Amazon, SpaceX challenge federal labor board in Fifth Circuit

(CN) — In a pair of cases that may foreshadow the targeted deregulation of federal agencies under President-elect Donald Trump, a panel of judges at the Fifth Circuit Court of Appeals heard arguments Monday about the constitutionality of the National Labor Relations Board.

The separate but similar cases were filed by Amazon after the NLRB accused the company of refusing to collectively bargain with workers who voted to unionize in 2022 and by SpaceX after the NLRB determined it had retaliated against workers who spoke out against the leadership of CEO Elon Musk.

In response, the companies attacked the organizational structure of the five-member board by claiming it fails to follow bedrock principles of separation of powers by both investigating and adjudicating labor complaints, rather than providing a trial by jury.

Under President Joe Biden, NLRB General Counsel Jennifer A. Abruzzo has aggressively sought to punish employers for engaging in anti-union tactics. But, as Musk himself seems to have found a seat at the table of Trump’s second term, questions loom about potential changes to the structure and mission of the NLRB and other federal agencies.

On Monday, Amazon attorney Trevor S. Cox argued the NLRB also “lacks the mandatory partisan balancing requirement” of other agencies like the Federal Trade Commission and the Consumer Product Safety Commission, creating “excessive insulation” from presidential oversight.

The agency’s board members and general counsel are appointed by the president, but board members enjoy broad protections from removal during their staggered 5-year terms, amounting to an Article II violation. Meanwhile, the agency’s practice of allowing administrative law judges “to adjudicate private rights and award legal relief through juryless administrative proceedings” violates the Seventh Amendment.

“Due process guarantees that no man can be a judge in his own case,” Cox told the panel. “And on this very unusual set of facts, Amazon asks for a [preliminary injunction] to pause the administrative proceedings while its claim is litigated to prevent board members from being permitted to sit in judgment of their own conduct.”

Similarly, SpaceX attorney Michael E. Kenneally said the company seeks a preliminary injunction against the NLRB’s unfair labor practices proceeding because of the onerous layers of protection from removal afforded to the board members, in violation of the separation of powers.

Amid a controversy over whether the failure of the NLRB to reach a timely decision amounted to an “effective denial” of Amazon’s motion for relief, U.S. Circuit Court Judges James Earl Graves Jr. and Irma Carrillo Ramirez repeatedly questioned the appellate court’s jurisdiction. Graves, an appointee of President Barack Obama, pressed Cox over why Amazon submitted a critical supplemental briefing to the agency the same day it needed a decision.

“You wanted [the judge] to receive the briefing, read it, review it, vet it, and rule on it all on the [same day]? That seemed reasonable to you at the time?” he asked.

Cox said Amazon’s hands were tied by the NLRB’s unreasonable deadlines and the agency refused to stay proceedings while the claims were litigated. Both Cox and Kenneally leaned heavily on the recent Supreme Court cases Axon Enterprise Inc. vs. Federal Trade Commission and** Securities and Exchange Commission vs. Jarkesy ** to support the companies’ constitutional standing against the NLRB and other federal agencies.

For the NLRB, attorney Tyler James Wiese argued lacks jurisdiction because precedent demands that “appellate jurisdiction based on effective denials should be limited as it interferes with the regular operation of the courts and invites precisely the type of mischief Amazon has brought here.”

Wiese further faulted Amazon for not raising its constitutional claims until the appeal.

U.S. Circuit Court Judge Priscilla Richman, a George W. Bush appointee, also served on the panel. Ramirez is an appointee of President Joe Biden.

On behalf of the employee’s union, attorney Julie Gutman Dickinson told the panel she used to work for the NLRB and she has never seen the agency issue a decision the same day a briefing is filed. It usually takes weeks or months, she said. Therefore, its failure to do so cannot constitute an effective denial.

“Amazon has improperly bypassed the district court and attempted to turn this court from a court of appeals to a court of first impression,” Dickinson argued, warning that a favorable ruling would “chill workers throughout the country from exercising their rights, and threatens chaos and industrial strife.”

Kenneally suggested the government is relying on procedural objections because it cannot win an argument on the merits. He also noted the Fifth Circuit has enjoined the NLRB three times previously on grounds of constitutionality. But like Cox, he was forced to defend the court’s jurisdiction.

Graves accused the attorney of minimizing procedural requirements. Kenneally denied that and emphasized that the company was at the whim of the NLRB’s scheduling. “I’m not trying to attack the procedural issues at all, I just don’t think that they’re a basis for avoiding the merits,” he said.

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