Chamber of Commerce of the U.S. v. Nat'l Labor Relations Bd.

856 F.Supp.2d 778

CHAMBER OF COMMERCE OF the UNITED STATES and South Carolina Chamber of Commerce, Plaintiffs,

v.NATIONAL LABOR RELATIONS BOARD, Mark Gaston Pearce, in his official capacity as Chairman of the National Labor Relations Board, Brian E. Hayes, Richard F. Griffin, Jr., Terence F. Flynn, and Sharon Block, in their official capacities as Members of the National Labor Relations Board, and Lafe Solomon, in his official capacity as General Counsel of the National Labor Relations Board, Defendants.

No. 2:11–cv–02516–DCN.

United States District Court,

D. South Carolina,

Charleston Division.

April 13, 2012.

Held Invalid

29 C.F.R. §§ 104.201, 104.202, 104.203, 104.204, 104.210, 104.211, 104.212, 104.213, 104.214, 104.220

Lucille L. Nelson, Benjamin P. Glass, Ogletree Deakins Nash Smoak and Stewart, Charleston, SC, Cheryl M. Stanton, Ogletree Deakins Nash Smoak and Stewart, Morristown, NJ, Lemuel Gray Geddie, Jr., Robert Oliver King, Ogletree Deakins Nash Smoak and Stewart, Greenville, SC, Robin S. Conrad, Shane Brennan Kawka, Washington, DC, for Plaintiffs.

Abby Propis Simms, Dawn Laura Goldstein, National Labor Relations Board, Washington, DC, Lee Ellis Berlinsky, US Attorneys Office, Charleston, SC, for Defendants.

ORDER

DAVID C. NORTON, District Judge.

This matter comes before the court on cross motions for summary judgment. The Chamber of Commerce of the United States and the South Carolina Chamber of Commerce (collectively, “plaintiffs”) seek review of a final rule promulgated by the National Labor Relations Board (“NLRB” or “the Board”). For over seventy-five years, the NLRB has been nearly unique among federal labor agencies in not requiring employers to post a general notice of employee rights in the workplace. On December 22, 2010, the Board changed course and issued a proposed rule: all employers subject to the National Labor Relations Act (“NLRA” or “the Act”) must post notices informing employees of their rights under the NLRA. After completing a notice-and-comment process, the Board published a final rule on August 30, 2011. The rule is presently set to take effect on April 30, 2012. As explained below, the Board, in promulgating the final rule, exceeded its authority in violation of the Administrative Procedure Act; therefore, the court grants summary judgment in favor of plaintiffs.

I. BACKGROUND

A. Procedural History

On September 19, 2011, plaintiffs filed a complaint for injunctive relief against the NLRB, Chairman Mark Pearce, Member Craig Becker, Member Brian Hayes, and General Counsel Lafe Solomon.¹ By agreement, the parties filed cross motions for summary judgment on November 9, 2011. The parties then filed responses in opposition on December 7, 2011. On January 3, 2012, defendant Craig Becker's appointmentas a Board Member expired, leaving only Chairman Pearce and Member Hayes on the Board. Following recess appointments to the Board by President Barack Obama, on January 11, 2012, Sharon Block, Terence F. Flynn, and Richard F. Griffin, Jr. were substituted as defendants. The court held oral argument on February 6, 2012.

B. The National Labor Relations Act

The NLRA, 29 U.S.C. §§ 151–169, governs labor relations between private sector employers, labor unions, and employees. It “creates a system for the organization of labor with emphasis on collective bargaining by employees with employers in regard to labor relations which affect commerce.” Republic Aviation Corp. v. NLRB, 324 U.S. 793, 799, 65 S.Ct. 982, 89 L.Ed. 1372 (1945). Enacted in 1935, the NLRA was originally known as the Wagner Act after its sponsor, Senator Robert F. Wagner of New York, and was signed into law by President Franklin Delano Roosevelt. Congress amended the Act in 1947, 1959, and 1974. See Labor Management Relations Act (“Taft–Hartley Act”), Pub.L. No. 80–101, 61 Stat. 136 (1947); Labor Management Reporting and Disclosure Act (“Landrum–Griffin Act”), Pub.L. No. 86–257, 73 Stat. 519 (1959); Health Care Amendments, Pub.L. No. 93–360, 88 Stat. 395 (1974). Congress also established the NLRB in 1935. The NLRB is an executive branch agency that administers and enforces the NLRA, and consists of a Chairman, four Members, and a General Counsel, all appointed by the President with the advice and consent of the Senate. The Board oversees various Regional Offices.

