The Fifth Circuit Court of Appeals affirmed three federal district courts in Texas Tuesday, finding SpaceX, Energy Transfer and Findhelp showed a likelihood of success in arguing that the structure of the National Labor Relations Board is unconstitutional.
All three companies were accused of unfair labor practices, but before administrative proceedings began before the NLRB on that issue, each filed lawsuits alleging the NLRB’s structure, specifically the dual for-cause removal protections shielding both board members and administrative law judges, is unconstitutional.
The Western, Southern and Northern District Courts agreed and granted preliminary injunctions that halted the agency’s proceedings.
On appeal, the NLRB argued that the district courts lacked jurisdiction to enjoin ongoing board proceedings and abused their discretion.
The Fifth Circuit panel disagreed on both counts.
Judge Don Willett wrote the majority opinion, joined by Judge Stuart Duncan. Judge Jacques Wiener Jr., who authored a separate opinion partially concurring and partially dissenting, also sat on the panel.
Judge Willett wrote that “nothing in federal law strips federal courts of jurisdiction to hear these claims — or to enjoin unconstitutional agency proceedings.”
He also wrote that the district courts acted within their discretion in granting preliminary relief and that the three companies should not have to choose between “compliance and constitutionality.”
“When an agency’s structure violates the separation of powers, the harm is immediate — and the remedy must be, too,” Judge Willett wrote.
The NLRB was created by Congress in 1935 to enforce the National Labor Relations Act. The ALJs preside over NLRA violation claims and issue initial decisions, which are subject to review by the agency’s five-member board that consists of presidential appointees.
Board members are only removed by the president for “neglect of duty or malfeasance of office.” ALJs can only be removed “for good cause” as determined by the Merit Systems Protection Board, which is an independent agency that adjudicates “federal employee appeals from agency personnel actions.”
Judge Willett wrote that case law from the U.S. Supreme Court and the Fifth Circuit has held that the two layers of for-cause removal protection are unconstitutional.
“The Constitution does not countenance unlawful power. And when the Constitution draws boundaries, neither agency expedience nor institutional inertia can erase them,” Judge Willett wrote. “The district courts recognized as much and acted to prevent an injury that, once inflicted, cannot be undone.”
Judge Wiener agreed with the majority that the district courts had jurisdiction of the cases but disagreed with its holding that the employers were entitled to a preliminary injunction regarding the removability of the NLRB board members.
“Because the employers have failed to prove that they would suffer irreparable harm in the absence of a preliminary injunction for that specific issue, I would instead reverse the district court’s decision granting injunctive relief,” Judge Weiner wrote.
Michael Kenneally and Harry Johnson III of Morgan, Lewis & Bockius represented Space Exploration Technologies Corporation. Talley Parker and David Kelly of Jackson Lewis represented Findhelp. Amber Rogers, Trevor Cox and Keenan Judge of Hunton Andrews Kurth represented Energy Transfer.
David Boehm, Kevin Flanagan, Macie Gallardo, Grace Pezzella, and Matheus Teixeira of the National Labor Relations Board represented the defendants.
Counsel for all parties did not immediately respond to requests for comment.
The case is Space Exploration Technologies Corporation v. National Labor Relations Board, et al., 24-50627.