In issuing a preliminary injunction in Space Exploration Technologies Corp. v. National Labor Relations Board, No. 24-50627 (5th Cir. 2025), the U.S. Court of Appeals for the Fifth Circuit held that the structure of the National Labor Relations Board (NLRB) is likely unconstitutional. The Fifth Circuit's decision stems from challenges to the NLRB's structure, specifically the limitations on the president's ability to remove board members and administrative law judges (ALJs). The Fifth Circuit reasoned that these restrictions on removal powers, particularly concerning board members who wield executive power, violate Article II of the U.S. Constitution.
This decision stemmed from three consolidated cases brought by SpaceX – Elon Musk's aerospace company, Aunt Bertha and Energy Transfer LP (Appellees). In response to unfair labor practice charges (ULPs), these companies challenged the NLRB's authority to prosecute the cases against them, asserting that the NLRB's structure, specifically the limited removal power of board members and ALJs, is unconstitutional.
Background
History of the NLRB and Removal Process
The NLRB was created to provide a mechanism for employees to vindicate the rights provided to them under the National Labor Relations Act (NLRA). More specifically, the NLRB helps to resolve "industrial disputes arising out of differences as to wages, hours, or other working conditions." 29 U.S.C. § 151.
The NLRB is made up of a five-member board, with members serving five-year staggered terms. Board members may be removed by the president only "for neglect of duty or malfeasance in office" but not for inefficiency or any other reason. 5 U.S.C. § 2105.
ALJs are appointed by the five-member board. To remove an ALJ, the board members must bring an action before the Merit Systems Protection Board (MRSP), an independent federal agency, and the MRSP must determine that good cause for removal exists.
Underlying Cases
The Fifth Circuit considered three consolidated cases in its decision. The first of these cases, Space Exploration Technologies Corp. v. National Labor Relations Board, consisted of a request for a declaratory judgment and preliminary injunction based on the argument that "good cause" removal protections for NLRB members and ALJs were unconstitutional on the grounds that they interfered with the president's Article II removal power. In issuing a preliminary injunction, the U.S. District Court for the Western District of Texas stated there is no "dispute that there is a strong public interest in providing employees a mechanism to vindicate their NLRA rights," nor is there a dispute that "employers and labor unions should [not] be free from scrutiny of their practices." However, "Congress exceeds its power when it attempts to neuter the President's constitutional power to remove and control executive officers by conferring a web of removal protections upon NLRB's ALJs and the NLRB members."
In the second case, Energy Transfer, LP v. National Labor Relations Board, 742 F. Supp. 3d 755 (S.D. Tex. 2024), the U.S. District Court for the Southern District of Texas granted Energy Transfer LP's request for a preliminary injunction, finding Energy Transfer LP was likely to succeed on the merits based on its claim that the two-step removal process for an ALJ was unconstitutional because it prevented the president from fully exercising his power of removal under the Take Care Clause. Because the Court found a preliminary injunction was appropriate based on the first argument – for ALJ removal – it did not reach additional arguments.
In the final case, Aunt Bertha v. National Labor Relations Board, No. 4:24-cv-00798-P, 2024 WL 4202383 (N.D. Tex. Sept. 16, 2024), the U.S. District Court for the Northern District of Texas adopted the Energy Transfer court's reasoning in issuing the preliminary injunction.
Closer Look at Fifth Circuit Decision
District Courts Have Jurisdiction to Enjoin NLRB Proceedings
The Fifth Circuit made clear that district courts have authority to enjoin NLRB proceedings based on constitutional grounds, despite the Norris-LaGuardia Act's general limitation on injunctions in labor disputes. In its opinion, it distinguished substantive labor disputes and structural constitutional challenges, finding that the latter – which were present in the underlying cases – do not concern wages, hours or working conditions but rather the constitutionality of the agency's structure, a distinction critical to the court's jurisdictional analysis. The court emphasized that meaningful judicial review would be foreclosed if parties were forced to wait for the NLRB process to conclude as the issues asserted were outside of the NLRB's expertise, for which the Norris-LaGuardia Act was intended to protect.
