On May 2, 2024, the U.S. Court of Appeals for the Fifth Circuit, in Space Exploration Technologies Corp., v. NLRB, No. 24-40315 (5th Cir. 2024), granted SpaceX’s Emergency Motion for Injunction Pending Appeal, essentially halting National Labor Relations Board (“NLRB”) proceedings pending the company’s appeal of a lower court’s “effective denial” of its request for preliminary injunction. 

Background

As we previously reported, SpaceX commenced suit in January 2024 in the District Court for the Southern District of Texas in response to NLRB Regional Office 31’s administrative complaint filed against the company. 

The NLRB complaint alleged that the company unlawfully fired eight employees after they circulated an open letter to all employees critical of the company and the company’s CEO. SpaceX asked the district court to stay or enjoin the NLRB’s administrative complaint and to declare that (1) the NLRB’s structure is unconstitutional because it not only limits the removal of Administrative Law Judges (“ALJ”) and Board Members, but it also permits Board Members to exercise executive, legislative, and judicial power in the same administrative proceeding; and (2) the Board’s new expanded remedies violate the employer’s constitutional right to trial-by-jury.

The district court granted the NLRB’s motion to transfer venue to the District Court for the Central District of California, finding that the case “concerns a California administrative proceeding regarding the actions of a California company and its California employees in California.” On appeal of that decision, a split Fifth Circuit panel upheld the district court order.  A full Fifth Circuit would not hear the issue after an 8-8 deadlock on the company’s en banc rehearing petition.

On April 17, 2024, SpaceX then filed a motion for reconsideration on the district court’s previous decision to transfer the case, or alternatively a request for ruling on its motion for preliminary injunction in District Court for the Southern District of Texas.  After what SpaceX called a de facto denial due to the district court’s failure to swiftly act on its motion, on May 1, 2024, the company filed a Notice of Appeal and an Emergency Motion for Injunction Pending Appeal at the Fifth Circuit. 

In its Emergency Motion for Injunction Pending Appeal, SpaceX argued that it would suffer irreparable harm without emergency relief before Thursday, May 2, 2024—the day on which the ALJ was to conduct a hearing on discovery issues.  The company reiterated its two original arguments and claimed that it would succeed under the Fifth Circuit’s previous ruling in Jarkesy v. SEC, No. 20-61007 (5th Cir. 2020), a case currently under review at the United States Supreme Court, which similarly assesses the SEC’s powers in enforcing securities law.

In its opposition, the NLRB argued that SpaceX’s participation in an administrative proceeding teleconference on discovery issues does not meet the standard for irreparable harm, noting that the company “previously participated in two such teleconferences with the ALJ acting as a special master, and it points to no injury, much less an irreparable one, arising from them.”

The Fifth Circuit’s Ruling

In a one-sentence order, the Fifth Circuit granted the company’s motion for injunction pending appeal.

Takeaways 

SpaceX treaded new ground in arguing that NLRB proceedings violate the U.S. Constitution, and their arguments have since been adopted by other employers in recent pending NLRB cases.  While the Fifth Circuit originally upheld the district court’s ruling that the case should be transferred to the California federal court, the Fifth Circuit has now paused the NLRB litigation for the time being, breathing new life into SpaceX’s hopes to evade scrutiny from the NLRB and potentially upending the entire administrative review process.  The final outcome of the SpaceX case very well may depend on the U.S. Supreme Court’s decision in Jarkesy, which was argued on November 29, 2023, and should be issued before the term ends in June 2024.

Photo of Joshua Fox Joshua Fox

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several…

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several Major League Baseball Clubs in all aspects of the salary arbitration process, including the Miami Marlins, Boston Red Sox, Los Angeles Dodgers, Kansas City Royals, San Francisco Giants, Tampa Bay Rays and Toronto Blue Jays. In particular, Josh successfully represented the Miami Marlins in their case against All-Star Catcher J.T. Realmuto, which was a significant club victory in salary arbitration. Josh also represents Major League Baseball and its clubs in ongoing litigation brought by current and former minor league players who allege minimum wage and overtime violations. Josh participated on the team that successfully defended Major League Baseball in a wage-and-hour lawsuit brought by a former volunteer for the 2013 All-Star FanFest, who alleged minimum wage violations under federal and state law. The lawsuit was dismissed by the federal district court, and was affirmed by the U.S. Court of Appeals for the Second Circuit.

Josh also has extensive experience representing professional sports leagues and teams in grievance arbitration proceedings, including playing a vital role in all aspects of the grievance challenging the suspension for use of performance-enhancing drugs of then-New York Yankees third baseman Alex Rodriguez. Josh also has counseled NHL Clubs and served on the trial teams for grievances alleging violations of the collective bargaining agreement, including cases involving use of performance-enhancing substances, domestic violence issues, and supplementary discipline for on-ice conduct. He has played a key role in representing professional sports leagues in all aspects of their collective bargaining negotiations with players and officials, including the Major League Baseball, National Hockey League, the National Football League, Major League Soccer, the Professional Referee Organization, and the National Basketball Association,.

In addition, Josh has extensive experience representing clients in the performing arts industry, including the New York City Ballet, New York City Opera, Big Apple Circus, among many others, in collective bargaining negotiations with performers and musicians, the administration of their collective bargaining agreements, and in grievance arbitrations.

Josh also represents a diverse range of clients, including real estate developers and contractors, pipe line contractors, hospitals, hotels, manufacturers and public employers, in collective bargaining, counseling on general employment matters and proceedings before the National Labor Relations Board, New York State Public Employment Relations Board and arbitrators.

Josh has also recently served as an adjunct professor at Cornell University’s School of Industrial Labor Relations for the past two years, teaching a course regarding Major League Baseball salary arbitration.

Prior to joining Proskauer, Josh worked for a year and a half at the National Hockey League, where he was involved in all labor and employment matters, including preparations for collective bargaining, grievance arbitration, contract drafting and reviewing and employment counseling. Josh also interned in the labor relations department of Major League Baseball and at Region 2 of the National Labor Relations Board. He was a member of the Brooklyn Law Review and the Appellate Moot Court Honor Society and served as president of the Brooklyn Entertainment and Sports Law Society.

Photo of Mallory Knudsen Mallory Knudsen

Mallory E. Knudsen is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Employment Counseling, Training, and Pay Equity groups.