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UC Health v. National Labor Relations Board

United States Court of Appeals, District of Columbia Circuit

September 18, 2015


Argued February 18, 2015

On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board.

Kerry P. Hastings argued the cause and filed the briefs for petitioner.

Kellie Isbell, Attorney, National Labor Relations Board, argued the cause for respondent. With her on the brief were Richard Griffin, Jr., General Counsel, John H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy Associate General Counsel, and Ruth E. Burdick, Supervisory Attorney.

Before: GRIFFITH, Circuit Judge, and EDWARDS and SILBERMAN, Senior Circuit Judges. OPINION filed by Circuit Judge GRIFFITH. Concurring opinion filed by Senior Circuit Judge EDWARDS. Dissenting opinion filed by Senior Circuit Judge SILBERMAN.


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Griffith, Circuit Judge

In NLRB v. Noel Canning, 134 S.Ct. 2550, 189 L.Ed.2d 538 (2014), the Supreme Court determined that the National Labor Relations Board lacked authority to act during the time that three of its five members held office via appointments that violated the Recess Appointments Clause. This petition for review asks whether a Regional Director of the Board had authority to conduct a union election and certify its result during that same time. We conclude that the Regional Director maintained his authority and therefore deny the petition for review.



Section 3(a) of the National Labor Relations Act (NLRA) calls for a National Labor Relations Board made up of five members who are appointed by the President with the advice and consent of the Senate. 29 U.S.C. § 153(a). The Board has two main functions under the NLRA. Its quasi-judicial function involves deciding whether particular conduct violates the provisions of the Act that bar unfair labor practices. Id. § § 158, 160. The Board also has the primary responsibility for directing and

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holding representation elections by which employees may choose to designate representatives for purposes of collective bargaining. Id. § 159(b), (c). Representation proceedings differ from unfair labor practice proceedings in that they may only be reviewed in a court of appeals when they are relevant to the court's review of an unfair labor practice proceeding. See Am. Fed'n of Labor v. NLRB, 308 U.S. 401, 409, 60 S.Ct. 300, 84 L.Ed. 347 (1940). The Act authorizes the Board to delegate to Regional Directors the authority to direct representation elections and certify the results. 29 U.S.C. § 153(b). The Board first delegated its authority over representation proceedings to the Regional Directors in 1961. See 26 Fed.Reg. 3911 (May 4, 1961). Regional Directors have been responsible for administering and certifying the results of representation elections in their particular regions ever since.

In what turns out to be a critical distinction for the purposes of this challenge, the statute preserves for the Board the power to review " any action of a regional director" taken pursuant to that delegation, should a party object. 29 U.S.C. § 153(b). Thus, though the Board may empower Regional Directors to oversee representation elections, the terms of the delegation authorized under the Act provide that no Regional Director's actions are ever final on their own; they only become final if the parties decide not to seek Board review or if the Board leaves those actions undisturbed. Id.

The Act separately permits the Board to delegate " any or all of the powers which it may itself exercise" to panels made up of three or more of its members. 29 U.S.C. § 153(b). When such a panel is created, the Act provides that two of its members make up a quorum of that group. Id. This provision allows the Board to process cases more quickly by spreading them across more panels. Moreover, it allows the Board to continue to function without requiring the attendance of all members. Should two of the five members' terms expire, the Board can continue to act despite the vacancies, while waiting for Congress to appoint new members. Nevertheless, the statute mandates that " three members of the Board shall, at all times, constitute a quorum of the Board." Id.

Between August 2010 and January 3, 2012, three of the Board's five members' terms expired and the Senate refused to confirm any of the President's nominees to fill the vacancies, leaving the Board without a quorum and therefore unable to act. Claiming authority under the Recess Appointments Clause, see U.S. Const. art. II, § 2, cl. 3, the President named three individuals to the Board during a three-day break between pro forma Senate sessions, but the Supreme Court held those appointments unconstitutional in Noel Canning, 134 S.Ct. 2550. No Senate-confirmed appointees were sworn in until August 5, 2013. In the interim, Regional Directors continued to hold elections and certify the results, relying upon the Board's previous delegation of authority.


