Business efforts to break the NLRB reach the Supreme Court — briefly

Business interests have been bringing challenges all year to the National Labor Relations Board. Update: A company's shadow docket ask at SCOTUS was rejected.

On Monday, a car supplier went to the U.S. Supreme Court, asking the court to block a National Labor Relations Board proceeding against the company from beginning on Tuesday — the highest-profile action yet in a growing effort to get the courts to declare that the labor board is unconstitutional.

The move followed a Sunday decision from three Republican appointees on the U.S. Court of Appeals for the Sixth Circuit rejecting YAPP USA Automotive System's request to halt the proceeding while the company’s challenge to the constitutionality of the NLRB goes forward.

[Update, 10:15 a.m. Oct. 15: Justice Brett Kavanaugh denied the request at the Supreme Court as well, meaning the proceeding will not be blocked by the courts. However, YAPP USA’s underlying case will continue forward.]

I covered this case at Law Dork in mid-September, highlighting this very possibility.

YAPP USA’s case is a big deal. It is part of an ongoing effort by business conservatives to get courts to expand past rulings about the scope of the president’s removal power — and the limits on the power of Congress to protect appointees from removal. In doing so, the lawyers’ aim is to hobble agencies across the federal government as part of their even broader efforts to take on the entirety of the federal regulatory state. (Recall last term’s Loper Bright decision ending Chevron deference, among other decisions.)

Following successful challenges to the set-up of the Consumer Financial Protection Bureau and in the midst of a case focused on the Securities and Exchange Commission — in which the Supreme Court dodged the removal questions — management-side lawyers began filing a series of challenges this year arguing that the NLRB’s administrative law judges and even the board members themselves are unconstitutionally appointed.

A challenge brought by Elon Musk’s SpaceX is pending at the far-right U.S. Court of Appeals for the Fifth Circuit now. There, a district court judge blocked the proceeding from going ahead during the litigation, and the Justice Department and NLRB did not seek any emergency stay of that ruling so the proceeding could go forward immediately. DOJ did appeal, though, and that appeal is pending. DOJ did ask for expedited consideration of the appeal, which the Fifth Circuit granted on October 11. A trio of appeals, now consolidated, will be briefed in the coming months and argued sometime after December 18.

Then, on Sunday, October 13, the Sixth Circuit issued its ruling. Notably, the court did not rule on the likelihood of YAPP USA’s success in its appeal — the question normally central to such requests:

These separation of powers questions are both complicated and consequential, but we need not address them at the preliminary injunction stage. Even if the removal protections of the NLRB Board members and ALJs are unconstitutional, YAPP is not automatically entitled to an injunction. Under Supreme Court and Sixth Circuit precedent, a party challenging an agency’s removal protection scheme “is not entitled to relief unless that unconstitutional provision ‘inflict[s] compensable harm.’”

Applying that test from past Supreme Court and Sixth Circuit cases, the court — Judges David McKeague and Richard Griffin, George W. Bush appointees, and Judge John Nalbandian, a Trump appointee — rejected YAPP USA’s request to block the proceeding.

“YAPP has not explained how the removal protections for the NLRB Board members or the NLRB ALJs would ‘specifically impact’ the upcoming proceeding,” the court stated. “YAPP's bare claim that the NLRB proceeding would be ‘illegitimate’ is not enough.”

With that, the court rejected YAPP USA’s request. The NLRB proceeding is, as of now, set to begin on Tuesday.

As such — while, on its face, supporting the NLRB — the Sixth Circuit’s ruling has now put this issue on the Supreme Court’s shadow docket.

The application, filed by YAPP USA’s lawyers from Warner Norcross + Judd LLP and Bass Berry & Sims PLC, left no doubt about its aims:

In its request, the company’s lawyers — again, on Monday, October 14 — asked: “YAPP requests relief by October 15 or as soon thereafter as is practicable.“

The request was submitted to Justice Brett Kavanaugh, as the circuit justice for the Sixth Circuit. Ordinarily, most applications are submitted to the full court, but I want to note this in light of the possibility for quick action here.

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