he ees eee 2

Other

vestatement (Third) of Agency § 3.07(4) (2006) 4

]

OPINIONS BELOW

The opinion of the court of appeals is reported at

564 F.3d 469. The decision and order of the National

Labor Relations Board (“Board”) is reported at 352

N.L.R.B. 179.

JURISDICTION

The judgment of the court of appeals was entered

on May 1, 2009. The Board’s petitions for rehearing

and for rehearing en banc were denied on July 1, 2009.

The jurisdiction of this Court is invoked under 28

U.S.C. § 1254 (1).

STATUTORY PROVISIONS INVOLVED

Section 3 (b) of the National Labor Relations Act,

29 U.S.C. § 153 (b) is set forth below:

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. The Board

shall have an official seal which shall be

judicially noticed.

2

STATEMENT OF CASE

On December 16, 2007, the term of Board

Chairman Robert J. Battista expired, leaving four

members of the Board. On December 20, 2007, the

Board, acting through its remaining four members

temporarily delegated all of its powers to Members

Liebman, Schaumber, and Kirsanow, acting as a three-

member group. This temporary delegation, which was

effective December 28, 2007, was made in anticipation

of the impending expiration of the recess appointments

of Members Kirsanow and Walsh at the expiration of

the then-current session of Congress and the

substantial likelihood that because of disagreements

between the President and the Senate, no new Board

members would be confirmed until after a new

President took office in 2009. The Board acted with the

specific intent that Members Liebman and Schaumber

would continue to issue decisions and orders as a de-

facto two-member panel. The recess appointments of

Members Walsh and Kirsanow did expire on December

31, 2007, and since January 1, 2008, the Board has

been functioning with two members, Liebman and

Schaumber.

On February 29, 2008, asserting that they were

acting as a quorum of the three-member group that

purported to include the previously-departed Member

Kirsanow, Chairman Schaumber and Member

Liebman issued a Decision and Order finding that

Laurel Baye Healthcare of Lake Lanier, Inc.,

Respondent herein, had committed violations of

§§ 8(a)(1) and (5) of the Act, 29 U.S.C. §§ 158(a)(1), (5).

The Board ordered affirmative relief.

3

Respondent subsequently filed a petition for review

in the United States Court of Appeals for the District

of Columbia Circuit, and the Board filed a cross-

petition seeking enforcement of its order. At the

request of all parties, the D.C. Circuit designated this

case as the lead case and expedited oral argument,

which was held on December 4, 2008. On May 1, 2009,

a panel of the D.C. Circuit (Chief Circuit Judge

Sentelle, Circuit Judge Tatel, and Senior Circuit Judge

Williams) issued a unanimous opinion granting the

petition for review and denying the Board’s cross-

application for enforcement.

The D.C. Circuit found it unnecessary to decide

whether the Board’s delegation of powers to a three-

member group, knowing that only two would remain to

decide cases, was a “sham,” as it concluded that the

case could be resolved on the basis of the Board’s lack

of a quorum. The court focused on the statutory

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

and rejected the Board’s contention that the two-

member quorum of a three-member group was an

“exception” that effectively overrode the three-member

quorum requirement.

In rejecting the Board’s argument, the court of

appeals explained:

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

4

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. Jd. But

the Board cannot by delegating its authority

circumvent the statutory Board quorum

requirement, because this requirement must

always be satisfied.

Id. at 472-473.

The court, citing the Restatement (Third) of Agency

§ 3.07(4) (2006), noted that “an agent’s delegated

authority terminates when the powers belonging to the

entity that bestowed the authority are suspended.” Jd.

at 473. The court thus concluded:

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

5

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.

Id.

The Board filed timely petitions for rehearing and

rehearing en banc. The court of appeals denied these

petitions on July 1, 2009. On September 29, 2009, the

Board filed its petition for writ of certiorari.

ARGUMENT

The court of appeals correctly interpreted section

3(b) as not authorizing the Board to continue to issue

decisions and orders in unfair labor practice and

representation cases with only two sitting members.

The court of appeals properly rejected the Board’s

contention that the prior delegation of powers to a

three-member group authorized the Board to continue

to issue decisions and orders when the Board’s

membership dropped below its statutory quorum of

three members.

Although the court of appeals properly construed

§ 3(b), as the Board points out in its petition and as is

set out more fully below, there is a split among the

circuit courts that warrants definitive resolution by

this Court. For that reason only, Respondent does not

oppose the granting of the petition for certiorari.

However, Respondent does oppose the ultimate relief

6

sought by the Board and requests that the Court

affirm the court of appeals.

