Amazon, SpaceX Take Assaults on Labor Board to Fifth Circuit

Amazon.com Inc. and SpaceX will try to convince a federal appeals court that elements of the National Labor Relations Board violate the Constitution, potentially creating legal issues that would be difficult for the US Supreme Court to ignore.

The two companies—founded by the world’s two richest men—will each square off against the New Deal agency that protects workers’ unionizing rights during separate oral argument sessions at the US Court of Appeals for the Fifth Circuit on Nov. 18.

The Fifth Circuit has played a central role in the intensifying constitutional attacks on the NLRB. District courts in Texas, one of three states covered by the Fifth Circuit, have granted the only preliminary injunctions to block agency proceedings based on constitutional arguments.

Every court outside of the Fifth Circuit’s boundaries to rule on bids for court orders against the NLRB for alleged constitutional defects have rejected them, according to a Bloomberg Law review of cases.

Those plaintiff wins are chiefly a product of district judges applying Fifth Circuit precedent to find fault with the legal shield that protects NLRB administrative law judges from being fired by the president, which is one of several constitutional claims the agency faces.

The Fifth Circuit has become a magnet for employers trying to create jurisdictional hooks to take advantage of the court’s “doctrinal lurches,” said Sharon Block, a law professor and executive director of Harvard University’s Center for Labor and a Just Economy.

“The impact of what the Fifth Circuit is doing goes way beyond employers in Texas, Louisiana, and Mississippi,” said Block, a former NLRB member. “It’s a national problem already.”

A Fifth Circuit ruling finding a part of the NLRB’s structure unconstitutional would virtually guarantee companies could stop the agency from prosecuting an unfair labor practice case against them, provided they can sue within the circuit’s boundaries.

The court would have to review such a ruling, given the ability of employers—especially large companies operating nationwide—to establish jurisdiction in the Fifth Circuit, Block said.

Appeals of Effective Denials

The Amazon and SpaceX cases show how employers can find ways to establish jurisdiction in Fifth Circuit.

Amazon sued the NLRB in Texas federal court to block cases related to workers at the e-commerce giant’s Staten Island warehouse unionizing in 2022. One of the cases at issue was transferred at Amazon’s request to the NLRB’s Phoenix regional office, which covers western portions of Texas, plus the company said some of the Staten Island workers have transferred to the Lone Star State.

SpaceX filed its lawsuit in Texas in response to agency prosecutors’ allegations that the aerospace firm illegally fired workers in California. The federal judge assigned to the case twice ordered its transfer to California. It took SpaceX three tries to convince the Fifth Circuit to keep the case in Texas.

Amazon and SpaceX also took the same unconventional path to get their NLRB proceedings halted and their cases before the Fifth Circuit.

Both companies set their own deadlines for when the judges in their respective cases needed to rule on their preliminary injunction requests.

When the judges didn’t meet the companies’ deadlines, they each called it an effective denial of their injunction request and went to the Fifth Circuit. The circuit court summarily halted the NLRB proceedings while it considers the companies’ appeals.

Exit Ramps From Merits

Both Amazon and SpaceX have argued in their briefs that three elements of the NLRB’s structure violate the Constitution: removal protections enjoyed by board members; the agency’s adjudication of labor law claims absent a jury; and the board members authorizing the agency to seek court injunctions in the same cases that they will ultimately rule on.

SpaceX is also pressing a fourth constitutional claim that challenges administrative law judges’ removal protections.

The NLRB defended the constitutionality of the agency’s structure in its briefs to the Fifth Circuit, while also giving the court multiple off-ramps to resolve the companies’ appeals without reaching the merits of their arguments.

For example, the NLRB said that the appeal isn’t properly before the court because there weren’t effective denials of their injunction requests. The Fifth Circuit indicated that a party can’t get an appeal just because a trial court didn’t act as swiftly as it wanted, the agency said, citing a 2024 ruling.

The NLRB also raised other jurisdictional arguments and asserted the companies failed to show the necessary harm from the agency’s allegedly unconstitutional elements.

While the Fifth Circuit is known for its strong conservative leanings, the three-judge panel that will review both cases includes two appointees by Democratic presidents. The panel is composed of Judges Priscilla Richman, a George W. Bush appointee; James E. Graves, an Obama appointee; and Irma Carrillo Ramirez, a Biden appointee.

Even if the panel sides with the NLRB, however, the full Fifth Circuit could call for rehearings to consider the constitutional issues, said William Gould, a former NLRB chairman.

“I don’t know about these three judges,” he said, “but the court overall might want to dive directly into the merits.”

The cases are Amazon.com Services LLC v. NLRB, 5th Cir., No. 24-50761, oral argument scheduled 11/18/24 and Space Exploration Technologies Corp. v. NLRB, 5th Cir., No. 24-40315, oral argument scheduled 11/18/24.