Friday, June 21, 2013

Comment on 4th Circuit Panel’s Decision in U.S. Chamber v. NLRB

Comment on 4th Circuit Panel’s Decision in U.S. Chamber v. NLRB

by Charles J. Morris

© 2013 Charles J. Morris

This decision, issued June 14, 2013, holds that in promulgating the NLRA rule requiring employers to post notices advising employees of their rights under the National Labor Relations Act “the Board exceeds its authority” pursuant to step one of the two-step rule of Chevron U.S.A., Inc. v. NRDC, Inc.,467 U.S. 837 (1984), that governs judicial review of an agency’s interpretation of its enabling statute.  That holding of an absence of statutory authorization is not only incorrect for a variety of valid reasons, it is directly contrary to the Supreme Court’s recent decision in City of Arlington v. FCC, Nos. 11-1545 & 11-1547, May 20, 2013, which the panel’s opinion by Judge Duncan acknowledged butwithout explanationchose not to follow. 

The decision in City of Arlington responded to the question of “whether a court must defer under Chevron to an agency’s interpretation of a statutory ambiguity that concerns the agency’s statutory authority (that is, its jurisdiction).”  Justice Scalia’s majority opinion stressed that “the distinction between ‘jurisdictional’ and ‘nonjurisdictional’ interpretation is a mirage” and noted that “there is no difference, insofar as the validity of agency action is concerned, between an agency’s exceeding the scope of its authority (its ‘jurisdiction’) and its exceeding authorized application of authority that it unquestionably has.”  The Court concluded that these alleged distinctions
can all be reframed as questions about the scope of agencies’ regulatory jurisdictionand they are all questions to which the Chevron framework applies....Once those labels are sheared away it becomes clear that the question in every case is, simply, whether the statutory text forecloses the agency’s assertion of authority, or not.
Among other things, the Supreme Court was repeating the Chevron requirement that

If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.  [But] if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.
Chevron further states that when the agency makes rules to fill the gap, “[s]uch legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute."  It is uncontested in this case that the notice-posting rule conforms to the declared policy of the statute and is not arbitrary, capricious, or manifestly contrary to the statute.  This is a garden-variety Chevron step-two case notwithstanding the obfuscation created by the Duncan opinion.

Clearly the NLRA is silent as to the specific issue, which is the promulgation of the notice-posting rule in question, therefore step two clearly applies, which means giving deference to the Board’s reasonable interpretation of its authorityauthority which was expressly granted by Section 6 of the Act.  Ignoring the aforesaid Chevron requirements for step one, Judge Duncan’s opinion sought to use Chevron’s reference to “employing traditional tools of statutory construction” in an attempt to justify her conclusion that the rule was not authorized, hence a step one situation, but her opinion overlooked that this reference limited such coverage to Congressional “intention on the precise question in issue” only, i.e. to the specific notice-posting requirement.  Instead, her opinion, which evidently was based on a blinders view of the statutory scheme, asserted that “there is no function or responsibility of the Board not predicated upon the filing of an unfair labor practice charge or a representation petition” and that “the Board is a reactive entity,” hence not intended to “allow proactive rulemaking.”   Even if that observation were correctwhich it is not, for the Board has a recognized and long-established proactive functionit would not satisfy the Chevron or City of Arlington requirement of finding specificity as to the action in issue. 
Indeed, the Board has both adjudicatory (i.e. quasi-judicial) and rulemaking (i.e. quasi-legislative) functions.  It has issued innumerable proactive prophylactic rules regarding employer conduct.  For example:  The rule requiring employers to provide unions with the names and addresses of eligible voters in representative elections, Excelsior Underwear, Inc., 156 NLRB 1236 (1966), and NLRB v. Wyman-Gordon, 394 U.S. 759 (1969); the rule prohibiting employers from enforcing no-solicitation rules on company property in non-work areas on non-work time, violation of which constitutes Section 8(a)(1) “interference,” Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945); the rule requiring employers in union-recognized workplaces to allow the presence of a union representative during an investigatory-disciplinary hearing when requested by the interviewee, otherwise Section 8(a)(1) is violated,  NLRB v. J. Weingarten, Inc., 420 U.S. 251 (1975); the rule prohibiting an employer from not allowing employees to discussing wages among themselves, which would constitute a Section 8(a)(1) “interference,” Jeannette Corp. v. NLRB, 532 F.2d 916 (3rd Cir. 1976); and the rule prohibiting employers from discharging employees for concertedly quitting work to protest working conditions, which would violate Section 8(a)(1), NLRB v. Washington Aluminum Co., 370 U.S. 9 (1962).
Most of the Board’s rulemaking has been achieved through the process of adjudication, which the Supreme Court has recognized to be a choice the Board usually may make notwithstanding the Court’s expressed preference for Section 6 rulemaking, NLRB v. Bell Aerospace Co., 416 U.S. 267, 292-293 (1974).  As the Court stated in that case, absent special circumstances the “function of filling in the interstices of [legislation] should be performed as much as possible, through [Section 6] quasi-legislative promulgation of rules to be applied in the future.”  That Supreme Court preference was ignored by Duncan’s opinion, which in effect deleted Section 6 from the Act, or at least denied it any substantive functions.  Likewise unmentioned was the Supreme Court’s broad and clear description of the Board’s rulemaking authority in American Hospital Association v. NLRB (499 U.S. 606,613 (1991), which declared that
As a matter of statutory drafting, if Congress had intended to curtail in a particular area the broad rulemaking authority granted in § 6, we would have expected it to do so in language expressly describing an exception from that section or at least referring specifically to the section.
Despite the panel’s efforts to limit the impact of that case, the above definitive Supreme Court statement of the authority conferred by Section 6 was never referred to or discussed in the Duncan opinion.
The key questions in this case closely resemble what the Board and Supreme Court confronted in NLRB v. City Disposal systems, Inc., 465 U.S. 822 (1984), where the Court upheld the Board’s definition of  “concerted activity” in Section 7 to include an employee’s assertion of a right grounded in a  collective-bargaining agreement.  In City of Arlington the Court cited City Disposal Systems for the proposition that “Chevron applies to cases in which an agency adopts a construction of a jurisdictional provision of a statute it administers.”
Section 6’s authorization of the Board’s substantive rulemaking, which was overtly reconfirmed by Taft-Hartley’s legislative history, Legislative History of the Labor-Management Relations Act, 1947 (1974) at 49, 99, 109, 226, 317, 330, 336, 366, 426, and House Conference Report at 542, which the Duncan opinion chose to ignore, fully supports the Board’s issuance of the notice-posting rule which, for proper reasons was deemed “necessary” within the meaning of Section 7.  Likewise, the broad language of Section 6, which covers all “provisions” of the Act, not just the reactive ones designated by the Chamber and agreed to by the Duncan opinion, also covers Sections 1, 7, and 8(a)(1).
The decision in Chamber v. NLRB is thus ripe for reversal, hopefully by its own court pursuant to en banc review.                   


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