/>iFollowing several complaints filed with the National Labor Relations Board (NLRB), SpaceX has mounted a constitutional challenge against the structure of the NLRB. Specifically, SpaceX contends that NLRB administrative judges and board members are improperly insulated from at-will removal by the president, and that NLRB proceedings violate the separation of power and companies’ right to a jury trial under the Constitution. SpaceX joins a broader wave of similar challenges mounted by major corporations, including Amazon, Starbucks, and Trader Joe’s.
The pushback against administrative agencies has gained momentum following two landmark Supreme Court cases. In 2023, the Court unanimously held that respondents in Federal Trade Commission (FTC) and Securities and Exchange Commission’s (SEC) administrative actions can file separate lawsuits in federal court to challenge the constitutionality of the agencies and thereby enjoin the agency proceedings (e.g., when an agency initiates an administrative proceeding, a federal district court may hear constitutional challenges to the agency). Then earlier this year, the Supreme Court’s 6-3 decision overruled Chevron. This landmark decision significantly impacts how courts view administrative regulations, providing companies with a stronger basis for challenging administrative decisions. The Supreme Court’s decisions mark a shift in the judicial landscape, empowering corporations to challenge administrative rules, decisions, and structures more effectively.
Indeed, SpaceX adds to the continued success companies are having in constitutional challenges. Judge Alan Albright, out of the U.S. District Court for the Western District of Texas, granted SpaceX’s request for a temporary injunction. This temporary injunction blocks certain NLRB administrative proceedings against SpaceX while SpaceX’s constitutional challenges are being adjudicated. The NLRB appealed Judge Albright’s decision to the Fifth Circuit, which has yet to issue a formal opinion on the matter — however, it seems unlikely the Fifth Circuit will reverse given its recent precedent.
Judge Albright’s ruling was informed by the Fifth Circuit’s 2022 ruling that the SEC’s in-house court system cannot process cases against companies when they could face financial penalties. The Supreme Court recently upheld the Fifth Circuit’s decision. This precedent reinforces many companies’ assertion that when financial penalties are on the table in unfair labor practices cases, companies should have access to a jury.
This trend of challenging administrative agencies is part of a broader deregulatory effort by corporations aimed at curbing what they perceive as excessive administrative overreach. If SpaceX succeeds in its constitutional challenge against the NLRB, it could lead to substantial changes in how unfair labor rights cases are adjudicated. The NLRB’s authority could be significantly diminished, impacting its ability to enforce labor laws and make decisions that affect unions and workers nationwide, in addition to NLRB rules in jeopardy now that courts are no longer required to defer to agencies under Chevron-deference. Such a transformation could reshape the landscape of labor relations and administrative adjudication, potentially leading to a more fragmented and less uniform application of labor laws in the NLRB’s view.
Given the evolving nature of these legal challenges and the potential for significant impacts on labor rights and administrative procedures, it is crucial for employers to seek experienced legal counsel when dealing with matters involving the NLRB. This area of law is in flux, and expert guidance will be essential in navigating the complexities of ongoing legal developments. As the courts continue to grapple with constitutional issues related to administrative agencies, the outcomes could have far-reaching consequences for administrative law and labor relations in the United States.
