Musk’s Tesla Union Tweet Sets Up Speech Clash at Fifth Circuit

Tesla Inc. will defend company CEO Elon Musk’s tweet about workers losing stock options as a consequence of unionization during oral argument before a full federal appeals court known for its politically conservative rulings.

The US Court of Appeals for the Fifth Circuit is set Thursday to reconsider a National Labor Relations Board decision that Musk’s tweet illegally threatened workers with the loss of benefits if they unionized, a conclusion that a three-judge circuit panel upheld last year.

People like Musk are the only ones who can afford to fight the government over a single tweet, but the impact of the case “goes far beyond Elon Musk,” said Kara Rollins, an attorney with the New Civil Liberties Alliance, which filed an amicus brief backing Tesla.

“This is really about fundamental First Amendment interests in relation to the National Labor Relations Act, which has some limited speech controls,” she said. “This case looks at that provision of the NLRA and the First Amendment through the lens of social media.”

The debate over Musk’s tweet poses questions about the role of context in determining whether employer speech qualifies as a threat under federal labor law, as well as the potency of NLRB determinations that certain statements crossed a legal line.

The full Fifth Circuit’s decision in the case could weaken the NLRB’s authority to police employers’ speech for threats and coercion.

The case’s potential for broad impact is tied to the interplay—and balance of power—between the NLRB and federal circuit courts. While companies can challenge NLRB rulings in federal courts of appeals, the board also needs courts to enforce them to prevent employers from ignoring its edicts with impunity.

Question of Deference

Judicial review of board decisions is limited and deferential. Courts accept the NLRB’s factual findings as long as they’re supported by substantial evidence, and judges generally respect the board’s expertise when assessing its application of the law to the facts.

The Fifth Circuit panel used a deferential standard when it affirmed the NLRB’s ruling against Musk’s tweet, saying it was required for a review of a board decision on whether workers would reasonably view a statement as a threat.

Tesla, however, has argued that the US Constitution requires the court to pay no deference to the NLRB’s take on the First Amendment issues in the case.

Although the company’s position is contrary to settled law, the Fifth Circuit’s recent decisions rolling back agency power suggest the court may be open to change, said Jeffrey Hirsch, a workplace law professor at the University of North Carolina.

Tesla’s argument on deference—if accepted by the appeals court—could create obstacles for NLRB enforcement against coercive speech as well as the board’s use of statements as evidence for other violations, such as firing workers for their union activities, said Hirsch, a former NLRB appellate lawyer.

“If you imagine the broadest, most aggressive decision from the Fifth Circuit, it could not only blow up NLRB law, it could also be applicable to employment discrimination,” he said. “All of these types of cases frequently use statements by employers or individuals as evidence of motive or intent.”

Full Court Rehearing

The case stems from Musk’s response to a question on Twitter about his views on unions. Musk made this comment about four years before he bought Twitter, fired most of the social media platform’s employees, and renamed it X.

The NLRB ruled that the tweet, which came amid the United Auto Workers’ campaign to represent Tesla workers, was an illegal threat and ordered the company to make Musk delete it.

A Fifth Circuit panel affirmed that decision, pointing to circuit precedent going back 60 years that upheld NLRB findings that similar employer statements were threats. The panel was composed of Judges James Dennis, a Clinton appointee; Leslie Southwick, a George W. Bush appointee; and Cory Wilson, a Trump appointee.

A few months later, the full Fifth Circuit granted the company’s request to reconsider the NLRB’s ruling.

Any of the Fifth Circuit’s 17 active-status judges—made up of 12 Republican appointees and five Democratic appointees—can sit on the en banc panel rehearing of the case. Dennis, who took senior status in 2022, can also participate because he was on the original three-judge panel.

The US Chamber of Commerce and other employer groups filed an amicus brief supporting Tesla’s en banc appeal.

Debating Bose

Musk wasn’t threatening employees with his spontaneous comment to a non-employee during an exchange on Twitter, and the NLRB’s move to make a “federal case” out of it reflects the agency’s desire to “enforce a hardline view against employers’ criticisms of unionization,” Tesla said in its brief to the Fifth Circuit.

The company’s argument that the court need not defer to the NLRB’s threat ruling largely rests on the US Supreme Court’s 1984 decision in Bose Corp. v. Consumers Union of the United States Inc. The justices upheld an appellate court’s non-deferential review of a lower court’s ruling on First Amendment protections in a product disparagement case.

Bose created the requirement that an appellate court must independently review judge or jury decisions on free speech issues, the company said.

“It would be backwards, under the Constitution’s separation of powers, to afford more deference to the findings of politically motivated executive branch officials than courts afford to findings by judges and juries,” Tesla said.

But Tesla failed to cite any cases extending Bose to overrule the deferential substantial-evidence test for a federal agency’s factual findings, while the Sixth, Seventh, and District of Columbia circuits have refused to do so, the NLRB said in its brief.

“Meanwhile, over the four decades since Bose, circuit courts have unanimously continued to apply substantial-evidence review,” the board said. “That leaves Tesla to make the remarkable claim that every circuit—including this one—has been applying the wrong standard to the Board’s findings of unlawful coercion for nearly 40 years.”

Musk has the right to speak out against unionization, but not threaten the loss of benefits as a result of his workers choosing a union, the NLRB said. The context of his tweet, including the company’s many unfair labor practices, increased its coercive power, the board said.

NLRB spokesperson Kayla Blado declined to comment. Tesla’s lawyer, Michael Kenneally of Morgan, Lewis & Bockius LLP, and the UAW’s attorney, Daniel Curry of Schwartz, Steinsapir, Dohrmann & Sommers LLP, didn’t respond to requests for comment.

The case is Tesla Inc. v. NLRB, 5th Cir., No. 21-60285, oral argument scheduled 1/25/24.