In a unanimous ruling announced by Justice Elana Kagan, the U.S. Supreme Court has held that a plaintiff can challenge the constitutionality of a federal agency action in federal district court without awaiting that agency’s final determination. The case involves challenges to the Federal Trade Commission and the Securities and Exchange Commission, but it potentially opens the door for such challenges to the National Labor Relations Board, where parties generally also must await a final Board decision before going to court. Yet, such a direct challenge would have to rest on a constitutional claim and not simply a dispute over the labor law.
Not over yet: The ruling in Axon Enterprise v. FTC does not resolve the merits of the plaintiffs’ challenges to the agencies’ authority. It is simply a procedural ruling that allows those challenges to proceed promptly in federal court. Two issues are in play which could apply to other federal agencies’ authority, depending on the facts. One issue involves the accountability of the agencies’ administrative law judges (ALJs) and the procedures for their removal. The potentially more significant issue is whether it is unconstitutional for a federal agency to hold both prosecutorial and adjudicative functions – to serve as judge and jury (and police) all at once.
Application to the NLRB? Unlike most other employment laws, unfair labor practice litigation exists almost exclusively within the NLRB. With extremely rare exceptions, a party must await a Board decision affirming or reversing an ALJ ruling in a case brought by the NLRB General Counsel before challenging in federal court. Thus, if the final decision in Axon rules the FTC’s combined prosecutorial and adjudicative authority unconstitutional, a similar challenge could be brought to the NLRB.
Potential chaos: There is a strong practical argument against the “combination” argument. If the federal courts were to remove the NLRB’s authority to both prosecute and adjudicate unfair labor law practices, it would require a statutory revamping of NLRB procedures by a Congress that is historically gridlocked on labor and employment law issues. It could also throw an enormous number of labor law cases into the already overburdened federal courts, unless alleviated by creation of separate federal labor courts.
But also potential for greater predictability: On the other hand, the way the NLRB operates has created enormous uncertainties for the affected parties. Since the NLRB is frequently overruled by the courts, there can be long periods where the state of the law is in limbo until courts rule on pending cases. The current General Counsel’s attack on employers’ mandatory meetings held to discuss union representation (“captive audience”) and other workplace issues is a case in point. The longstanding law allows such meetings but, until a federal court rules on the issue, employers are left to wonder whether they are still legal. While it will likely remain well below the public’s radar screen, the labor law community will be watching the ruling in Axon very closely.