Labor Law Gap Remains in Fifth Circuit Until High Court Rules

The National Labor Relations Board has a Fifth Circuit-sized hole in its enforcement of federal labor law, and it’s likely to persist at least until the US Supreme Court rules on the president’s power to fire board members.

The justices Monday agreed to consider the validity of Federal Trade Commission members’ removal protections before a circuit court weighed in on the issue, even as they rejected fired NLRB member Gwynne Wilcox’s bid for the same. The high court said it will hear the FTC case in December, which could delay resolution of Wilcox’s case—depending on how it rules.

For now, employers are seemingly guaranteed to win court orders to halt ongoing unfair labor practice cases at the NLRB if they can sue the agency in Texas, Louisiana, or Mississippi, where they can take advantage of a recent ruling from the US Court of Appeals for the Fifth Circuit.

The appeals court changed the playing field by finding that SpaceX and two other employers that challenged the constitutionality of the NLRB’s structure deserved to win preliminary injunctions that stopped underlying administrative proceedings at the agency.

That ruling’s potential for employers is amplified by jurisdictional standards that have allowed companies to litigate lawsuits against the NLRB within the Fifth Circuit even when they appear to stem from elsewhere.

Amazon.com Inc., for example, sued the NLRB in Texas to block an unfair labor practice case stemming from a historic unionization vote at a New York warehouse. One of SpaceX’s constitutional challenges in a Texas courthouse arises from a ULP case based in California. And a Texas judge rejected the NLRB’s request to transfer a case involving a marine construction company to California.

Texas is primed to become an even more popular venue based on two findings from the Fifth Circuit’s SpaceX v. NLRB decision: board members’ shields against being fired without cause likely violating the Constitution, and administrative law judges’ two-layer removal protections being unconstitutional.

The number of constitutional lawsuits against the NLRB dropped this year after a 2024 surge.But that pattern has changed in the wake of SpaceX, with employers filing about twice as many in the past 30 days as they had during the prior eight months.

The NLRB still has time to ask the full Fifth Circuit to reconsider SpaceX. But absent the agency seeking—and winning—en banc reversal, employers will be able to take advantage of that precedent to stop ULP cases for the foreseeable future, said Jennifer Abruzzo, who served as the agency’s general counsel during the Biden administration.

“Unless an en banc Fifth Circuit reverses, I don’t see how this gets resolved until the Supreme Court decides the Wilcox case,” said Abruzzo, now a senior adviser for the Communications Workers of America and of counsel with Bush Gottlieb.

Disarming SpaceX

The Supreme Court temporarily blocked district judges’ rulings that would have reinstated Wilcox and Merit Systems Protection Board member Cathy Harris, saying they’re likely to lose.

Wilcox and Harris await a DC Circuit ruling on their removals following joint oral argument in May.

Regardless of what the DC Circuit decides, the Supreme Court will need to resolve the constitutionality of Wilcox’s job safeguards for the agency to fully function, said Anne Lofaso, a University of Cincinnati labor law professor.

The high court eventually upholding or nullifying Wilcox and Harris’ job protections would take that issue off the table for employers suing to freeze NLRB cases. But a decision against their job safeguards could also defuse constitutional challenges against NLRB administrative law judges’ firing shields, legal observers said.

Those claims depend on Supreme Court precedent that bars “inferior officers”—a designation covering ALJs—from having multiple layers of removal protections. The NLRB, whose members have removal protections, can only fire ALJs upon a finding of good cause by the MSPB, whose members have removal protections.

Taking away job safeguards for NLRB and MSPB members would leave just one layer of protection, likely undermining the constitutional claims against ALJs’ safeguards.

A Ninth Circuit panel indicated as much in August, telling Amazon that the Supreme Court signaling it’s likely to invalidate Wilcox’s removal protections hurts its chances to win an injunction.

If an employer amended its claim to challenge ALJs’ single, direct layer of removal protections, it would go against a very long line of precedent suggesting that inferior officers can have tenure protections when principal officers can be removed, said Ilan Wurman, an administrative law professor at the University of Minnesota.

SpaceX will continue to restrict the NLRB until both the member and judge removal protection issues are resolved.

Significant Impact

Companies looking to take advantage of SpaceX should do so promptly, said Marc Antonetti, a management-side labor lawyer at Baker & Hostetler LLP.

“If you go through a whole trial and a decision is issued, it might be too late,” he said.

Depending on the situation, getting an unfair labor practice case temporarily frozen can have significant impacts.

Amazon, for example, sued in a Texas federal court to block the NLRB from moving forward with a case accusing the online retailer of failing to bargain with the union representing thousands of workers at its facility in Staten Island, N.Y.

The Fifth Circuit halted the NLRB’s case last September, which prevented the NLRB from ruling while the board had a functioning quorum and was controlled by a Democratic majority.

Although the appeals court eventually rejected Amazon’s argument, its stay order appears to remain in place due to unusual procedural steps.

Amazon spokesperson Eileen Hards said the company disagrees with the outcome of the election at the Staten Island facility and, because of NLRB and union interference, doesn’t believe it represents what the majority of workers there want.

But an attorney who formerly represented the Amazon Labor Union said the case reveals deep problems.

“In my opinion, there is no effective National Labor Relations Act, and there certainly isn’t one in the Fifth Circuit,” said Seth Goldstein of Goldstein & Singla PLLC.