The Fifth Circuit Ruled That the NLRB Is Unconstitutional
The Fifth Circuit Court of Appeals sided with SpaceX earlier this week, ruling that the National Labor Relations Board’s current structure is unconstitutional. The decision will keep the agency hamstrung until the case makes its way to the Supreme Court.
The US Court of Appeals for the Fifth Circuit has affirmed preliminary injunctions halting NLRB proceedings against three employers, including Elon Musk's SpaceX. (Brandon Bell / Getty Images)
For the last year or so, federal district court judges in the Fifth Circuit have been enjoining the National Labor Relations Board (NLRB) from processing unfair labor practice charges against employers in Texas, Louisiana, and Mississippi. I’ve written a couple of pieces about this including this one in September of last year.
These decisions are all downstream of the “unitary executive” theory popular in conservative legal circles. The legal argument goes as follows:
- Article II of the US Constitution requires that the president “shall take Care that the Laws be faithfully executed.”
- The president cannot do so with respect to the NLRB because the NLRB members and administrative law judges (ALJs) are too difficult to fire.
- Thus, the NLRB’s current structure is likely unconstitutional and it would cause irreparable harm to these employers to be subject to NLRB administrative processes.
Three of these district court cases were consolidated into an appeal that recently went before the Fifth Circuit. Unsurprisingly, the Fifth Circuit, which is dominated by conservatives, endorsed this particular legal theory and upheld the district court decisions enjoining the NLRB from processing unfair labor practice charges against the involved employers.
At this point, the practical significance of this ruling is essentially zero. It is already clear that the Supreme Court is going to decide on the relevant legal issue in the near future, whether upon appeal of this Fifth Circuit decision or upon the appeal of Wilcox v. Trump, which is currently making its way through the DC Circuit. The Supreme Court has strongly signaled that once it has a chance to do so, it will rule that the removal protections for NLRB ALJs and NLRB members are unconstitutional under the theory outlined above.
Based on how the court has handled recent similar cases, the Supreme Court will most likely remedy this problem by striking down the removal protections while otherwise leaving the NLRB intact and operational. So at some point in the next year or two, it will become the case that the president can discretionarily fire NLRB members and NLRB ALJs.
As I’ve written already before, I don’t really think that the president having the power to fire NLRB members and NLRB ALJs will make much difference in how the agency operates. So the real problem created by all of this legal activity is the way in which the agency is being hobbled during the period in which these legal challenges make their way through the courts.
The United States Court of Appeals for the Fifth Circuit has affirmed preliminary injunctions halting NLRB proceedings against three employers: SpaceX, Energy Transfer, and Findhelp. The consolidated case centered on constitutional challenges to the removal protections for NLRB ALJs and board members.
Background and Analyses
Each employer faced unfair labor practice complaints before the NLRB. Before administrative proceedings began, they each filed suit in different federal district courts challenging the constitutionality of the NLRB’s structure — specifically, the “dual for-cause removal protections” shielding both board members and ALJs from presidential removal. The district courts granted preliminary injunctions halting the NLRB proceedings.
Jurisdictional Analysis
The court first addressed whether district courts had jurisdiction to enjoin ongoing NLRB proceedings. The NLRB argued that the Norris–La Guardia Act stripped courts of such jurisdiction in cases “involving or growing out of a labor dispute.” The Fifth Circuit rejected this argument, finding that constitutional challenges to agency structure do not qualify as labor disputes under the act’s definition.
Applying the Thunder Basin factors, the court determined that:
- Meaningful judicial review would be foreclosed if the employers were forced to endure unconstitutional proceedings.
- The claims were “wholly collateral” to the NLRB’s review provisions since they challenged the agency’s authority to proceed.
- The constitutional questions fell outside the NLRB’s expertise.
Constitutional Analysis
ALJ Removal Protections
The court found that NLRB ALJs are “inferior officers” protected by two layers of for-cause removal restrictions: (1) ALJs can be removed only for “good cause” as determined by the Merit Systems Protection Board (MSPB), and (2) MSPB members themselves have for-cause removal protection. Following its precedent in Jarkesy v. SEC, the court held this arrangement unconstitutionally restricts presidential oversight.
Board Member Removal Protections
Regarding NLRB board members, who can be removed only “for neglect of duty or malfeasance in office,” the court engaged in a more nuanced analysis of whether the Humphrey’s Executor exception applies. The court concluded that the NLRB differs from agencies like the Federal Trade Commission (FTC) in critical ways:
- NLRB board members “wield substantial executive power” through their administrative, policymaking, and prosecutorial functions.
- Unlike the FTC, the NLRB lacks statutory party-balancing requirements, allowing a president to appoint four of five members from his own party.
- The NLRB’s structure and powers take it outside the narrow Humphrey’s Executor
Irreparable Harm Analysis
The court held that being subjected to an unconstitutionally structured agency proceeding constitutes irreparable harm in itself, without requiring proof of specific outcome differences. The majority rejected the NLRB’s argument based on Collins v. Yellen, distinguishing between retrospective relief from final agency action (where a causal link is required) and prospective relief from an ongoing unconstitutional proceeding (where the process itself is the injury).
Conclusion
Finding that the employers demonstrated likelihood of success on the merits, irreparable harm, and that the balance of equities favored relief, the Fifth Circuit affirmed the preliminary injunctions.
Judge Jacques Wiener dissented in part, arguing that the employers failed to demonstrate irreparable harm regarding board member removal protections by not establishing causal harm between the constitutional violation and agency proceedings.