WALL STREET JOURNAL: Elon Musk vs. the Administrative State: SpaceX fights an NLRB attack on the company’s employment practices.
SpaceX wants to colonize Mars, but first it’s taking on a more difficult mission: Rolling back the administrative state. CEO Elon Musk’s firm is challenging the structure and powers of the National Labor Relations Board.
A regional director at the NLRB last week charged SpaceX with retaliating against employees who wrote an open letter criticizing Mr. Musk. The complaint alleged that the company unfairly barred workers from discussing the letter and “created an impression of surveillance” by “showing employees screen shots of communications between employees.”
SpaceX responded with a lawsuit in federal court arguing that the board’s structure and administrative trials are unconstitutional. The suit leans in part on the Fifth Circuit Court of Appeals’s SEC v. Jarkesy precedent. The Supreme Court heard the Securities and Exchange Commission’s appeal in the case in November, and a decision is expected by June.
Jarkesy held that the SEC administrative law judges’ dual layers of protection from presidential removal violate the Constitution’s command that the President must “take Care that the Laws be faithfully executed.’” The Fifth Circuit also held that the SEC’s administrative process for adjudicating fraud claims violates the Seventh Amendment’s right to a jury trial.
Like SEC administrative law judges, the NLRB’s judges can only be removed for good cause as found by a Merit Systems Protection Board whose members can only be removed for “inefficiency, neglect of duty, or malfeasance in office.” Similar to the SEC, the NLRB asserts the power to extract monetary damages from defendants. SpaceX argues that such claims belong in federal court where defendants enjoy a right to a jury trial.
The SpaceX lawsuit also seeks to break new legal ground by taking aim at the NLRB’s combination of adjudicative, legislative and executive power, which it argues violates the constitutional separation of powers and due process. NLRB members rule on charges brought in its administrative courts and decide whether to seek injunctive relief in federal court.
Members of other independent agencies do the same, but SpaceX argues that the NLRB’s procedural unfairness is magnified because the board “has chosen to promulgate virtually all the legal rules in its field through adjudication rather than rulemaking.” . . .
The “accumulation of all powers legislative, executive and judiciary, in the same hands” is “the very definition of tyranny,” SpaceX writes, citing James Madison’s Federalist No. 47. Congress has granted the NLRB and other independent agencies sweeping powers that would have made the founders blanch. But the agencies have also expanded their purview.
The Biden NLRB is a case in point. The board’s statutory mission is to protect workers’ right to organize, but it is rewriting labor law to limit employer rights to manage their workforces. Credit to SpaceX for firing a rocket at the administrative state.
SpaceX has a good chance of winning here. It’s also a brushback at other bureaucracies.