What it means for employers trying to challenge agency proceedings on procedural grounds
Healthcare employers failed to halt NLRB proceedings with constitutional challenges, as appeals court says procedural objections won't stop ongoing labor cases.
In a decision dated February 5, he U.S. Court of Appeals for the Second Circuit rejected Care One LLC's attempt to halt National Labor Relations Board proceedings that have stretched across more than a decade. The company and nine affiliated healthcare facilities across Connecticut argued the entire process was constitutionally flawed, but the court disagreed.
The employers raised two constitutional objections. First, they claimed Administrative Law Judge Kenneth Chu was never properly appointed because the board members who selected him weren't lawfully serving at the time. Second, they argued dual layers of job protection unconstitutionally insulated the judge from presidential removal.
The appeals court found a critical problem with the employers' case: they couldn't demonstrate ongoing harm. Judge Chu had already completed his work and retired from the agency. The proceedings now sit with the full labor board, whose members are all properly appointed and empowered to review everything from scratch.
Circuit Judge Reena Raggi explained that Care One essentially wanted to stop proceedings that were no longer happening before the judge they objected to. The board has authority to examine all of Judge Chu's findings with fresh eyes through what's called de novo review. The employers have already filed their objections to his work.
The timeline matters here. The NLRB filed unfair labor practice complaints against the healthcare facilities in 2012. Judge Chu held 39 days of hearings between September 2012 and October 2014, then proceedings stalled for years due to interlocutory appeals and the pandemic.
When proceedings were set to resume in June 2023, the employers raised their constitutional challenges for the first time. They initially sought relief in New Jersey federal court, were denied, then tried in Connecticut. Both courts refused to halt the process.
Judge Chu issued his decision on May 29, 2024, finding the employers had committed many of the alleged unfair labor practices and recommending remedial actions to the board. Shortly after, he retired from the NLRB.
For HR professionals managing labor disputes, this decision shows how difficult it is to derail agency proceedings on procedural grounds once they've moved beyond the initial hearing stage. The court made clear that having properly appointed officials conduct a fresh review addresses most constitutional concerns.
Judge Myrna Pérez wrote a separate concurrence addressing whether the constitutional claims had merit. She concluded they didn't. Administrative law judges don't wield the kind of enforcement or policymaking power that requires direct presidential control, she explained. They develop factual records and make recommendations that their agencies can completely disregard.
Pérez traced these job protections to the 1883 Pendleton Act, when Congress created civil service reforms to end the spoils system where government jobs went to political supporters. The protections were designed to let hearing officers work without fear of being fired for politically unpopular decisions.
Federal appeals courts are divided on this question. The Ninth, Tenth, and Eleventh Circuits have upheld removal protections for administrative law judges. The Fifth Circuit has struck them down. The majority of courts addressing the issue have sided with keeping the protections in place.
The ruling arrives as courts nationwide grapple with questions about administrative agency authority, making this an important area for anyone dealing with federal employment regulators. For employers facing NLRB cases, the message is clear: constitutional challenges to judge appointments or job protections won't stop your proceedings, especially once the judge has finished and the case is under board review.