UC Health is a nonprofit corporation that operates a hospital and provides inpatient and outpatient medical care near the University of Cincinnati in Ohio. In March 2013, while the Board lacked a quorum, the UC Health Public Safety Union filed a petition with the Board seeking to represent a unit of security officers employed by the company. UC Health and the Union entered into a Stipulated Election Agreement that identified the appropriate bargaining unit and established that the Regional Director would supervise a secret-ballot election following the Board's regulations. Under those regulations, if either

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party files timely objections to the election, it is entitled to plenary review by the Board of any decision of the Regional Director addressing those objections. 29 C.F.R. § 102.67(c). If no objections are filed, the Regional Director " shall" certify the results. Id. § 102.69(b).

The Regional Director held the representation election on April 16, 2013, and the Union prevailed by a small margin. The Regional Director certified the results without objection from UC Health or the Union on April 24. Shortly thereafter, the Union requested that UC Health bargain, but the company refused. Citing that refusal to bargain, the Acting General Counsel charged UC Health with an unfair labor practice. The company defended itself on the ground that the Regional Director had acted without authority because the Board lacked a quorum at the time of the election.

The Board granted summary judgment to the Acting General Counsel, finding that the company's argument was untimely because it had not been made during the representation proceedings. See UC Health and UC Health Public Safety Union, 360 N.L.R.B. No. 71 (2014). And even if not waived, the Board concluded that UC Health's argument was without merit because the Board had delegated authority over representational proceedings to the Regional Directors in 1961; " [p]ursuant to this delegation, N.L.R.B. Regional Directors remain vested with the authority to conduct elections and certify their results, regardless of the Board's composition at any given moment." 360 N.L.R.B. No. 71, Id. at *1 n.2. Therefore, the Board determined that the election was valid and UC Health had committed an unfair labor practice by refusing to bargain with the Union. 360 N.L.R.B. No. 71, Id. at *2-3. UC Health filed a petition for review in this court. We have jurisdiction under 29 U.S.C. § 160(e), (f). Absent plain meaning to the contrary, a court is obliged to defer to an agency's reasonable interpretation of its statutory jurisdiction pursuant to the familiar Chevron doctrine. City of Arlington v. FCC, 133 S.Ct. 1863, 1870-71, 185 L.Ed.2d 941 (2013).


The sole question before us is whether the Regional Director had authority to hold the representation election and certify its results when the Board lacked a quorum. We hold that he did.


The Board argues that we need not address whether the Regional Director had the necessary authority because UC Health has waived its challenge by failing to raise its objection to the Regional Director's authority at the representation proceeding. " [A]s a general proposition, the applicable case law emphasizes the need for parties seeking judicial review of agency action to raise their issues before the agency during the administrative process in order to preserve those issues for review." Advocates for Highway & Auto Safety v. Fed. Motor Carrier Safety Admin., 429 F.3d 1136, 1148, 368 U.S.App.D.C. 335 (D.C. Cir. 2005). The NLRA states that " [n]o objection that has not been urged before the Board, its member, agent, or agency, shall be considered by the court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances." 29 U.S.C. § 160(e). And under the Board's practice, " any issues that may be presented during the representation proceeding must be offered there." Pace Univ. v. NLRB, 514 F.3d 19, 23, 379 U.S.App.D.C. 336 (D.C. Cir. 2008). Thus, the Board claims, UC Health's objection to the Regional Director's authority comes too late.

We have consistently held, however, that challenges to the composition of an agency

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can be raised on review even when they are not raised before the agency. See Noel Canning v. NLRB, 705 F.3d 490, 497, 403 U.S.App.D.C. 350 (D.C. Cir. 2013), aff'd on other grounds, 134 S.Ct. 2550, 189 L.Ed.2d 538 (2014); Mitchell v. Christopher, 996 F.2d 375, 378-79, 302 U.S.App.D.C. 109 (D.C. Cir. 1993) (recognizing an exception allowing parties to " raise[] for the first time on review . . . challenges that concern the very composition or 'constitution' of an agency" ). Since this challenge directly involves the question of whether the Board's lack of a quorum stripped the Regional Directors of power, UC Health may make it and we may review it.

