District Court Rules That President May Fire NLRB Judges

The U.S. District Court for the District of Columbia ruled on Dec. 10 that the president may fire National Labor Relations Board (NLRB) administrative law judges (ALJs) and that the judges’ protections against being fired are unconstitutional. We’ve gathered articles on the news, as well as previous NLRB challenges, from SHRM and other trusted outlets.

‘Byzantine Process’

The court said the in-house judges’ layered removal protections amount to a “byzantine process” that “eviscerates the president’s ability to control NLRB ALJs.” The decision is the first win outside the 5th U.S. Circuit Court of Appeals or one of the district courts within the 5th Circuit for the many companies that have raised constitutional challenges to the NLRB’s structure.

In this case, the NLRB charged an acute-care Massachusetts hospital—VHS Acquisition Subsidiary Number 7, doing business as Saint Vincent Hospital—with violations of federal law. But the NLRB delegated adjudication of the matter to an ALJ who enjoyed multiple levels of protection from presidential removal. The hospital, which moved for summary judgment as to the removal restrictions on ALJs, claimed these protections were unconstitutional. The court agreed.

Neither of the parties to the lawsuit immediately commented. The case is VHS Acquisition Subsidiary Number 7 Inc. v. NLRB. 

(Bloomberg Law and U.S. District Court decision)

SpaceX’s Constitutional Challenge

SpaceX’s constitutional challenge to the NLRB got a boost from a U.S. Supreme Court decision issued in June. Earlier this year, SpaceX—a spacecraft manufacturer, defense contractor, and satellite communications company founded and run by Elon Musk—challenged the NLRB’s structure as unconstitutional because its ALJs and members can only be fired for cause. 

(SHRM)

Decision on SEC May Affect NLRB

The Supreme Court’s ruling in SEC v. Jarkesy on June 27 stripped the Securities and Exchange Commission’s (SEC’s) ability to recover civil penalties for fraud at administrative proceedings. In its decision, the court said the Constitution requires the government to seek civil penalties for federal securities fraud before a jury in federal court rather than before the SEC. Court observers said the decision might lead to similar limitations on the enforcement authority of the NLRB.

(SHRM)

Lower Court Rules for SpaceX

A federal district judge in Texas said he would block the NLRB from pursuing claims that Musk’s SpaceX forced workers to sign illegal severance agreements, pending the outcome of the rocket maker’s challenge to the agency’s structure. 

The judge issued an order on July 23 granting SpaceX’s motion for a preliminary injunction, finding a substantial likelihood of success on its argument that the NLRB’s ALJs and members are unconstitutionally insulated from removal. The NLRB has appealed this decision to the 5th Circuit.

(Reuters and Perkins Coie)