*Erin Turvey
I. Introduction
Elon Musk is no stranger to explosions. From SpaceX rockets detonating during test flights[1] to Tesla batteries spontaneously bursting into flames,[2] Musk has seen his fair share of combustions. Now, Musk might blow up something else: the National Labor Relations Board (NLRB).[3] On January 4, 2024, Space Exploration Technologies Corp. (SpaceX) filed a lawsuit against the NLRB in the United States District Court for the Southern District of Texas[4] challenging the constitutionality of the structure of the agency’s administrative proceedings.[5]
II. The NLRB Unfair Labor Practice Charge
The lawsuit is in response to an NLRB complaint filed against SpaceX alleging unfair labor practices (ULPs).[6] The ULP charges stem from the allegedly unlawful firing of eight SpaceX employees engaged in protected concerted activity: drafting and circulating an open letter criticizing Musk for “negatively affecting SpaceX’s reputation” through his actions, including “recent allegations of sexual harassment against him.”[7] The letter, which was shared on SpaceX’s internal Microsoft Teams channel and distributed to SpaceX executives, argued that all of Musk’s tweets are “de facto public statement[s] by the company” because of Musk’s position as “CEO and most prominent spokesperson” of SpaceX and that such statements are detrimental to SpaceX’s internal culture and external reputation.[8] Additionally, the letter requested that employees support the letter’s demands by filling out a linked survey.[9] SpaceX allegedly responded by interrogating employees regarding the letter, making coercive statements about the concerted activity, and creating an “impression of surveillance . . . during an investigatory interview” by showing screenshots of a group chat that several of the fired employees participated in.[10] SpaceX is now attempting to escape any potential liability in a unique way.[11] Through its lawsuit against the NLRB, SpaceX seeks to upend the established adjudication procedures of the NLRB and is asking the court to enjoin the agency from pursuing any case over which agency officials preside – including the present one.[12]
III. SpaceX’s Constitutional Claims
SpaceX’s complaint[13] relies on SEC v. Jarkesy,[14] a case pending before the Supreme Court which contends that certain agency adjudications infringe on the right to a jury trial enshrined in the Seventh Amendment[15] and, when decided by an administrative law judge (ALJ), violate separation of powers.[16]
First, SpaceX asserts that “NLRB’s ALJs are unconstitutionally insulated from removal” by the executive branch in violation of Article II of the Constitution.[17] To carry out the executive power vested in the President by Article II of the Constitution, a President has the power to remove officers that assist in carrying out executive functions.[18] Relying on the Fifth Circuit’s decision in Jarkesy, SpaceX asserts that the President’s “removal power extends to [ALJs] who ‘perform substantial executive functions.’”[19] Under current procedures ALJs are insulated from Presidential removal and “are removable only for cause, by officials who themselves are removable only for cause.”[20]
Similar to the first count, SpaceX next asserts that NLRB members are also “unconstitutionally insulated from removal” because they exercise “substantial prosecutorial, rulemaking, policymaking, and adjudicative authority,” yet enjoy “strict removal protections”[21] that allow the President to remove members only “upon notice and hearing, for neglect of duty or malfeasance in office.”[22]
Third, SpaceX asserts that by having ALJs adjudicate “private rights without a jury trial,” the NLRB violates the Seventh Amendment.[23] Citing Jarkesy, SpaceX notes that “[s]uits at common law” means “all actions akin to those brought at common law as those actions were understood at the time” the Seventh Amendment was drafted.[24] While SpaceX does not appear to challenge the constitutionality of the NLRB’s imposition of traditional equitable remedies, such as ordering reinstatement of employees and backpay without a jury trial,[25] SpaceX asserts that the NLRB’s “broader authority to award monetary damages” and expanded remedies for compensatory purposes without a jury do violate the Seventh Amendment.[26] The award of such “nonrestitutionary compensatory damages,” SpaceX argues, are a form of “legal relief” and thus are “akin to those [actions] brought at common law” for which the Seventh Amendment protects the right to a jury trial.[27] Accordingly, SpaceX asks for a judgment declaring the NLRB’s current procedures for adjudication to be unconstitutional and enjoining the NLRB from further pursuing its charge against SpaceX for ULPs in the absence of a trial by jury.[28]
IV. Conclusion
Much of SpaceX’s constitutional argument hinges on the Supreme Court’s forthcoming decision in SEC v. Jarkesy.[29] While the oral arguments in Jarkesy barely touched on the constitutionality of ALJs, commentators note that the justices were “deeply divided” on the Seventh Amendment challenge.[30] During the Jarkesy oral argument, Justice Sotomayor pressed the point that the SEC’s action was pursuing “an interest that’s possessed by the sovereign, to protect.”[31] In line with that reasoning, there could be an argument that the NLRB’s action against SpaceX is pursuing the sovereign’s right to protect “workplace democracy” rather than private interests subject to Seventh Amendment protections.[32]
Whatever the outcome of SpaceX’s suit, Musk’s argument has gained traction with other corporations, signaling further attacks on the NLRB’s authority in the future[33] and a potential need to create alternative enforcement mechanisms to continue to hold employers accountable for unfair labor practices.
