SpaceX Takes Aim at the NLRB

SpaceX is facing an administrative hearing before a National Labor Relations Board (NLRB) administrative law judge (ALJ) on March 5. 2024.  Last week, SpaceX launched its latest projectile, a motion for a preliminary injunction in the District Court for the Southern District of Texas, alleging that it will be irreparably harmed if that hearing takes place.  The argument is that both the NLRB and the ALJ system are unconstitutional because both the NLRB and the ALJs are insulated from removal by the President.  Moreover, seizing on what must have been a very encouraging oral argument before the Supreme Court in SEC v. Jarkesy, SpaceX claims that administrative proceedings such as this violate the Seventh Amendment right to a jury trial. The brief leans heavily on the Fifth Circuit's ruling in Jarkesy, which is a  precedent binding on the District Court. 

The case arose because some SpaceX employees circulated an open letter, soliciting employees to fill out a hyperlinked survey and indicate their level of support for the letter's demands and provide feedback.  SpaceX fired some of the employees responsible for the open letter, alleging that they violated company policy and that their manner of circulating the open letter disrupted SpaceX's operations.  The fired employees filed a complaint with the NLRB, alleging unfair labor practices.   The NLRB was apparently not convinced by SpaceX's 700-page response and notified SpaceX that it had authorized an administrative complaint.  SpaceX's suit followed.

When Jarkesy was argued, people noted that if SCOTUS upheld the Fifth Circuit, the struture of many other executive agencies or their practices could also be attacked as unconstitutional, on either separation of powers or Seventh Amendment grounds.  And here we are.  The motion places the District Court in an awkward position.  It is bound by Fifth Circuit precedent, so denying the injunction might be hard unless there are arguments that the NLRB is in some relevant way different from the SEC.  Ordinarily, the District Court might hold off on ruling, given that SCOTUS is unlikely to rule in Sarkesy until June.  Without such a ruling, it is hard to know which side has the better argument for irreparable harm.   Perhaps the safest solution is to stay the administrative hearing until SCOTUS decides whether to kneecap the administrative state in whole or just in part in Sarkesy.

Stay tuned.