ALJ Removal Process Likely Unconstitutional
The court next turned to whether the ALJ removal process was unconstitutional. In doing so, the Fifth Circuit relied on its precedent in Jarkesy v. SEC, where the court found the removal protections for the U.S. Securities and Exchange Commission's (SEC) ALJs were unconstitutional based on the two-layer removal process. The Fifth Circuit identified that "[i]f SEC ALJs' removal protections are unconstitutional, the same must be true of NLRB ALJs – whose powers are, if anything, more robust."
Board Member Removal Process Likely Unconstitutional
The Fifth Circuit reached a similar conclusion regarding the constitutionality of the Board member removal process. Although the NLRB invoked the Humphrey's Executor precedent – which allows Congress to limit the president's removal authority over officials of independent agencies performing quasi-legislative or quasi-judicial functions – the court found this exception inapplicable. The Fifth Circuit emphasized that the current structure of the NLRB differs substantially from the Federal Trade Commission model considered in Humphrey's Executor. Specifically, NLRB board members exercise significant executive power, and the NLRA does not include a statutory requirement for partisan balance. As a result, the court determined that the removal protections for board members are also likely unconstitutional.
Appellees Will Suffer Irreparable Harm Absent a Preliminary Injunction
Because it found the Appellees are likely to succeed on the merits, the Fifth Circuit considered whether they had established irreparable harm such that an injunction could issue. The Fifth Circuit adopted a "here-and-now" standard, holding that the injury arises the moment a party is compelled to participate before officials insulated from presidential removal and that such harm is immediate and irreparable. The injury is the process itself, not merely its outcome, and cannot be remedied after the fact. Notably, this approach diverges from the standards adopted by the U.S. Court of Appeal for the Tenth, Sixth and Second Circuits, which require a showing of causal harm, specifically proof that the unconstitutional removal provision affected the agency's action or the proceeding's outcome.
Severability Defense More Appropriate for Final Judgment
Finally, the Fifth Circuit declined to address whether the removal protections could be severed from the NLRA at the preliminary injunction stage, reserving the issue for final judgment.
Implications for Employers
The Fifth Circuit ruling will undoubtedly have implications for ongoing and future NLRB cases and may impact how the NLRB can enforce labor laws. It is likely the Fifth Circuit's ruling will lead to one of two outcomes:
- If the constitutional issues are ultimately resolved, either through severance of the offending removal provisions or legislative reform, the NLRB could resume proceedings on the affected ULPs and other cases, restoring its enforcement authority and allowing adjudication to continue under a constitutionally compliant structure.
- If the structural defects are not remedied, the NLRB may be unable to proceed with enforcement actions, potentially invalidating or indefinitely delaying a wide range of cases beyond the underlying cases where injunctions have issued. Though this outcome is less likely, it remains a possibility and could have far-reaching effects on labor law enforcement mechanisms.
Employers currently facing NLRB proceedings should consult with counsel to identify their ability to file for injunctive relief based on structural constitutional claims. There is also a question as to whether the Fifth Circuit's ruling could impact the enforceability of NLRB decisions issued under the current structure.
In addition to impacting NLRB matters, the Fifth Circuit's ruling may embolden challenges to other independent agencies with similar dual-layer removal protections. This could ultimately impact the structure and function of other federal agencies. In fact, the Fifth Circuit appears to be a favorable venue for constitutional challenges, as the court considered nearly identical issues in the Jarkesy matter, which led to significant changes in SEC enforcement practices.
Next Steps
There is little question as to whether the NLRB will appeal the Fifth Circuit's decision, potentially leading to U.S. Supreme Court review. Should the Supreme Court take up this issue, its decision regarding President Donald Trump's firing of NLRB member Gwynne Wilcox may shine light on the outcome.1
Employers should monitor this issue closely for potential Supreme Court review or congressional action in modifying the removal process.
Notes
1 When Gwynne Wilcox challenged her removal from the NLRB by President Trump, the Supreme Court stayed the lower court's reinstatement order, signaling that the president was likely to prevail in asserting constitutional authority to remove board members. The Court’s action underscores the growing judicial consensus that such removal protections may impermissibly constrain executive power.
