Musk's SpaceX loses early legal challenge to US labor board's powers

By Daniel Wiessner

March 5 (Reuters) - A U.S. appeals court on Wednesday rejected a bid by Elon Musk's SpaceX to block the National Labor Relations Board from pursuing claims that the rocket maker illegally fired engineers who were critical of Musk.

A unanimous three-judge panel of the New Orleans-based 5th U.S. Circuit Court of Appeals said that it was premature for SpaceX to bring the case to the appeals court before a lower court judge could rule on the company's claims that the NLRB's structure is unconstitutional.

SpaceX claimed U.S. District Judge Rolando Olvera in Brownsville, Texas, effectively denied its motion for a preliminary injunction in the 2024 lawsuit by not ruling on it more quickly. Olvera transferred SpaceX's lawsuit to California, where the company is based, a move that the 5th Circuit paused but ultimately upheld last year.

"Here, SpaceX’s sole conceivable injuries stem from participating in a teleconference in an unconstitutional administrative proceeding. These are ... not sufficiently serious to warrant interlocutory appeal," Circuit Judge Irma Carrillo Ramirez wrote for the court.

Ramirez is an appointee of Democratic former President Joe Biden. The panel includes Circuit Judge Priscilla Richman, an appointee of Republican former President George W. Bush, and Circuit Judge James Graves, who was appointed by Democratic former President Barack Obama.

The court sent the case back to Olvera, who can then send it to California.

SpaceX and the NLRB did not immediately respond to requests for comment.

The decision comes as the NLRB is hobbled by the lack of a three-member quorum to decide cases. President Donald Trump in January fired Gwynne Wilcox, a Democratic board member, in an unprecedented move and while the agency already had two vacancies.

A growing number of companies have been going on the offensive against the NLRB in recent years, filing lawsuits around the country that claim aspects of its in-house enforcement proceedings violate the U.S. Constitution, and SpaceX's case was among the first to reach a federal appeals court.

The 5th Circuit on Wednesday did not issue a ruling in a similar lawsuit by Amazon.com that was consolidated with the SpaceX case for the purposes of hearing oral arguments. Amazon also says that a judge effectively denied the company relief by not issuing a ruling quickly.

The legal challenges, if successful, could impact the board's powers, and even if they fail some have already succeeded in indefinitely delaying NLRB cases. Judges have temporarily blocked five board cases from moving forward, including a separate case involving SpaceX, while about a dozen other judges have refused to do so.

In the underlying NLRB case, SpaceX is accused of violating U.S. labor law by firing eight engineers in 2022 after they circulated a letter accusing Musk of sexist conduct and claiming the company tolerated discrimination against women. SpaceX has said the engineers were fired for violating company policies.

Musk is a top adviser to Trump and is spearheading an effort to drastically shrink the federal workforce and slash government spending.

The Trump administration has taken the position that legal protections shielding NLRB members from at-will removal by the president violate the U.S. Constitution.

A federal judge in Washington, D.C., held a hearing on Wednesday in Wilcox's lawsuit seeking to be reinstated.

The case is Space Exploration Technologies v. NLRB, 5th U.S. Circuit Court of Appeals, No. 24-40315.

For SpaceX: Michael Kenneally of Morgan Lewis & Bockius

For the NLRB: Tyler Wiese

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