Respondent further opposes the Board’s suggestion

that because a petition for writ of certiorari is

currently pending in New Process Steel, LP v. NLRB,

No. 08-1457 (U.S. filed May 22, 2009), the “Court

should therefore hold the Board’s petition in this case

pending its disposition of New Process.” Board Petition

at 9. Rather, the appropriate course of action is for the

Court to either grant or deny both petitions. If the

Court decides to grant both petitions, the appropriate

course of action is to consolidate the cases for briefing

and oral argument.

Il. THE FOUR COURTS THAT HAVE

CONSIDERED THE TWO-MEMBER BOARD

ISSUE HAVE APPLIED FOUR UNIQUE

ANALYSES.

As of this date, in addition to the decision of the

court of appeals in Laurel Baye, three other courts of

appeals have addressed the issue of the Board’s power

to issue decisions and orders with only two sitting

members. Although the score card currently rests at

three to one in favor of the Board’s power to issue two-

member decisions, all four courts have followed

distinct analytical approaches.

A. The First Circuit’s Analysis

On March 13, 2009, the United States Court of

Appeals for the First Circuit issued its decision in

Northeastern Land Services, Ltd. v. NLRB, 560 F.3d 36

(1st Cir. 2009) (petition for certiorari pending), finding

that the Board was empowered to issue two-member

7

decisions. The court’s analysis was short and failea to

discuss the import of the provision in § 3(b) that the

Board’s quorum was “at all times” three members:

The Board’s delegation of its institutional

power to a panel that ultimately consisted of a

two-member quorum because of a vacancy was

lawful under the plain text of section 3(b). First,

section 3(b) allowed the Board to delegate all of

its powers to a three-member group. Second, the

statute states that “{a] vacancy in the Board

shall not impair the right of the remaining

members to exercise all of the powers of the

Board.” The vacancy, which left the two-

member quorum remaining, may not, under the

terms of section 3(b), impair the nght of the

two-member quorum to exercise all powers of

the Board.

Id. at 41.

B. The Seventh Circuit’s Analysis

On the same day that the D.C. Circuit issued its

decision in Laurel Baye, the United States Court of

Appeals for the Seventh Circuit issued its decision in

New Process Steel, L.P. v. NLRB, 564 F.3d 840 (7th

Cir. 2009). Like the First Circuit, the court gave no

consideration to the import of the § 3(b) mandate that

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

constitute a quorum of the Board,” choosing to focus

instead on the vacancies and delegee group quorum

provisions. The court concluded:

The NLRB argues that the statute at issue is

clear that the vacancy of one member of a three

8

member pane! does not impede the right of the

remaining two members to execute the full

delegated powers of the NLRB. As the NLRB

delegated its full powers to a group of three

Board members, the two remaining Board

members can proceed as a quorum despite the

subsequent vacancy. This indeed is the plain

meaning of the text. As we read it, § 3(b)

accomplished two things: first, it gave the Board

the power to delegate its authority to a group of

three members, and second, it allowed the

Board to continue to conduct business with a

quorum of three members but expressly

provides that two members of the Board

constitutes a quorum where the Board has

delegated its authority to a group of three

members. The plain meaning of the statute thus

supports the NLRB’s delegation procedure.

Id. at 845-846.

Although the Seventh Circuit was of the view that

the meaning of the statutory language was “plain” and

that resort to legislative history was unnecessary, it

nevertheless found that the legislative history failed to

affirmatively support the employer’s proffered

interpretation of the statute. Jd. at 847. Finally, the

court rejected the contention that the Board panel was

not properly constituted because it failed to include

three members at the time the case was assigned to

the panel. Jd. at 848.

C. The Second Circuit’s Analysis

The Second Circuit also confronted this issue in

Snell Island SNF, LLC v. NLRB, 568 F.3d 410 (2d Cir.

9

2009 (petition for certiorari pending). Well in advance

of issuing its decision, the Second Circuit had the

benefit of the three court decisions described above.

After reviewing these decisions, the court of appeals

candidly acknowledged the divergent approaches:

To summarize, one of our sister circuits—the

Seventh Circuit—has upheld a decision by the

two-member NLRB panel based on the “plain

meaning” of section 3(b) of the Act, noting that

its interpretation comports with the legislative

history of relevant amendments to the Act,

without discussing principles of agency (i.e.

principal-agent) law. [citation omitted] Another

of our sister circuits—the D.C. Circuit—has

overturned a decision by the same two-member

panel based on the plain language of section

3(b) of the Act, noting that its interpretation

comports with applicable principles of agency

law, but without discussing the applicable

legislative history. [citation omitted] A third

sister circuit—the First Circuit—has concluded

that the “plain text” of the Act authorized the

decisions by the same two-member panel,

without either discussing the legislative history

or relevant principles of agency law. [citation

omitted]

The question regarding the jurisdiction of

the NLRB’s two-member panel is one ultimately

to be resolved by the Supreme Court. In the

meantime, we must make a determination in

the present case.

