SpaceX is trying to take down the NLRB after a group of employees wrote an open letter denouncing Elon Musk's embarrassing behavior

SpaceX filed suit against the NLRB alleging its proceedings are unconstitutional after the NLRB argued SpaceX violated federal labor laws.

• Elon Musk's SpaceX has filed suit against the NLRB, arguing its proceedings are unconstitutional.
• The suit follows an NLRB accusation that SpaceX illegally fired employees who complained about Musk.
• SpaceX's suit could have wide-reaching impacts on federal agencies if successful, an expert told BI.

Elon Musk's SpaceX has gone scorched-Earth on the National Labor Relations Board in a new lawsuit, arguing the configuration of the federal agency that oversees manager-employee relations in the country is unconstitutional.

SpaceX's suit, filed in the Brownsville division of the US District Court for the Southern District of Texas on January 4, comes amid NLRB proceedings over allegations that SpaceX illegally fired multiple employees after they publicly complained about Musk.

Representatives for SpaceX and the NLRB did not respond to requests for comment from Business Insider sent outside regular business hours.

SpaceX employees called Elon a 'distraction and embarrassment'

The case at hand stems from a 2022 open letter written by SpaceX employees who criticized Musk's "disparaging" and "sexually charged" antics on Twitter, arguing that leadership of the company should "clearly define what exactly is intended by SpaceX's 'no-asshole' and 'zero tolerance' policies and enforce them consistently."

"Elon's behavior in the public sphere is a frequent source of distraction and embarrassment for us, particularly in recent weeks," The Verge reported the letter — which was posted to an internal SpaceX Microsoft Teams channel and deleted within 32 hours — read. "As our CEO and most prominent spokesperson, Elon is seen as the face of SpaceX — every Tweet that Elon sends is a de facto public statement by the company. It is critical to make clear to our teams and to our potential talent pool that his messaging does not reflect our work, our mission, or our values."

Eight SpaceX employees were wrongfully terminated for their involvement in drafting and posting the letter, the NLRB alleged in its complaint against the billionaire's spacecraft manufacturing company.

SpaceX also "told other employees that the eight were discharged for participating in the open letter, interrogated other employees about the open letter (and instructed employees not to discuss the investigatory interviews), created an impression of surveillance (including reading and showing screenshots of communications between employees), disparaged participation in the open letter, and restricted employees from distributing the open letter," CBS reported the NLRB said in a statement. 

The open letter incident isn't the first time one of Musk's companies has been accused of terminating employees who criticize the eccentric billionaire.

In 2022, several Twitter employees who criticized Musk on the platform shortly after his $44 billion takeover of the company said they were fired after posting about Musk on the site. At Tesla, two former employees filed complaints with the NLRB, accusing the company of illegally firing them for denouncing Musk's tweets as well as the electric car manufacturer's strict return-to-office policy.

SpaceX takes aim at the NLRB

In response to the NLRB complaint — for which a trial is set for March 5 — SpaceX isn't aiming at the argument that it illegally fired workers but at the federal agency itself.

"What you're seeing from SpaceX is, perhaps, a recognition that the complaint on its merits is a strong one," David Wimmer, a labor attorney specializing in representing companies in employment-related issues, told BI. "So now they're figuring out: Is the best defense a good offense? Meaning, is the best defense to now challenge the constitutional structure of the NLRB?"

In a request for a preliminary injunction filed against the NLRB, SpaceX argues that the judges overseeing the wrongful termination case should not be able to determine whether SpaceX illegally fired its employees until the federal government rules on the company's constitutional questions surrounding the NLRB's proceedings.

"SpaceX has filed this action to avoid serious and irreparable injuries that it will otherwise suffer from being subjected to an unconstitutional administrative proceeding," SpaceX's request reads. "Defendants are currently prosecuting and presiding over such a proceeding accusing SpaceX of violating federal law. Because the structure of that proceeding violates the United States Constitution under Supreme Court and Fifth Circuit precedent, SpaceX respectfully requests an order halting the NLRB proceedings unless and until the constitutional defects are remedied."

The company's lawyers go on to argue:

• NLRB judges and board members are unconstitutionally protected from removal from office by the President, in violation of Article II of the Constitution.

• NLRB proceedings violate SpaceX's right to a jury trial by ruling on private matters outside the court system, in violation of the Seventh Amendment.

• The NLRB "transgresses the separation of powers and violates SpaceX's due-process rights" by "exercising prosecutorial, legislative, and adjudicatory authority within the same proceeding."

A novel, aggressive approach

Jerry Cutler, a labor and employment attorney, and lecturer at Columbia University, said in a statement to BI that the constitutionality of the National Labor Relations Act, which established the foundation of its enforcement board, the NLRB, has been challenged a few times over the years, including shortly after it was enacted in 1935.

"But never successfully, to my knowledge, or on the somewhat novel grounds SpaceX has asserted in its lawsuit," Cutler's statement read.

Cutler also noted that the arguments made in SpaceX's suit against the NLRB closely resemble a recent argument against the board's authority published in November by the Federalist Society. This conservative legal group advocates for a textualist and originalist interpretation of the Constitution.

Wimmer called SpaceX's approach an "aggressive, all-in legal challenge," which raises unique constitutional questions regarding the authority of the NLRB to rule on issues relating to manager-employee relations and the existence of federal enforcement agencies in general.

By filing the case in Texas, Wimmer added, it appears SpaceX is attempting to have its case heard in front of a more receptive audience compared to more worker-defensive courts in California, where the alleged wrongful firings took place.

The NLRB, in response to SpaceX's suit, has argued the case should be heard in California. If the NLRB is unsuccessful in getting the case moved, Wimmer said, he expects a relatively swift decision in favor of Musk that the NLRB would then need to appeal to overturn.

Possible impacts of a SpaceX win

SpaceX's legal challenge is not limited to this case alone, Wimmer told BI, but is rather an attack against the agency structure "that will have an impact on every case if they're successful."

If SpaceX wins its suit against the NLRB, Wimmer said it would mean that Congress would have to figure out how to reconstitute the labor relation board, as well as how other federal agencies are structured.

In addition to the future of federal enforcement agencies coming into question due to the potential success of SpaceX's suit against the NLRB, past decisions made by those agencies could also come under fire.

"The National Labor Relations Board is the body that conducts the secret ballot elections, determines if they've been properly conducted, investigates complaints of unfair labor practices, prosecutes those complaints, and decides whether the prosecution is successful or not," Wimmer told BI. "There's a lot at stake to this challenge."