Labor & Employment Law Daily Wrap Up, LABOR—5th Cir.: Court affirms injunctions against ULP proceedings pending constitutional challenges to NLRB structure, (Aug 20, 2025)

By Jason Albright, J.D.

“Unlike the FTC commissioners in 1935, NLRB Board Members today ‘wield substantial executive power.’”

SpaceX and two other employers were entitled to preliminary injunctions halting unfair labor practice proceedings against them pending the employers’ constitutional challenges to the structure of the NLRB, the Fifth Circuit affirmed. Finding that both the Supreme Court and the Fifth Circuit have declined to extend Humphrey’s Executor to agencies that are not a “mirror image” of the Federal Trade Commission, the appeals court concluded that the employers are likely to succeed on the merits of their challenge to the Board members’ removal protections. In addition, “forcing the Employers to appear before an unconstitutionally structured agency inflicts irreparable harm,” and the public interest does not suffer where “an unlawful agency structure is prevented from subjecting ‘countless individuals and companies’ to unconstitutional proceedings,” said the court. Judge Wiener dissented in part (Space Exploration Technologies Corp. v. NLRB, Nos. 24-50627, 24-40533, and 24-10855 (5th Cir. Aug. 19, 2025)).

SpaceX. SpaceX is a private aerospace company dedicated to a stated mission of “making life multiplanetary.” It employs thousands of workers nationwide in rocket development and testing, rocket manufacturing, and spaceflight operations.

ULP charges. In December 2022, a former SpaceX employee filed an unfair labor practice (ULP) charge with the NLRB. After investigating, the Board’s regional office issued a complaint in March 2024 alleging that SpaceX’s severance agreements violated the NLRA.

Preliminary injunction issued. An administrative hearing was set for October, but in April 2024, SpaceX filed suit in a federal district court in the Western District of Texas, asserting that the NLRB’s ALJs and Board members are unconstitutionally shielded from presidential removal. SpaceX moved for a preliminary injunction, which the district court granted.

In granting relief, the court held that the removal provisions for both Board Members and ALJs were unconstitutional; that SpaceX had shown irreparable harm absent relief; and that blocking unlawful agency action would not cause any cognizable public harm.

Consolidated appeals from Texas federal district courts. The NLRB timely appealed, and the Fifth Circuit consolidated the appeal with those in cases involving two similar injunctions issued by federal district courts in the Southern and Northern Districts of Texas, respectively.

ALJs’ protections. Agreeing with the employers that the possibility of severance has no bearing at the preliminary injunction stage, the appeals court first observed that Fifth Circuit precedent holds that the tenure protections of the Board’s ALJs are unconstitutional. As the appeals court concluded in Jarkesy v. Securities & Exch. Comm’n, 34 F.4th 446, 463 (5th Cir. 2022), aff’d and remanded, 603 U.S. 109 (2024), SEC ALJs are “inferior officers... because they ha[d] substantial authority within SEC enforcement actions,” and because their removal protections left the SEC’s principal officers unable to “intervene in their inferior officers’ [the ALJs] actions except in rare cases,” the President, by extension, unconstitutionally “lack[ed] the control necessary to ensure that the laws [were] faithfully executed.” The same analysis, the appeals court said, applies here, where the NLRB ALJs are protected by “at least two layers of for-cause protection.”

Because NLRB ALJs are inferior officers insulated by two layers of for-cause protection, the Fifth Circuit thus found, the removal restrictions applicable to them are unconstitutional.

Board members’ protections. The appeals court came to the same likely conclusion with respect to the for-cause removal protections applicable to members of the Board itself. “Both the Board Members and the General Counsel wield prosecutorial power,” said the Fifth Circuit. “But while the General Counsel is politically accountable, the Board Members are not.”

Unlike the FTC in Humphrey’s Executor, moreover, the NLRB “has no statutory party-balancing requirement,” observed the appeals court. The Supreme Court, it noted, “has cabined Humphrey’s Executor as ‘permit[ting] Congress to give for-cause removal protections to a multimember body of experts’ where that body is statutorily ‘balanced along partisan lines,’” but “[t]hat is not true of the NLRB,” the Fifth Circuit asserted. “A President may fill four of its five seats with members of his own party, and the Board’s work is widely acknowledged as politically charged. This absence of structural balancing undermines the ‘independence’ rationale underlying Humphrey’s Executor.”

Not a “mirror image” of the FTC. Admitting that “the merits question for Board Members’ removal protections is a closer call than for ALJs,” the appeals court nonetheless concluded, “But both the Supreme Court and this circuit have declined to extend Humphrey’s Executor to agencies that are not a ‘mirror image’ of the FTC. The NLRB’s structure and powers take it outside that narrow exception.”

The Fifth Circuit thus found that the employers are likely to succeed on the merits of their challenge to the Board members’ removal protections.

Irreparable harm. As to the next preliminary injunction factor, the appeals court found irreparable harm, citing Axon Enter., Inc. v. Fed. Trade Comm’n, 598 U.S. 175 (2023), based on the “here-and-now injury” of “being subjected to unconstitutional agency authority.”

Equities, public interest, and “unlawful agency structure.” Finally, the balance of the equities and the public interest, which “merge when the Government is the opposing party,” supported a preliminary injunction, according to the Fifth Circuit. The government, observed the court, suffers no cognizable injury when a court halts unlawful agency action, and the public interest does not suffer “when an unlawful agency structure is prevented from subjecting ‘countless individuals and companies’ to unconstitutional proceedings.”

Partial dissent. Concurring in part and dissenting in part, Judge Wiener wrote to express his disagreement with the majority’s conclusion that the employers have satisfied the irreparable-harm prong of the preliminary injunction analysis “by simply alleging they suffer a ‘here-and-now’ injury.” “The Supreme Court has plainly indicated,” Wiener noted, “that parties are not automatically subject to the authority of ‘illegitimate’ officers who might be protected by unconstitutional removal provisions, as that only occurs when such officers are unconstitutionally appointed. It follows logically that we must require the Employers to allege some type of causation between the unconstitutional removal provision and their injuries to be entitled to injunctive relief, as other circuits have expressly stated.”

The case is Nos. 24-50627, 24-40533, and 24-10855.

Judge: Willett, D.

Attorneys: Michael E. Kenneally (Morgan, Lewis & Bockius) for Space Exploration Technologies Corp. David P. Boehm for the NLRB, Jennifer Abruzzo, and Marvin Kaplan.

Companies: Space Exploration Technologies Corp.

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