The U.S. Court of Appeals for the 5th Circuit issued a decision this week siding with Elon Musk’s SpaceX, and two other companies (the Employers) finding that the manner in which the National Labor Relations Board is structured is likely unconstitutional. Its ruling effectively prohibits the NLRB from taking any further actions against the Employers. While the decision is only effective in states within the 5th Circuit (which does not include any in our five-state area) other Circuits may well follow suit. Regardless, the U.S. Supreme Court will undoubtedly take up the issue.
At the heart of the Employers’ claims and the Court’s decision is the question of whether Congress placed removal protections for the NLRB’s members and Administrative Law Judges (ALJs) that inappropriately limit the President’s Executive Powers. The Court determined that the protections for ALJs are plainly unconstitutional and the protections for members of the NLRB are likely so. The Appeals Court’s decision leaves in place a July 2024 preliminary injunction that paused NLRB proceedings against the Employers regarding unfair labor practice charges.
The decision included two important concepts. First, no entity should be forced to choose between foregoing its rights under the Constitution and subjecting itself to compliance with an agency that is unlawfully constituted: “The Employers have made their case and should not have to choose between compliance and constitutionality.”
The Court also noted that being subjected to enforcement proceedings by an unlawfully structured agency imposes irreparable harm, one element that is needed for a court to impose injunctive relief: “When an agency’s structure violates the separation of powers, the harm is immediate – and the remedy must be, too.”
The NLRB is expected to seek review by the Supreme Court of the United States. We will continue to monitor these cases as well as other court cases being litigated against the NLRB.
The full decision of the case can be found here: https://www.ca5.uscourts.gov/opinions/pub/24/24-50627-CV0.pdf