US court may not address nursing home's claims over NLRB's structure
By Daniel Wiessner
Nov 12 (Reuters) -A U.S. appeals court panel on Tuesday seemed likely to punt on a nursing home operator's claim that National Labor Relations Board administrative judges are insulated from removal in violation of the U.S. Constitution.
A three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan heard arguments in an appeal by Care Realty of a judge's ruling refusing to block an NLRB case against the company and six of its facilities in Connecticut pending the outcome of its lawsuit filed in June 2023.
Care Realty claims that NLRB administrative law judges, who can only be removed for cause after a hearing process, should instead be subject to at-will removal by the president.
The case was the first of its kind to be filed, but the board is now facing similar challenges to its in-house enforcement proceedings in about two dozen lawsuits pending around the country, including two cases by Amazon.com and a pair by Elon Musk's SpaceX. The 2nd Circuit is the first appeals court to hear arguments over the ALJ removal issue.
An administrative judge ruled in May that Care Realty illegally refused to bargain in good faith with a union representing workers at its nursing homes. The company has asked the five-member NLRB to review the decision.
On Tuesday, Circuit Judges Reena Raggi and Maria Araujo Kahn suggested that because Care Realty has the ability to seek review of the ALJ's decision as it has done and then appeal the board's decision to the 2nd Circuit, the court lacked jurisdiction over the company's lawsuit. Several companies including Starbucks, Macy's and Amazon have raised challenges to the NLRB's powers in appeals of board decisions.
Daniel Benson, who represents Care Realty, argued that the entire case was tainted because an ALJ improperly insulated from removal presided over it, but the judges seemed unconvinced.
"That harm can be fixed" by a subsequent ruling in the company's favor, Kahn said. "It's not improper for you to be before the NLRB."
"Our position is that the proceeding ... should not be reviewed by the NLRB at all because it was unconstitutional," Benson replied.
The judges did not ask Benson or NLRB lawyer Michael Dale about the merits of Care Realty's claims.
Unlike many other companies that have sued the board, Care Realty does not argue that the NLRB's board members also are improperly shielded from removal by the president.
The 2nd Circuit judges also suggested that U.S. District Judge Robert Chatigny in Hartford, Connecticut, applied the wrong standard in denying a preliminary injunction to Care Realty last year.
Chatigny said the company had failed to show "a clear and substantial" likelihood of its claims ultimately succeeding, but the judges on Tuesday noted that the bar is typically lower.
"It's not at all clear to me that just because it involves statutory agency action that it raises the burden to a clear likelihood of success versus just a likelihood of success," Kahn said.
Dale, the board's lawyer, told the panel that Care Realty's bid for an injunction would fail even under the more lax standard. The NLRB in court filings has said that U.S. Supreme Court precedent going back decades has upheld the structure of the board and similar agencies.
The panel also includes Circuit Judge Myrna Perez, who like Kahn is an appointee of Democratic President Joe Biden. Raggi was appointed by Republican former President George W. Bush.
The case is CareOne LLC v. NLRB, 2nd U.S. Circuit Court of Appeals, No. 23-7475.
For CareOne: Christian Becker, Amit Vora and Daniel Benson of Kasowitz Benson & Torres
For the NLRB: Michael Dale and Grace Pezzella
Read more:
US judge rejects medical center's bid to 'neuter' NLRB
US judge blocks NLRB case against energy firm challenging agency's structure
Amazon takes challenge to NLRB's structure to US appeals court
US Supreme Court won't block NLRB case pending challenge to its structure
Reporting by Daniel Wiessner in Albany, New York
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