The National Labor Relations Board lost another argument in the courts last week and this could be a big one. The winner of this case was Space X, which had argued the NLRB’s structure was unconstitutional. Last week, the 5th Circuit Court of Appeals said Space X was likely to prevail in its case against the agency.
A U.S. appeals court on Tuesday agreed with Elon Musk’s SpaceX and two other companies that the U.S. National Labor Relations Board’s structure is likely unlawful and blocked the agency from pursuing cases against them.
The ruling by the New Orleans-based 5th U.S. Circuit Court of Appeals is the first by an appeals court to find that a law shielding NLRB administrative judges and the board’s five members from being removed at will by the president is likely illegal.
The 5th Circuit upheld decisions by three judges in Texas that blocked NLRB cases alleging illegal labor practices by SpaceX, pipeline operator Energy Transfer (ET.N), opens new tab, and Aunt Bertha, which operates a social services search engine, pending the outcome of their lawsuits.
The NLRB had tried to prevent this case from moving forward, but in June their attempts to get a stay also failed in court back in June. The left-wing site The American Prospect says this effectively blows a big hole in what is left of the NLRB’s power.
Before the court was a suit that Elon Musk’s SpaceX had filed against the Board, concerning a pending investigation from one of the Board’s regional attorneys into claims that SpaceX had violated its workers’ rights by firing eight of them for going online to opine that Musk’s online verbal outbursts and abuses actually hurt the company’s standing. SpaceX had sought an immediate injunction overturning the Board’s right to investigate those charges, saying that it inflicted “irreparable harm” on the company…
In seeking SpaceX’s injunction to stop any investigation the Board might order, its attorneys, from the union-busting firm of Morgan Lewis, based their claim on the argument that the Board itself was unconstitutional, since it had been established, and had been operating for the past 90 years, as an agency that the president couldn’t completely control. The two Trump-appointed judges and the one George H.W. Bush–appointed judge who heard the case found for SpaceX, in a ruling that will now extend to any and every case brought against the NLRB or against employers or unions that the NLRB would adjudicate in the Fifth Circuit, which encompasses Louisiana, Mississippi, and Texas. And in this era of judge shopping, mega-companies that may have one part-time employee or a single post office box in one of those states “may now flood the Fifth Circuit” to avoid any enforcement of decisions upholding workers’ rights, former NLRB general counsel Jennifer Abruzzo told me in the wake of the court’s ruling.
All of this is meant to sound terrible, but of course it’s not. The NLRB has had a free ride to jerk around companies for decades. Under previous rules including a low standard of proof in at least some states, all the agency had to do was put forward some plausible claim that their ruling made sense and the actual courts (as opposed to the ALJs working for the NLRB) were forced to stay out of it. In practice that meant that pro-unionists had free reign because almost any action taken by a company to discourage unionizing was quickly ruled an unfair labor practice and reversed by the NLRB. Here’s how the Wall Street Journal described the NLRB’s power last year under former President Biden.
The White House plans to renominate Lauren McFerran to chair the NLRB, hoping to keep her in the seat for another five years…
That’s because the agency has shed any veneer of fairness during her tenure, trampling the rights of small and large businesses. A series of rulings since 2021 have stretched the protections in labor law wide enough to make workers virtually unfireable, as long as they belong to a union or wish to join one.
One target of the NLRB’s abuse is Stern Produce, a grocery distributor in Arizona. In 2021 the company issued a warning to two of its drivers for serious workplace violations: covering up a surveillance camera, and a threatening joke about a colleague’s sexual orientation. Both employees admitted to their actions, but Ms. McFerran ruled that the company’s warnings were illegal intimidation because the two workers had tried to unionize years earlier…
These decisions send a clear message to employers: Roll over for union activists, or the NLRB will turn any management decision into a labor violation. That strategy was made explicit by Jennifer Abruzzo, whom President Biden appointed as general counsel in 2021…
Those days are probably over now and it’s very likely the structure of the NLRB itself is going to change significantly in the near future. In theory, the NLRB can appeal last week’s decision of the 5th Circuit Court but that’s not likely since the agency is down to two board members and lacks a quorum to do much of anything at the moment. Even if it did appeal, the Supreme Court is not likely to take their side.
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