SpaceX Wins a First Battle in Its Assault on the NLRB

By
Matt Bruenig

SpaceX just won a preliminary injunction in a Texas federal district court against the National Labor Relations Board. The decision moves us closer to a potential Supreme Court decision declaring the NLRB unconstitutional — and massively empowering bosses.

The SpaceX Falcon Heavy rests on Pad 39A at the Kennedy Space Center in Florida, on February 5, 2018. (Jim Watson / AFP via Getty Images)

Space Exploration Technologies Corp. (SpaceX) sought a preliminary injunction in a Texas federal district court against the National Labor Relations Board (NLRB) and its officers, including the NLRB’s administrative law judges (ALJs). The core issue was the constitutionality of the removal protections for NLRB members and ALJs.

SpaceX argued that these protections violate the president’s Article II power of removal and the district court, applying the Fifth Circuit’s decision in Jarkesy v. Security and Exchange Commission (SEC), decided that SpaceX was likely to win this argument and preliminarily enjoined the NLRB from initiating an administrative proceeding against SpaceX.

Unconstitutional Insulation of NLRB ALJs

  • Legal precedent: the Fifth Circuit’s decision in Jarkesy held that the statutory removal protections for SEC ALJs are unconstitutional due to double-layer protection from removal.
  • Application to NLRB ALJs: similar to SEC ALJs, NLRB ALJs have substantial executive functions and are protected by layers of removal restrictions:
    • ALJs can only be removed for good cause determined by the Merit Systems Protection Board (MSPB).
    • MSPB members themselves have for-cause removal protection.
  • The court found a substantial likelihood that SpaceX would succeed in proving that these protections for NLRB ALJs are unconstitutional.

Unconstitutional Insulation of NLRB Members

  • Statutory protections: NLRB members are removable only “for neglect of duty or malfeasance in office” and not for inefficiency, which is stricter than the removal protections for Federal Trade Commission commissioners.
  • Recent Supreme Court precedents: Decisions in Seila Law LLC v. Consumer Federal Protection Bureau and Collins v. Yellen suggest that removal of protections for officers wielding substantial executive power violate Article II.
  • The court found a substantial likelihood that SpaceX would succeed in proving that the removal protections for NLRB Members are unconstitutional.

For now, the district court’s decision simply prevents the NLRB from processing a fairly run-of-the-mill unfair labor practice charge against SpaceX. The real question is going to be what the Supreme Court does once this case makes it to their docket. But in the meantime, as we wait for that to play out, it is likely that other companies subject to NLRB proceedings will seek similar injunctions, especially in Texas, Louisiana, and Mississippi, which are the states covered by the Fifth Circuit.