Photo Credit: This work is a derivative of Steve Jurvetson, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons.
*Erin Turvey is a third-year student at the University of Baltimore School of Law, where she is a Production Editor for Volume 53 of Law Review, a Legal Writing Fellow, a Research Fellow for the Center for Criminal Justice Reform, and a Distinguished Scholar of the Royal Graham Shannonhouse III Honor Society. Last summer, Erin served as a judicial intern to the Honorable Judge Douglas R. M. Nazarian at the Appellate Court of Maryland and a law clerk at Maryland Legal Aid. This summer, she is excited to join Brown, Goldstein & Levy as a summer associate.
[1] Associated Press, SpaceX Starship Launch Ends in Explosion, N.Y. Times (Nov. 18, 2023), https://www.nytimes.com/video/science/space/100000009187670/spacex-starship-explosions.html.
[2] Rob Wile, Tesla Car Battery ‘Spontaneously’ Catches Fire on California Freeway, Requiring 6,000 Gallons of Water to Put it Out, NBC News (Jan. 30, 2023, 11:47 AM), https://www.nbcnews.com/business/business-news/tesla-car-battery-fire-needed-6000-gallons-water-to-extinguish-rcna68153.
[3] See, e.g., Nick Niedzwiadek & Olivia Olander, Musk’s SpaceX Seeks to Blow Up Federal Labor Enforcer, Politico (Jan. 4, 2024, 6:01 PM), https://www.politico.com/news/2024/01/04/musks-spacex-seeks-to-blow-up-nlrb-00133919.
[4] Complaint, Space Expl. Techs. Corp. v. NLRB, No. 1:24-cv-00001 (S.D. Tex. Jan. 4, 2024). The court granted NLRB’s motion to transfer the case to the Central District of California. In re Space Expl. Techs. Corp., No. 24-40103, at 2 (5th Cir. Mar. 5, 2024) (Elrod, J., dissenting). Subsequently, SpaceX petitioned the U.S. Court of Appeals for the Fifth Circuit for a writ of mandamus to keep the suit in Texas. Id. The Fifth Circuit denied the petition. Id. at 1 (majority opinion).
[5] In re Space Expl. Techs. Corp., No. 24-40103, at 1 (5th Cir. Mar. 5, 2024).
[6] Id.; Second Amended Charge Against Employer, Space Expl. Techs. Corp., 31-CA-307446 (N.L.R.B. Dec. 15, 2023); see also Sarah Fortinsky, National Labor Relations Board Issues Complaint Against SpaceX, The Hill (Jan. 3, 2024, 6:42 PM), https://thehill.com/business/4387940-national-labor-relations-board-issues-complaint-against-spacex/.
[7] Loren Grush, SpaceX Employees Draft Open Letter to Company Executives Denouncing Elon Musk’s Behavior, The Verge (June 16, 2022, 9:05 AM), https://www.theverge.com/2022/6/16/23170228/spacex-elon-musk-internal-open-letter-behavior; see also Second Amended Charge Against Employer, supra note 6; Fortinsky, supra note 6.
