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 ( AMZN ) 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 ( SBUX ), Macy's and Amazon ( AMZN ) 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 ( AMZN ) 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)