A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit has upheld three orders that bar the National Labor Relations Board from pursuing unfair labor practice cases against SpaceX and two other employers.
Most significantly, the panel found that (1) the statutory restrictions on involuntary termination of NLRB members were “likely” to violate the U.S. Constitution, (2) statutory restrictions on involuntary termination for NLRB administrative law judges did violate the U.S. Constitution, and (3) a 1935 U.S. Supreme Court decision upholding termination protections did not apply to the National Labor Relations Act.
The court’s decision is bad news for NLRB Member Gwynne Wilcox, who was fired by President Trump shortly after he took office in January and has been challenging her termination in court.
The removal protections at issue
The NLRA provides that Board members can be terminated from office during their terms only for “neglect of duty or malfeasance in office.” Another statute provides that Board administrative law judges are subject to involuntary termination only “for good cause” after a finding of the Merit Systems Protection Board. ALJs who are challenging terminations of employment have the right to a hearing before the Merit Systems Protection Board, which itself is based on a statute with removal protections for its members.
The statutory removal protections, if valid, would restrict the power of the President under Article II of the Constitution to remove and appoint personnel to Executive Branch agencies.
The SpaceX decision
The NLRB had brought separate unfair labor practice complaints against SpaceX and the other two companies. Each of the companies filed lawsuits in federal court, contending that the removal protections for NLRB members and for ALJs were unconstitutional. The lower courts agreed and granted the companies’ motions for preliminary injunctions. The cases were then consolidated for appeal to the Fifth Circuit.
The Fifth Circuit panel consisted of Judges Donny Willet, Stuart Kyle Duncan, and Jacques Wiener, Jr. Judges Willet and Duncan were appointed by President Trump, and Judge Wiener was appointed by President George H.W. Bush.
The constitutional issue
The panel concluded that the 1935 case of Humphrey’s Executor – which upheld removal protections for commissioners on the Federal Trade Commission – should be narrowly applied. In Humphrey’s Executor, the Supreme Court held that removal protections for high-level officials of a multi-member expert agency are not unconstitutional if the agency does not wield substantial executive power and is essentially an independent, quasi-judicial or quasi-legislative body. Recent decisions have interpreted Humphrey’s Executor narrowly.
Because members of the NLRB do have and exercise substantial executive power, the panel said, Humphrey’s Executor “likely” does not apply to the NLRB. The panel cited the substantial executive powers the NLRB wields, including the authority (1) to determine bargaining units and direct representation elections, (2) to adjudicate unfair labor practice cases, (3) to seek enforcement of Board orders in federal court, (4) to appoint inferior personnel, and (5) to petition federal courts for injunctive relief against alleged unfair labor practices. The panel also noted that the NLRB was not statutorily balanced along partisan lines, as was the FTC in 1935, and that the absence of structural balancing undermined, for the NLRB, the independence rationale of Humphrey’s Executor.
With respect to the ALJs, the panel applied its 2022 decision in Jarkesy v. Securities and Exchange Commission. In that decision, the Fifth Circuit held unconstitutional double-layered job protections for SEC administrative law judges that were “nearly identical” to those of the NLRB judges. If anything, the SpaceX panel said, administrative law judges for the NLRB have more authority than their counterparts at the SEC. The NLRB judges have the power to penalize parties for misconduct, and their decisions more often become final without Board-level review.
Irreparable harm
Among other things, a court has to find that the party seeking a preliminary injunction will suffer “irreparable harm” if the court does not grant the injunction.
In the SpaceX case, the panel said that forcing employers to appear in a proceeding before an unconstitutionally structured government agency is, in itself, irreparable harm. The panel relied on Axon Enterprise, Inc. v. FTC, a 2023 decision in which the U.S. Supreme Court held that a party challenging the constitutionality of the FTC’s statutory structure was not required to first exhaust the agency’s administrative procedure. According to the SpaceX panel, “The Employers have made their case and should not have to choose between compliance and constitutionality. When an agency’s structure violates the separation of powers, the harm is immediate –and the remedy must be too.”
The panel added, "Binding precedent, first principles, and common sense align: Forcing the employers to appear before an unconstitutionally structured agency inflicts irreparable harm.”
Back to Gwynne Wilcox
In January 2025, President Trump fired NLRB Member Gwynne Wilcox, a Democrat appointed by President Biden, whose term was not set to expire until 2028. Ms. Wilcox sued, and in defense of the termination, President Trump and his appointed NLRB Chairman argued that Humphrey's Executor did not apply to the NLRB. Ms. Wilcox initially won an injunction, but in May 2025, the U.S. Supreme Court stayed that order. The stay indicated that President Trump might ultimately prevail on the argument that the President has the authority to terminate Board members with or without cause, despite the removal protections in the NLRA. The Wilcox case is now before the U.S. Court of Appeals for the District of Columbia Circuit for a decision on the merits.
The wait continues. For the time being, the five-seat NLRB has only two members -- Chairman Marvin Kaplan (R) and Member David Prouty (D) -- and no quorum.
