(In Jan. 10 story, corrects last name of board member in paragraph 14 to Terence Flynn instead of Terence Block)
* Business ally sends bottling firm's case to high court
* Oral argument on Monday to focus on presidential "recess appointment" power
By Lawrence Hurley
WASHINGTON, Jan 10 (Reuters) - A powerful business group's decision to use its legal firepower to back a bottling company in a dispute with unionized workers turned a routine labor tussle in Washington state into a high-stakes Supreme Court case that could limit the ability of U.S. presidents to make appointments to critical jobs.
The case began as a complaint in December 2010 by the International Brotherhood of Teamsters Local 760 accusing Noel Canning Corp's owner, Rodger Noel, of reneging on a verbal agreement concerning a new collective bargaining agreement.
But after the U.S. National Labor Relations Board (NLRB) sided with the workers, the U.S. Chamber of Commerce intervened on behalf of the company and elevated the importance of the case by putting the focus on whether President Barack Obama had exceeded his authority in appointing members of the board.
The high court is set to hear longer than usual 90-minute oral argument in the case on Monday on the constitutional issue of a president's capacity to fill senior government posts without the usual Senate confirmation at a time when the 100-member body is in a recess.
Presidents of both parties have made many such "recess appointments" to install officials who otherwise would have had a hard time winning Senate confirmation.
The chamber calls itself the world's largest business organization, representing more than 3 million U.S. businesses.
It has a reputation as a formidable legal advocate for business interests. It often participates in challenges to government regulations on behalf of all its members and regularly files friend-of-the-court briefs in the U.S. Supreme Court and, increasingly, in other courts.
In the Supreme Court's 2012-2013 term, the chamber won a favorable outcome in 14 of the 18 cases in which it filed friend-of-the-court briefs. The Noel Canning case marks the first time the chamber has directly represented a member before the high court's justices.
With the help of the chamber's lawyers, Noel Canning won an unexpected victory in the U.S. Court of Appeals for the District of Columbia Circuit by convincing the judges that the appointments Obama made to the board were unconstitutional.
If the high court were to uphold the appeals court ruling, it would limit future presidents for years to come. The Supreme Court is expected to decide the case by the end of June.
Obama used his "recess appointment" power to name three members to the five-member NLRB in January 2012.
The chamber's lawyers, some with executive branch experience in the administration of Republican George W. Bush, said Obama abused his authority because the Senate was technically in session at the time the appointments were made. Obama announced the appointments during a period in which no Senate business was being conducted but a single senator was present to conduct a so-called "pro forma" session once every three days. Whether or not that constituted a recess is one of the main issues in the Supreme Court case.
In January 2013, the appeals court issued its expansive ruling agreeing with Noel Canning Corp. The court threw out the adverse labor board decision on the grounds that three of its members had been invalidly appointed by Obama.
Hobbling presidential power was not Noel Canning's stated aim when it contested the 2012 NLRB decision. It merely wanted the board's decision thrown out, according to court filings. Of the three board members who presided over the case, two - Sharon Block and Terence Flynn - were recess appointments.
Initially, Noel Canning's sole lawyer was Gary Lofland, a labor law expert based in Yakima, Washington, where the bottling company is based. He represented the company before the NLRB and filed the initial two-page petition for review in the appeals court in February 2012. Following standard practice, Lofland did not outline his legal arguments in the petition.
In an interview, Lofland said he was aware of the recess appointment issue, which was widely discussed in labor law circles after Obama had made his appointments the prior month.
"Because of the timing of the case, the recess appointments came up as one of the issues on my mind," Lofland said.
The chamber's lawyers were also closely following the issue. The business lobby has been a long-term critic of the NLRB and was eager to do what it could to prevent the Obama administration from having a free rein over appointments.
"We were concerned about the effect the recess appointments would have on the board and on its operations," said Rachel Brand, who co-heads the chamber's litigation arm. "That certainty is what we were interested in and what pushed our involvement in the case."
The Noel Canning case came to the attention of Brand and Noel Francisco, a lawyer at the Jones Day law firm who is the chamber's outside counsel in the case, because it was one of the first cases decided by an NLRB panel that included the newly appointed members.
The chamber lawyers approached Lofland and asked if he was amenable to the chamber intervening, something it and other trade groups often do in cases with broad implications for members. Lofland said he urged his client to cooperate.
"I thought that would be helpful to our position," he said. "I believe the U.S. Chamber of Commerce had a great deal of credibility in the D.C. area."
If Noel Canning had not agreed to cooperate, the chamber would likely have participated in another NLRB appeal and made the recess appointment argument in that case.
"This wasn't some novel concept that Noel Canning brilliantly thought up on their own," Brand said. "Everyone knew this was going to be an argument to make."
All of the lawyers involved declined to comment on whether the chamber is now bankrolling the entire case.
Brand and Francisco served in the White House and Justice Department under Bush and had experience on the legal issues surrounding presidential appointments.
In court filings, U.S. Solicitor General Donald Verrilli, representing the NLRB, urged the high court to throw out the appeals court ruling in its entirety.
"The court of appeals' decision would dramatically curtail the scope of the president's authority under the recess appointments clause," he wrote in one filing.
The Obama administration has also prepared a list of recess appointments dating back to 1867 to emphasize the historical nature of the practice.
The NLRB appointments were legitimate because they came "in the midst of an extended period during which the Senate was bound to conduct no business," James Coppess, a lawyer for the Teamsters - a party in the case, said in a court filing.
The Supreme Court has various ways it could decide the case in Noel Canning's favor, but even a narrow ruling against the government could be bad news for Obama in the last two years of his term. Currently the Senate is controlled by the Democrats, but Republicans could win control in the November elections, giving them more sway over when to declare recesses.
"That certainly would weaken the president's hand," said Sheldon Goldman, a political scientist at the University of Massachusetts Amherst.
At a minimum, a ruling backing Noel Canning would cause more than a 100 NLRB decisions made by the recess-appointed members to be thrown out. The Senate confirmed new appointees last year so the NLRB operations now would not be affected.
Emphasizing the political aspect of the case, the court is allowing a lawyer for Senator Mitch McConnell, the Senate Republican leader, to take part in Monday's oral argument.
The chamber's Brand said the group had no hidden agenda to try to curtail presidential power in general.
"What good would that do?," Brand said. "That's the kind of thing that could hurt you as much as it could help you."
Doug Kendall, head of the Constitutional Accountability Center, a left-leaning legal group, said the chamber will have to learn to live with whatever the Supreme Court rules.
"This case will decide the structure of the recess appointments clause from here on in," Kendall said. "Your position had better be one you are willing to live with regardless of who is president." (Editing by Will Dunham and Grant McCool)