Bloomberg News

Obama Picks Rejected as Court Casts Doubt on Recess Power

January 27, 2013

President Barack Obama violated the Constitution by making appointments to the federal labor board without Senate approval, a U.S. appeals court said in a ruling that calls hundreds of board decisions into question and may extend to the head of the new consumer finance agency.

The U.S. Court of Appeals in Washington sided with Republican lawmakers in a unanimous opinion. The court held that Obama’s recess appointments to the U.S. National Labor Relations Board last year, made after Republicans refused to consider his nominees, were “constitutionally invalid” because the Senate wasn’t in recess at the time.

“Allowing the president to define the scope of his own appointments power would eviscerate the Constitution’s separation of powers,” U.S. Circuit Judge David Sentelle wrote in a 46-page opinion -- one that may be cited in challenges to recess appointments throughout the federal government, possibly upending a longstanding presidential practice.

In the near-term, the Jan. 25 ruling, one of about a dozen similar cases, may be used to undo more than 200 decisions by the NLRB over the past year, as well as regulations by the Consumer Financial Protection Bureau, whose director, Richard Cordray, was named at the same time as the board members. The White House said the ruling won’t affect Cordray and is restricted to the company at issue. Republicans, meanwhile, have demanded the NLRB appointees quit immediately.

Future Appointments

The future of recess appointments as used by past presidents is now in doubt, said C. Boyden Gray, the White House counsel under Republican President George H.W. Bush.

“The take-away is that the president doesn’t have the authority to decide when a recess exists so he can make an appointment whenever he feels like it,” said Gray, who is counsel in a separate suit challenging Obama’s appointment power.

In recent years, Democratic President Bill Clinton made 139 recess appointments, while Republican President George W. Bush made 171 and Obama, a Democrat, has made 32, according to the Congressional Research Service.

The appeals court ruling came in a case brought by a soda bottling company over an NLRB decision in a collective bargaining agreement. The company argued that a recess only occurs in the period between one session of Congress and the next, not when members are simply absent and the Senate hasn’t adjourned.

White House press secretary Jay Carney, calling the decision “novel and unprecedented,” said it contradicts 150 years of practice by Democratic and Republican administrations.

Hundreds of recess appointments have occurred dating back to 1867 during so-called intra-sessions, he said.

Court Conflicts

The ruling also conflicts with decisions by three other federal appeals courts regarding the scope of the president’s recess appointment authority, including rulings by the U.S. appeals courts in Atlanta and San Francisco, according to an administration official who requested anonymity to discuss the case before the Justice Department decides whether to appeal.

The government may seek a rehearing by the three-judge panel that ruled on Jan. 25, or instead seek a so-called en banc review by a larger panel of circuit judges. It may also move to request the U.S. Supreme Court take up the matter.

The Supreme Court is more likely to accept such an appeal when there is a split among the federal appeals courts.

The Justice Department is considering all of its options, including a potential en banc appeal, the official said.

First Ruling

The ruling is the first substantive decision by a federal appeals court in the recent challenges to the president’s naming of three NLRB members Jan. 4, 2012, while the Senate was holding so-called pro-forma sessions. Such sessions sometimes involved a single senator appearing in the chamber every third day.

To prevent Obama from making appointments after Congress started a holiday break in December 2011, House and Senate Republicans refused to formally adjourn as they sought to block the appointment of Cordray, a former Ohio attorney general, as the first head of the Consumer Financial Protection Bureau.

Obama put Cordray, who was nominated in July 2011, in his post on the same day as the NLRB board members, an appointment also being contested in a lawsuit in Washington federal court. Obama renominated Cordray Jan. 24.

The court’s decision “casts serious doubt” on whether Cordray’s recess appointment is constitutional, Senate Minority Leader Mitch McConnell said in a statement.

McConnell and 41 other Republican senators filed court papers challenging the NLRB appointments, and McConnell attended oral arguments in the case.

CFPB Power

Noel Francisco of the law firm Jones Day, who represented the unit of Noel Corp., the Yakima, Washington-based soda bottler, seeking to overturn the appointments, said anyone subject to regulations by the CFPB would be able to challenge them in Washington.

“The CFPB world has been turned upside down,” Richard Gottlieb, who heads the financial industry group at Dykema Gossett Pllc in Chicago, said by e-mail. He argued that “If the Cordray appointment is void, then so too is every supervisory action, and every new regulation promulgated by the CFPB arising out of newly-created bureau powers.”

Carney said the ruling “has no bearing on” Cordray’s appointment and it will have “no direct effect” on the CFPB, according to Moira Vahey, an agency spokeswoman. The Justice Department said in a statement it believes the recess appointments are “constitutionally sound.”

Mark Pearce, the chairman of the NLRB, said in a statement that the board will continue to issue decisions while more than a dozen similar challenges are pending in other courts.

Threatened Rulings

The labor board’s website lists more than 200 decisions issued since the recess appointments. Charles Donnelly, a lawyer who won an NLRB case for the United Mine Workers in September against a unit of Alpha Natural Resources Inc. (ANR:US), argued those rulings are likely to be sent back for reconsideration once a confirmed board is in place.

The cases include a December decision against Dish Network Corp. (DISH:US), whose union workers said they were threatened by the company, said David Van Os, a labor lawyer in Austin, Texas.

In another case last month, the board ruled a nonprofit group in Buffalo wrongfully dismissed five employees for comments posted on a Facebook Inc. web page about working conditions, according to Michael Wasser, a policy analyst with Jobs With Justice-American Rights at Work, a group that advocates for worker rights.

The Jan. 25 decision by the Washington-based federal appeals court came in two cases brought by Noel Corp. and union members who were seeking to reverse rulings made by the Obama appointees that require the company to execute a collective bargaining agreement.

‘Shocking’ Decision

“Republicans have employed unprecedented partisan delay tactics and filibusters to prevent confirmation of nominees to lead the NLRB, thus crippling the Board’s legal authority to act,” Senator Tom Harkin, an Iowa Democrat and chairman of the Senate’s Health and Labor Committee, said in a statement.

Some Republican lawmakers asked after the ruling that two of the board members appointed by Obama resign immediately. The third member Obama named, Terence Flynn, resigned last year.

Without the recess appointees, the board has only one confirmed member. A Supreme Court decision in 2010 requires at least three members of the board, which with a full complement has five members, to conduct business.

Government’s Argument

In arguments before the panel on Dec. 5, Beth Brinkmann, a Justice Department lawyer, said the Senate wasn’t in session or acting as a legislative body from Jan. 3, 2012, to Jan. 23, 2012, because no legislation was passed, no votes were held and no nominations were considered.

The president used his authority to fill positions that if left vacant would have “substantially impaired the functioning of an executive branch agency,” the Justice Department said in court papers.

In the ruling, the appellate judges said the definition of “the recess” in the Constitution’s Recess Appointments Clause is limited to the period between one session and the next, and that Congress had begun a new session at the time the president made the appointments.

Besides Sentelle, U.S. Circuit Judges Karen LeCraft Henderson and Thomas Griffith were on the panel. All were named by Republican presidents.

The judges rejected the administration’s position that an “alternative appointment procedure” is available during breaks in the Senate’s business during a continuing session.

Gary Chaison, a labor professor at Clark University in Worcester, Massachusetts, said the administration will probably appeal the case to the Supreme Court.

“It’s going to create chaos,” he said. “The labor board decisions are going to be voided so I don’t think the administration has an option but to take it further.”

The case is Noel Canning v. National Labor Relations Board, 12-1115, 12-1153, U.S. Court of Appeals for the District of Columbia (Washington).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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