SpaceX challenges NLRB’s authority after unfair labor practice charge

Dive Brief:

  • SpaceX sued the National Labor Relations Board in a Texas federal court Thursday, arguing that the NLRB unconstitutionally subjected the company to an administrative hearing over an unfair labor practice charge filed in 2022.
  • The case stems from a June 2022 incident in which a group of SpaceX employees published an open letter that conveyed workplace concerns. The company later fired several of the employees, who in turn filed the NLRB charge later that year.
  • On Wednesday, an NLRB regional director issued a consolidated complaint and notice of hearing to be conducted before an agency administrative law judge in March. But SpaceX’s complaint alleged that the hearing is an administrative proceeding whose structure is unconstitutional and deprives SpaceX of its right to a jury trial. SpaceX asked the court to enjoin NLRB from subjecting it to such proceedings, alongside other relief.

Dive Insight:

In filing its suit with the U.S. District Court for the Southern District of Texas, SpaceX referenced a separate ongoing legal battle that involves similar questions about the constitutionality of administrative proceedings. That case, SEC v. Jarkesy, is currently pending before the U.S. Supreme Court.

Jarkesy centers around a securities fraud enforcement action brought by the Securities and Exchange Commission. This included a proceeding overseen by an SEC administrative law judge who determined the liability of the parties involved as well as ordered various remedies, according to the 5th U.S. Circuit Court of Appeals, which decided the case in 2022.

The 5th Circuit held that the SEC’s adjudication of the case in Jarkesy was unconstitutional because it violated the parties’ right to a jury trial and represented an unconstitutional delegation of legislative power by Congress. Additionally, the court found that statutory restrictions on the removal of administrative law judges at SEC were similarly unconstitutional.

SpaceX’s lawsuit against NLRB makes largely similar claims. For example, the company asked the district court to find the statutory removal protections that exist for NLRB law judges unconstitutional.

“To prevent SpaceX from undergoing protracted administrative proceedings before an unconstitutionally structured agency […] the Court should stay or enjoin the current agency proceedings, declare that the NLRB’s structure violates the separation of powers under Article II of the Constitution, and permanently enjoin the NLRB and its General Counsel from pursuing unfair labor practice charges against SpaceX before agency officials that are unconstitutionally insulated from presidential oversight,” the company said in the suit.

SpaceX — along with other companies that sit under the direction of its CEO, Elon Musk — has faced a litany of toxic workplace allegations in the past few years. Former employees publicly shared experiences with sexual harassment, sexism and racism at the company before the publication of the 2022 open letter.