The appeals court decision throws a year's worth of rulings by the National Labor Relations Board into limbo though a defiant board has vowed to carry on with its work. It also sets up a major constitutional fight if the controversy gets U.S. Supreme Court review, as seems likely.
Presidents since George Washington have made recess appointments, usually in the interest of allowing the government to function with key personnel. In modern times presidents have used recess appointments to avoid political fights in the Senate.
The game changed during President George W. Bush's administration. Though Bush made 105 recess appointments, Senate Democrats began holding "pro-forma" sessions of the Senate during a recess, "some lasting less than a minute," The Washington Post reported. The Democrats argued that the pro-forma sessions kept the Senate in session, even when most of the chamber was out for a holiday and no business was conducted.
Giving tit for tat, Senate Republicans did the same thing during Obama's administration -- holding short pro-forma sessions every three business days -- hoping to keep the president's powers in check.
However, Obama opted to challenge the practice in January 2012 when some Republican senators were holding pro-forma sessions while the Senate technically was on a 20-day recess.
When Obama moved ahead with three appointments to the NLRB that Republicans considered too labor-oriented -- Sharon Block, Terence F. Flynn and Richard F. Griffin Jr. -- a Pepsi bottling and distributing company in Washington state, Noel Canning, took the board to court after it ruled against it in a union dispute, challenging the board's legitimacy.
At the time, the NLRB had five purported members, two who had taken their seats before the controversy and the three Obama recess appointees.
The case eventually landed in the U.S. Court of Appeals for the D.C. Circuit, described as the most powerful court in the country behind the U.S. Supreme Court. The appeals court often rules in cases involving the federal government and its agencies.
A three-member appeals court panel led by the conservative U.S. Circuit Judge David Sentelle ruled in the Noel Canning case, the NLRB's decision was invalid "as it did not have a quorum."
Sentelle wrote: "Noel Canning asserts that the [NLRB] did not have a quorum for the conduct of business on the operative date, Feb. 8, 2012." Citing the U.S. Supreme Court's 2010 ruling in New Process Steel L.P. vs. NLRB, "which holds that the board cannot act without a quorum of three members, Noel Canning asserts that the board lacked a quorum on that date. Noel Canning argues that the purported appointments of the last three members of the board were invalid under the Recess Appointments Clause of the Constitution, Article II, Section 2, Clause 3. Because we agree that the appointments were constitutionally invalid and the board therefore lacked a quorum, we grant the petition for review and vacate the board's order."
Normally, the president appoints high officers of the government with the "advice and consent" of the Senate. But the recess clause says, "The president shall have power to fill up all vacancies that may happen during the recess of the Senate, by granting commissions which shall expire at the end of their [the Senate's] next session."
"It is universally accepted that 'session' here refers to the usually two or sometimes three sessions per Congress," Sentelle wrote. "Therefore, 'the recess' should be taken to mean only times when the Senate is not in one of those sessions."
The panel accepted Noel Canning's assertion the pro-forma sessions meant the Senate was still "in session," adding, "the appointments structure would have been turned upside down if the president could make appointments any time the Senate so much as broke for lunch."
The panel also rejected the U.S. Justice Department's assertion the president himself has the "discretion to determine when the Senate is in recess. ... This will not do. Allowing the president to define the scope of his own appointments power would eviscerate the Constitution's separation of powers. ...
"An interpretation of 'the recess' that permits the president to decide when the Senate is in recess would demolish the checks and balances inherent in the advice-and-consent requirement," Sentelle wrote. "Giving the president free rein to appoint his desired nominees at any time he pleases, whether that time be a weekend, lunch, or even when the Senate is in session and he is merely displeased with its inaction. This cannot be the law."
Sentelle wrote: "In short, we hold that 'the recess' is limited to intersession recesses. The [NLRB] conceded at oral argument that the appointments at issue were not made during the intersession recess: The president made his three appointments to the board on Jan. 4, 2012, after Congress began a new session on Jan. 3 and while that new session continued. ... Considering the text, history, and structure of the Constitution, these appointments were invalid from their inception."
Sentelle's opinion was joined by a second member of the panel. A third member wrote a concurring judgment agreeing with the judgment, making the ruling unanimous.
But Sentelle conceded the Washington panel's ruling was in conflict with rulings from other federal appeals courts, making it more likely the U.S. Supreme Court would hear the case to resolve those conflicts if the Obama administration chooses to take it there.
The results of the appellate panel's ruling could be catastrophic for the current makeup of the NLRB unless the administration continues the legal fight. Republicans are insisting the three board members who took their seats under recess appointments should resign.
Its political impact brought out some heavy hitters in support of Noel Canning.
Miguel Estrada -- appointed by President George W. Bush to the Washington appeals court but blocked by a Democratic filibuster -- represented Senate Republican Leader Mitch McConnell and 41 other members of the Senate in support Noel Canning.
Jay Alan Sekulow -- who frequently appears before the Supreme Court to argue religious cases -- represented U.S. House Speaker John Boehner in support of Noel Canning.
"Business groups were thrilled by a court ruling that found that President Barack Obama's recess appointments to the National Labor Relations Board were unconstitutional," Washington bureau chief Kent Hoover wrote for the influential Jacksonville (Fla.) Business Journal.
Unless the panel's decision is overturned by the full D.C. circuit court or the U.S. Supreme Court, "a year's worth of NLRB decisions could be invalid, and the agency will lack a quorum to make any new rulings until members are confirmed by the Senate," he said.
"That's a victory for business groups, who contend the NLRB has become biased in favor of labor unions under Obama."
The ruling could also call into question Obama's appointment of Consumer Financial Protection Bureau chief Richard Cordray, who was tapped at the same time as the three NLRB members.
NLRB Chairman Mark Gaston Pearce issued a statement on the day the panel handed down its decision, saying: "The board respectfully disagrees with today's decision and believes that the president's position in the matter will ultimately be upheld. It should be noted that this order applies to only one specific case, Noel Canning, and that similar questions have been raised in more than a dozen cases pending in other courts of appeals.
"In the meantime, the board has important work to do. The parties who come to us seek and expect careful consideration and resolution of their cases, and for that reason, we will continue to perform our statutory duties and issue decisions."
The U.S. Justice Department issued a terse statement after the panel's decision, but did not indicate immediately whether it would continue the case.
"We disagree with the court's ruling and believe that the president's recess appointments are constitutionally sound," the statement said.
Though Republicans praised the panel's ruling, White House press secretary Jay Carney told reporters: "The decision is novel and unprecedented, and it contradicts 150 years of practice by Democratic and Republican administrations. We respectfully but strongly disagree with the ruling."
The administration now can ask the full circuit to rehear the case en banc, ask the U.S. Supreme Court for review or, unlikely, simply drop the case and take the consequences.