(App. 18-19).

10

The court of appeals then deepened the existing

split by applying the two-step analysis of Chevron

U.S.A., Inc. v. National Res. Def. Council, Inc., 467

U.S. 837 (1984), an analysis that the Board had never

suggested was appropriate. Following this approach,

the court of appeals first addressed whether the

meaning of section 3(b) was “plain.” The court of

appeals agreed with the First Circuit that the initial

delegation of powers to a three-member panel,

knowing that only two would remain to decide cases,

was not improper. 568 F.3d at 419. Next, the court of

appeals agreed with the D.C. Circuit that the Board’s

statutory quorum of three members must be satisfied

“at all times,” but concluded that this did “not answer

the precise question presented here: once the Board

has lost its quorum, what happens to a panel that was

duly constituted before the Board lost its quorum?” Jd.

at 420. Further, whereas the D.C. Circuit had relied

upon principal/agency law to conclude that the delegee

group lost its power when the Board lost its quorum,

the court of appeals chose to look to the pertinent

legislative history. Jd. at 420-422. After reviewing in

some detail the legislative history of Taft-Hartley, the

court of appeals concluded that this legislative history

“lacks any clear statement of intent regarding the

jurisdiction of a plenipotentiary panel where the Board

loses its quorum-—the precise question that we face in

this case.” Id. at 423.

Having concluded that the statutory language was

ambiguous, the court of appeals turned to step two of

the Chevron analysis, whether the Board’s

interpretation was a reasonable interpretation to

which the court of appeals was required to defer.

Under this deferential standard of review, the court of

appeals concluded that although the D.C. Circuit’s

11

view was “reasonable,” the Board’s interpretation was

also “reasonable” and thus should be upheld. 7d. at

423-424.

II. THIS CASE SHOULD BE CONSOLIDATED

WITH NEW PROCESS STEEL FOR BRIEFING

AND ARGUMENT.

Contrary to the Board’s suggestion, it would be

highly inappropriate for the Court to decide the issue

presented solely in the context of the petition filed by

New Process Steel. The Board is not merely asking

that the Seventh Circuit’s decision in New Process

Steel be affirmed. It is asking this Court to reverse the

D.C. Circuit’s decision in Laurel Baye Healthcare.

Respondent is the party who obtained the decision in

Laurel Baye and it has a substantial interest in

defending and preserving that decision. Respondent

desires the opportunity to participate fully as a party

in interest in the case if the Court decides to take up

the issue presented. The Court should not consider the

Board’s request to reverse Laurel Baye without active

participation by Respondent.

Consolidation of cases presenting the same issue is

not unusual. £.g., Employment Division, Department

of Human Resources v. Smith, 485 U.S. 660, 663, n. 4

(1988) (“Raising identical legal issues and presenting

almost identical facts, these two cases proceeded in

tandem through state administrative proceedings and

through the state courts. They were consolidated upon

order of this Court when the State’s petitions for

certiorari were granted); Traynor v. Turnage, 480 U.S.

916 (1987) (granting and consolidating petitions for

writ of certiorari to the Second and District of

Columbia Circuits); Commissioner of Internal Revenue

12

v. Engle, 459 U.S. 722 (1983) (consolidating separate

petitions for writs of certiorari to Seventh and Federal

circuits).

The Board’s petition in this case was filed the same

day it responded to the petition in New Process Steel.

The respective decisions of the District of Columbia

and Seventh Circuits were issued on the same day.

The analyses of the two courts are quite different, and

the Court would be aided in its decision making

process by having both cases briefed and argued

together.

CONCLUSION

For the reasons stated herein, Respondent contends

that the decision of the court of appeals should be

affirmed, but does not oppose the granting of the

petition given the sharp split among the circuits.

Respondent affirmatively opposes deferral of any

decision on the Board’s petition. Respondent requests

that the Court consider and either grant or deny the

Board’s petition. If the Court grants the petition of the

Board in this case and of the employer in New Process

Steel, the two cases should be consolidated for briefing

and oral argument.

13

Respectfully submitted

Charles P. Roberts III

Counsel of Record

Constangy, Brooks & Smith, LLP

100 N. Cherry Street, Suite 300

Winston-Salem, NC 27101

(336) 721-6852

(336) 748-9112 fax

Clifford H. Nelson, Jr.

Constangy, Brooks & Smith, LLP

230 Peachtree Street, NW

Suite 2400

Atlanta, GA 30303

(404) 230-6714

(404) 525-6955 fax

Counsel for Respondent