ANALYSIS: If Loper Bright Doesn’t Kill the NLRB, Elon Musk Might

The National Labor Relations Board is better equipped than many entities to survive the effect of losing Chevron deference, should the U.S. Supreme Court decide to limit or overturn the doctrine that favors federal agencies’ interpretations of ambiguously worded statutes. However, a lawsuit currently making its way through the federal court system, coupled with a seemingly unrelated pending Supreme Court case, could not only restrict the NLRB from carrying out its purpose but threaten the agency’s very existence.

How Loper Bright Could Hinder the Board

During the current term, two cases have been argued in front of the Supreme Court in which the petitioners are asking for the court to overrule the Chevron case. The more well-known of these cases is Loper Bright Enterprises v. Raimondo, which was combined with Relentless Inc. v. Dep’t of Commerce. Both cases deal with the federal regulation of fisheries, but the cases will have broader implications than just that area of regulation, as the petitioners have argued that the basis for the issuance of the rule in question by the Department of Commerce—namely, the Chevron deference doctrine—is wrong and should be either overturned or, alternatively, significantly narrowed so that it can’t be applied in either this case or in numerous other future cases.

The NLRB relies significantly on this deference not only when it goes through the rulemaking process, but also when the members of the board issue a case decision, believing that the Chevron doctrine will result in most of their decisions being upheld by the federal courts.

Depending on the outcome of the case, and how broadly the Supreme Court extends its ruling, multiple recent NLRB actions and decisions could end up in litigation and in serious jeopardy of being overturned by the courts. This includes recent rulemaking such as the new joint employer rule, and recent board rulings such as the Cemex decision, both of which made controversial changes to NLRB legal doctrine.

If Chevron were overturned completely, the most likely legal doctrine to replace it, barring specific Supreme Court guidance, would be from a 1944 U.S. Supreme Court case, Skidmore v. Swift. This doctrine states that while the interpretations and opinions of the federal agencies “do not control judicial decision, they do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.” In other words, the judges overseeing a case challenging an agency’s interpretation of an ambiguous federal statute could give as much or as little deference as that judge sees fit.

If Skidmore deference becomes the controlling legal doctrine for agency statutory interpretations, it could lead to forum shopping—at an even more prevalent rate than what exists today—by plaintiffs to find judges who are most likely to agree with their positions. Even if a rule or policy has existed for a sizable amount of time, its legal history wouldn’t have to be given any significant weight in a judicial decision. In the context of the NLRB, it could lead to a greater rate of challenge of the board’s rules and opinions, and an appellate panel could end up reversing the board at a higher rate, without being required to consider how the board’s decision was reached.

Better Insulation for the NLRB?

The good news for the NLRB is that it also relies on multiple other Supreme Court decisions, issued prior to Chevron, that proscribe significant deference to the agency’s expertise, insulating it more than other agencies from the probable consequences of having the Chevron doctrine rescinded.

NLRB agency officials have stated that if Chevron is overturned, the board could rely on Supreme Court precedent from the 1960s and 1970s that specifically instructs courts to defer to the board similarly to how Chevron states that courts should defer to federal agencies. These cases include NLRB v. Erie Resistor Corp., NLRB v. Iron Workers Local 103, and Ford Motor Co. v. NLRB.

These cases all hold that the courts are to grant deference to the board due to its special expertise in the labor relations field, unless the board’s interpretation of the NLRA is “unreasonable or unprincipled.”

Even if some form of Skidmore were to become the legal doctrine by which statutory interpretation actions by federal agencies are analyzed, the earlier Supreme Court precedents specifically grant the NLRB more substantive interpretive authority. In addition, because these precedents were issued after Skidmore, they would be the ones to be followed in cases involving the NLRB unless and until the Supreme Court says otherwise.

The Elon Musk Threat

Even if this insulation holds, and Loper Bright Enterprises fails to remove the teeth from the NLRB’s enforcement mechanism, there are other cases pending in the federal courts that have the combined potential to plunge a dagger into the agency’s heart within the next couple of years.

Elon Musk filed suit in January on behalf of his company, SpaceX, stating that the entire NLRB structure is unconstitutional. The lawsuit’s most overarching allegation is that the NLRB process violates companies’ right to a trial by jury as outlined in the Fifth Amendment. It also argues that for-cause limits on removing the agency’s administrative law judges and five board members violates the separation of powers and infringes on the executive powers outlined in the Constitution. The lawsuit has since been joined, either through separate lawsuits or supporting briefs, by nationwide corporations such as Amazon, Starbucks, and Trader Joe’s.

The Supreme Court has previously upheld the legality of the National Labor Relations Act, which includes the establishment of the NLRB, in NLRB v. Jones & Laughlin Steel Corp. The court has also upheld the authority of the NLRB to operate in the manner it does, as well as providing legal authority to its decisions, in NLRB v. Hearst Publications. Since that case was decided in 1944, the board’s legality has not been seriously challenged. However, there is a case that has been argued before the court this term that, while not dealing specifically with the powers and structure of the NLRB, could be used by Musk and his co-plaintiffs to make their argument when the trial in their case commences, depending on how the Supreme Court rules.

This case, SEC v. Jarkesy, hinges on whether the Securities and Exchange Commission’s structure of administrative judges—who have for-cause removal protection and the power to adjudicate enforcement proceedings that could result in civil penalties—is unconstitutional in a nearly identical way to how Musk is arguing that the NLRB’s enforcement structure is unconstitutional.

While a decision in Jarkesy’s favor wouldn’t immediately cause the dissolution of the NLRB, it would provide Musk and his co-plaintiffs with the basis to argue that the federal judiciary should rule in their favor, particularly since the enforcement mechanisms of the SEC and the NLRB are very similar. This would likely lead to the case being brought before the Supreme Court, and if the composition doesn’t change, it’s very likely that the justices would rule in the same manner as they do in the Jarkesy case. As a result, the NLRB would have no enforcement mechanism to carry out its mission.

Such an outcome would eventually leave those who seek remedies under the NLRA with only the courts to turn to, which would end up flooding the courts with even more litigation than they’re handling now and slowing down the enforcement process. That concern was brought up during the Jarkesy oral arguments by Chief Justice John Roberts and Associate Justice Amy Coney Barrett. Moreover, such a decision would likely lead to multiple inconsistent legal doctrines throughout the circuits, which means the Supreme Court would have to take more time to eventually rule on them, leaving federal labor relations policy in limbo for significant periods of time.

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