[8] Grush, supra note 7.
[9] Complaint, supra note 4, at 9.
[10] Second Amended Charge Against Employer, supra note 6.
[11] Nick Robertson, SpaceX in New Lawsuit Claims NLRB Structure Violates Constitution, The Hill (Jan. 5, 2024, 9:44 AM), https://thehill.com/business/4390852-spacex-lawsuit-nlrb-constitution/.
[12] Complaint, supra note 4, at 4.
[13] While the complaint contains four counts, only three are discussed here for brevity. The fourth count asserts that “[t]he NLRB’s exercise of prosecutorial, legislative, and adjudicatory authority in the same proceedings violates the separation of powers and due process.” Id. at 19. Inter alia, SpaceX asserts that the NLRB’s procedures for determining “whether to petition for injunctive relief” involve members taking on a prosecutorial role. Id. 19–20.
[14] Jarkesy v. SEC, 34 F.4th 446 (5th Cir. 2022), cert. granted, 143 S. Ct. 2688 (2023).
[15] U.S. Const. amend. VII.
[16] SEC v. Jarkesy, No. 22-859 (U.S. argued Nov. 29, 2023); see also Complaint, supra note 4, at 2; Niedzwiadek & Olander, supra note 3.
[17] Complaint, supra note 4, at 10.
[18] Id. at 2 (citing Free Enter. Fund v. PCAOB, 561 U.S. 477, 513–14 (2010)).
[19] Id. at 2 (quoting Jarkesy, 34 F.4th at 463).
[20] Id. (citing Jarkesy, 34 F.4th at 463).
[21] Id. at 12–13.
[22] 29 U.S.C. § 153(a).
[23] Complaint, supra note 4, at 15.
[24] Id. (quoting Jarkesy, 34 F.4th at 452).
[25] Id. at 15 (citing 29 U.S.C. § 160(c)).
[26] Id. at 15–16.
[27] Id. at 15, 17.
[28] Id. at 23–24. SpaceX essentially argues that the current NLRB, under the direction of General Counsel Jennifer Abruzzo, has been seeking remedies that go beyond the traditional equitable scope of restitutionary backpay. Id. 15–17. These expanded remedies “permit[] a broad range of consequential damages,” including “monetary relief for compensatory purposes.” Id. at 16. Because these expanded remedies focus on remedying the harm done to individual employees rather than vindicating “the public interest in effecting federal labor policy,” SpaceX claims it is entitled to a jury trial where backpay is sought. See id. at 17 (quoting Chauffeurs, Teamsters & Helpers, Local 391 v. Terry, 494 U.S. 558, 573 (1990)).
[29] See supra notes 13–16 and accompanying text.
[30] See, e.g., Ronald Mann, Justices Divided Over SEC’s Ability to Impose Fines in Administrative Proceedings, SCOTUS Blog (Nov. 30, 2023, 7:28 AM), https://www.scotusblog.com/2023/11/justices-divided-over-secs-ability-to-impose-fines-in-administrative-proceedings/.
[31] See id.
[32] Congress passed the National Labor Relations Act, which created the NLRB, to “protect[] workplace democracy by providing employees at private-sector workplaces the fundamental right to seek better working conditions . . . without fear of retaliation.” About NLRB: The Law, Nat’l Lab. Rels. Bd., https://www.nlrb.gov/about-nlrb/rights-we-protect/the-law#:~:text=National%20Labor%20Relations%20Act&text=The%20NLRA%20protects%20workplace%20democracy,representation%20without%20fear%20of%20retaliation (last visited Mar. 14, 2024).
[33] Josh Eidelson & Bloomberg, Elon Musk and SpaceX are Right about the National Labor Relations Board Being Unconstitutional, Argues Trader Joe’s, Fortune (Jan. 27, 2024, 12:21 PM), https://fortune.com/2024/01/27/elon-musk-spacex-right-nlrb-unconstitutional-says-trader-joes/.