SpaceX v NLRB Lawsuit Currently Stays in Texas

Santa Clara, CAA 5th U.S. Circuit Court of Appeals on August 9th overturned—for now—a Texas federal judge’s decision that would have landed one of the rocket maker’s constitutional lawsuits against the National Labor Relations Board in California.

U.S. District Judge Rolando Olvera in February refused to reconsider an earlier ruling transferring the case from his Brownsville, Texas, court to Los Angeles. Olvera asserted that the structure of the National Labor Relations Board is unconstitutional and must be transferred to a federal court in Los Angeles. He said that, while SpaceX has a launch facility nearby, he agreed with the labor board that the case should instead be heard in California where the events that triggered the lawsuit occurred, explained Reuters.

The judge had ruled that SpaceX couldn’t stop its challenge to the constitutionality of the NLRB’s structure from transferring to California, saying Elon Musk’s aerospace company appealed to the Fifth Circuit months after the transfer order. But the Fifth Circuit said the lawsuit could still land in California, saying the NLRB could renew its transfer motion “if appropriate”.

The NLRB has said the claims about its structure lack merit and that the companies bringing the challenges are attempting to distract from their violations of federal labor law. (Similar claims the board faces involve Amazon.com, Starbucks, Trader Joe's, a Michigan hospital operator, a small Missouri bank, and a film producer, and more.)

SpaceX v. NLRB

Eight SpaceX employees in June 2024 sued the company and Elon Musk, claiming they were wrongfully terminated after circulating a memo raising concerns about sexual harassment and discrimination at the rocket company led by Musk.

The workers were fired in 2022 after they circulated an open letter urging SpaceX executives to condemn Mr. Musk’s comments on Twitter, later renamed X, which amounted to “a frequent source of distraction and embarrassment for us.” After being made aware of the letter, Mr. Musk ordered the terminations, according to the complaint, and reported by The New York Times.

The lawsuit was filed in California state court in Los Angeles. It referred to SpaceX’s workplace as an “Animal House” filled with inappropriate and sexually suggestive behavior. Some plaintiffs claimed they were harassed from other SpaceX employees that “mimicked Musk’s posts,” which created “a wildly uncomfortable hostile work environment.” Further, SpaceX executives were constantly made aware of grievances about Musk’s explicit social media messages, but the complaints were routinely dismissed, even after a “sexual harassment internal audit” conducted by SpaceX’s president and chief operating officer.

The plaintiffs filed charges in January 2024 against SpaceX with the National Labor Relations Board. One day after the agency issued the complaint, SpaceX retaliated and sued the labor board to dispute the charges, arguing that the complaint should be dismissed because the structure of the agency is unconstitutional. (The NLRB's general counsel acts like a prosecutor and brings cases to the five-member board appointed by the president. If the NLRB finds that firings violated labor law, it can order that workers be reinstated and given back pay. If SpaceX is found to have violated the law, it could also face steeper penalties in future cases before the board.)

“We hope that this lawsuit encourages our colleagues to stay strong and to keep fighting for a better workplace,” Paige Holland-Thielen, one of the plaintiffs, said in a statement and Reuters reported. And Deborah Lawrence, one of the employees who was fired, said that “SpaceX has a ‘toxic culture’ where harassment is tolerated, particularly against women…We wrote the open letter to leadership not out of malice, but because we cared about the mission and the people around us.”

The case is SpaceX v. NLRB, 5th U.S. Circuit Court of Appeals, No. 24-40315.