The Texas federal judge presiding over 🚀 SpaceX’s challenge to the NLRB cast doubt on the agency’s constitutionality. This puts the agency’s ability to oversee labor disputes in jeopardy.

In April 2024, SpaceX filed a complaint seeking a preliminary injunction to halt the progress of an unfair labor practice charge. SpaceX argued that the NLRB’s Board Members and Administrative Law Judges (ALJs) are likely serving unconstitutionally due to their protection from removal.

Court’s Rulings:

1️⃣ Preliminary Injunction Granted

On July 10, 2024, the court granted SpaceX’s motion for a preliminary injunction, blocking the NLRB charge. This was followed by a written order on July 24, 2024, formally enjoining the NLRB and its ALJs from proceeding with the charge against. A copy of the order is attached.

2️⃣ ALJs’ Constitutionality

The court found that SpaceX is likely to succeed in showing that NLRB ALJs are unconstitutionally insulated from removal. This conclusion was based on the precedent set in a case called Jarkesy v. Sec. & Exch. Comm’n, which ruled that the double-layer protection from removal for SEC ALJs was unconstitutional. NLRB ALJs have a similar double-layer protection.

3️⃣ NLRB Members’ Constitutionality

The court also found that SpaceX is likely to succeed in arguing that NLRB Members are unconstitutionally insulated from removal. NLRB Members can only be removed for “neglect of duty or malfeasance in office,” a standard the court found to be overly restrictive compared to the standards applied to other regulatory commissioners.

4️⃣ Severance Argument Rejected

The NLRB argued that instead of a preliminary injunction, the unconstitutional provisions should be severed from the rest of the law. The court rejected this, stating that it was premature to consider severance before determining whether the statute as written was unconstitutional.

Now What❓

The NLRB is prohibited from proceeding with the charges against SpaceX and other employers while the lawsuits continue. However, they do not constitute nationwide injunctions against the NLRB’s operations. It is expected that there will be appeals and a potential increase in petitions for injunctive relief, particularly in states under the Fifth Circuit’s jurisdiction. There could also be a rise in challenges to NLRB rules and practices.