The Board also asserts that UC Health may not challenge the Regional Director's authority because the company voluntarily entered into the Stipulated Election Agreement with the Union, and therefore agreed to let the Regional Director supervise the election. According to the Board, the agreement is a contract binding on both parties: UC Health accepted the Regional Director's authority to oversee the election and, in exchange, received important procedural benefits, including a prompt election. Because UC Health explicitly agreed to the terms of the election, the Board insists that the company cannot challenge one of those terms now. We reject this argument. UC Health did not expressly give up the challenge it brings now when it executed the Agreement; it merely signed a form agreement providing that the Board's regulations would govern the election. Indeed, when UC Health entered the Stipulated Election Agreement, no one knew whether Congress might confirm the President's appointments and obviate the quorum issue by the time the representation election in this case took place. And for that matter, UC Health could not have known with any certainty that the Board had no quorum even without Senate approval for the President's appointments until the Supreme Court handed down its decision in Noel Canning fourteen months after the election. We will not hold UC Health responsible for failing to see the future. And as we have already said, " challenges that concern the very composition or 'constitution' of an agency" can " be raised for the first time on review," even if the objecting party failed to make that objection at the appropriate time below. Mitchell, 996 F.2d at 378-79. Perhaps some objections to agency action could be abandoned by explicit acceptance of the agency's authority to act under the statute. But we need not decide that here because UC Health did not expressly abandon anything at all in the Stipulated Election Agreement, and we will not hold it responsible for failing to preserve expressly an argument the substance of which had not yet arisen. See San Miguel Hosp. Corp. v. NLRB, 697 F.3d 1181, 1187 n.7, 403 U.S.App.D.C. 11 (D.C. Cir. 2012).


UC Health's challenge to the Board's decision that the Regional Director had authority to conduct the election fails on the merits.

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The Board interprets the relevant provision of the NLRA to permit Regional Directors to continue exercising their delegated authority while the Board lacks a quorum. We consider the validity of the Board's interpretation of the Act under " the familiar two-step Chevron test." [1] Int'l Alliance of Theatrical & Stage Emps. v. NLRB, 334 F.3d 27, 31, 357 U.S.App.D.C. 189 (D.C. Cir. 2003). At step one we ask " whether Congress has directly spoken to the precise question at issue." Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). If Congress has addressed whether Regional Directors may continue to act in the absence of a Board quorum, " 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." Id. at 842-43. If the statute is ambiguous, we move to Chevron 's second step and ask whether the Board's interpretation is " a permissible construction of the statute" to which we must defer. Id. at 843.

At the first step of Chevron, we conclude that the statute is silent on the issue of the Regional Director's power to act when the Board lacks a quorum. The relevant text of the statute provides:

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. The Board is also authorized to delegate to its regional directors its powers . . . to direct an election or take a secret ballot . . . and certify the results thereof, except that upon the filing of a request therefor with the Board by any interested person, the Board may review any action of a regional director delegated to him under this paragraph, but such a review shall not, unless specifically ordered by the Board, operate as a stay of any action taken by the regional director. 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 . . . .

29 U.S.C. § 153(b). In its adjudication of the unfair labor practice charge against UC Health, the Board explained that it interpreted the NLRA to permit the delegation of authority to the Regional Director and concluded that " [p]ursuant to this delegation, N.L.R.B. Regional Directors remain vested with the authority to conduct elections and certify their results, regardless of the Board's composition at any given moment." UC Health, 360 N.L.R.B. No. 71, Id. at *1 n.2.

UC Health argues that the structure of the statute forbids this interpretation. In its view, the three-member quorum requirement applies to the activities of not just the Board but also of the Regional Directors. UC Health points out that the statute ...

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