The first five sections of the Act are primarily structural. Section 1 sets forth Congress's aspirations: to address the “inequality of bargaining power between employees ... and employers”; to “encourag[e] the practice and procedure of collective bargaining”; and to “protect[ ] the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing.” 29 U.S.C. § 151. Section 2 defines certain terms in the Act. Sections 3, 4, and 5 establish and lay out the composition of the Board, along with some of its authority and obligations.

Section 6 confers rulemaking authority on the Board: “The Board shall have authority from time to time to make, amend, and rescind, in the manner prescribed by the Administrative Procedure Act,² such rules and regulations as may be necessary to carry out the provisions of this Act.” Id. § 156.

Section 7 lists the core labor rights of employees. These include employees' rights “to self-organization”; “to form, join, or assist labor organizations”; “to bargain collectively through representatives of their own choosing”; “to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection”; and “to refrain from any or all such activities.” Id. § 157.

Sections 8 through 12 establish the Board's authority over unfair labor practice disputes and representation elections. Sections 8 and 10 authorize the Board to investigate, prevent, and remedy “unfair labor practices,” or “ULPs,” that violate employees' Section 7 rights. Congress prohibited five specific ULPs by employers, each of which is listed in Section 8. ULP charges are subject to a six-month statute of limitations, which may only be tolled if the person filing a charge was delayed by reason of service in the armed forces. Id. § 160(b). Section 9 authorizes the filing of representation petitions, in which a petitioner alleges that a substantial number of employees wish to be represented by a union for collective bargaining. Under Section 9, the Board may investigate questions of representation, conduct hearings, hold secret-ballot elections, and certify the results thereof. Section 9(b) specifically requires the Board to decide the appropriate collective bargaining unit in each representation case. Section 11 gives investigatory powers to the Board in relation to its authority under Sections 9 and 10. Finally, Section 12 prohibits interference with the Board in the performance of its duties. The remaining provisions of the Act are not relevant to the instant case.

Through this framework, Congress intended the NLRB to be a quasi-judicial body that “has two main functions: to conduct representation elections and certify the results, and to prevent employers and unions from engaging in unfair labor practices.” NLRB, Basic Guide to the National Labor Relations Act 33 (1997), http:// www. nlrb. gov/ sites/ default/ files/ documents/ 224/ basicguide. pdf. “In both kinds of cases the processes of the NLRB are begun only when requested.” Id. The Board readily acknowledges that it lacks “roving investigatory powers” and instead traditionally functions as a reactive agency. 76 Fed. Reg. 54,006, 54,010 (Aug. 30, 2011). In its most recent Performance and Accountability Report, the Board stated, “The NLRB acts only on those cases brought before it, and does not initiate cases. All proceedings originate with the filing of charges or petitions by labor unions, private employers, and other private parties.” NLRB, 2011 FY Performance and Accountability Report 12 (emphasis added). The Acting General Counsel, Lafe Solomon, has explained that the “NLRB's processes can be invoked only by the filing of an unfair labor practice charge or a representation petition by a member of the public. The agency has no authority to initiate proceedings on its own.” NLRB GC Mem. 11–03, 2 (Jan. 10, 2011) (emphasis added).

C. The Rule

On December 22, 2010, the NLRB published a Notice of Proposed Rulemaking in the Federal Register. See75 Fed.Reg. 80,410 (Dec. 22, 2010). The Board proposed a rule requiring employers subject to the NLRA to put up posters in the workplace, which inform employees of their Section 7 rights under the Act. The Board reasoned that a notice-posting rule was necessary because the NLRA was “almost unique” among major federal labor laws in not requiring employers to post workplace notices informing employees of their statutory rights and that most employees are unaware of those rights. Id. at 80,410–11.

The Board bypassed an Initial Regulatory Flexibility Analysis and Final Regulatory Flexibility Analysis under the Regulatory Flexibility Act (“RFA”) by certifying that the rule will not have a significant economic impact on a substantial number of small entities. Id. at 80,415; see5 U.S.C. § 605(b).³ Specifically, the Board determined that each employer subject to the rule will spend around $62.04 during the first year to comply with the rule—two hours per year, at an hourly rate of $31.02 paid to a professional or business worker—to acquire the notices, learn where and how to post them, and actually post them. 75 Fed.Reg. at 80,415. The Board estimated that nearly six million small businesses will be affected but that the compliance costs incurred by each individual business will be de minimis.

Member Brian Hayes dissented from the Board's Notice of Proposed Rulemaking. See id. (“[T]he Board lacks the statutory authority to promulgate or enforce [this] type of rule.”). Hayes also encouraged commentary on the Board's authority to promulgate the rule.

A public comment period followed,...