LANDMARK RULING
The U.S. Court of Appeals for the Fifth Circuit has ruled that the National Labor Relations Board’s structure is “likely unconstitutional,” delivering a seismic victory for SpaceX and potentially reshaping federal labor law.
In a decision that could fundamentally alter the landscape of American labor law, the Fifth Circuit Court of Appeals has ruled that the National Labor Relations Board’s constitutional structure likely violates separation of powers principles. The landmark ruling represents a major victory for SpaceX and signals a potential constitutional crisis for federal labor enforcement that has operated largely unchanged for nearly nine decades.
89 – Years of NLRB Operations
3-0 – Unanimous Panel Decision
2022 – Year SpaceX Case Started
8 – Former SpaceX Employees
The Constitutional Challenge – Separation of Powers at Stake
The Fifth Circuit’s ruling centers on a fundamental constitutional principle: the separation of powers doctrine that requires clear delineation between executive, legislative, and judicial functions. The court determined that the NLRB’s removal protections for board members and administrative law judges create an unconstitutional dual-layer insulation from presidential oversight.
Core Constitutional Issues
The court identified two primary constitutional violations:
- Dual-Layer Protection: NLRB members can only be removed “for cause,” while administrative law judges have additional tenure protections
- Executive Authority: The structure prevents the President from exercising constitutionally required oversight over executive branch functions
- Separation Doctrine: The arrangement blurs lines between executive enforcement and judicial adjudication
The Fifth Circuit upheld lower court injunctions barring the National Labor Relations Board from prosecuting unfair labor practice cases against SpaceX and two other companies, finding that removal protections for board members and agency judges likely violate the U.S. Constitution. This decision builds upon previous Supreme Court precedents that have increasingly scrutinized independent agency structures.
SpaceX’s Legal Strategy – From Complaint to Constitutional Victory
The legal battle began in 2022 when eight former SpaceX employees filed a complaint with the NLRB alleging unfair labor practices. Rather than simply defending against the charges, SpaceX chose to challenge the fundamental constitutional authority of the NLRB itself, transforming a routine labor dispute into a landmark constitutional case.
2022 – Eight former SpaceX employees file unfair labor practice complaint with NLRB
January 2024 – SpaceX files constitutional challenge in Southern District of Texas
May 2, 2024 – Fifth Circuit grants SpaceX’s Emergency Motion for Injunction Pending Appeal, halting NLRB proceedings
February 3, 2025 – NLRB files letter with Fifth Circuit indicating it would not address constitutionality arguments
August 20, 2025 – Fifth Circuit rules NLRB structure likely unconstitutional in unanimous decision
Strategic Legal Maneuvering
SpaceX’s legal team employed a sophisticated constitutional strategy that went far beyond traditional labor law defenses. By challenging the NLRB’s structural authority rather than simply disputing the specific allegations, the company opened a new front in corporate constitutional litigation that could have implications extending well beyond labor law.
This case represents a paradigm shift in how corporations can challenge federal agency authority. Rather than fighting individual enforcement actions, companies are now successfully attacking the constitutional foundations of regulatory agencies themselves.
— Constitutional Law Expert
The Three-Judge Panel – Conservative Judicial Philosophy in Action
The unanimous ruling came from a three-judge panel that included two judges appointed by President Donald Trump and a third judge appointed by George H.W. Bush. This composition reflects the broader conservative judicial philosophy that has increasingly scrutinized the constitutional foundations of federal administrative agencies.
TR
Trump Appointees – Two judges with conservative judicial philosophy focused on originalist constitutional interpretation
GB
Bush Appointee – Senior judge with established precedent of questioning administrative state expansion
5C
Fifth Circuit – Known for conservative rulings challenging federal agency authority and regulatory overreach
The Fifth Circuit has established itself as a leading judicial forum for constitutional challenges to federal agency authority, with this ruling representing the latest in a series of decisions that have questioned the constitutional foundations of the modern administrative state.
NLRB’s Strategic Retreat – Dropping Constitutional Defense
In a surprising strategic development, the NLRB filed a letter with the Fifth Circuit on February 3, 2025, indicating that it would not address constitutionality arguments. This decision to essentially concede the constitutional challenge represents a significant tactical retreat that may have contributed to the strength of the court’s eventual ruling against the agency.
Strategic Implications of NLRB’s Non-Defense
By choosing not to defend its constitutional structure, the NLRB may have inadvertently strengthened SpaceX’s position and created precedent that could be used against other federal agencies with similar structural characteristics.
Institutional Consequences
The NLRB’s decision not to defend its constitutional structure raises serious questions about the agency’s long-term viability and its confidence in its own legal foundations. This strategic choice could signal internal recognition that the agency’s current structure is indeed constitutionally problematic.
Broader Implications – The Future of Federal Regulatory Authority
The Fifth Circuit’s ruling extends far beyond the specific SpaceX case, potentially affecting numerous federal agencies that operate with similar structural protections. The decision could fundamentally alter how federal regulatory agencies are organized and how they exercise enforcement authority.
Affected Federal Agencies
- Securities and Exchange Commission (SEC) – Similar removal protections for commissioners
- Federal Trade Commission (FTC) – Multi-member board with tenure protections
- Consumer Financial Protection Bureau (CFPB) – Single director with removal protections
- Federal Communications Commission (FCC) – Commissioners with cause-only removal
- Equal Employment Opportunity Commission (EEOC) – Protected board members
The ruling builds upon the Supreme Court’s decision in SEC v. Jarkesy, which has emboldened corporate constitutional challenges against the 89-year-old National Labor Relations Board. This growing line of precedent suggests that the current Supreme Court is increasingly receptive to structural challenges against federal administrative agencies.
Labor Law Revolution – Impact on Worker Rights
The constitutional challenge to the NLRB’s structure could have profound implications for American labor law and worker rights. If the ruling is upheld on appeal, it could fundamentally alter how labor disputes are resolved and how workplace rights are enforced.
Potential Consequences for Workers
- Delayed resolution of unfair labor practice complaints
- Reduced independence in labor law enforcement
- Increased political influence over workplace rights adjudication
- Potential restructuring of collective bargaining protections
Corporate Strategy Implications
The SpaceX victory provides a roadmap for other corporations facing NLRB enforcement actions. SpaceX and two other companies can keep their court orders freezing unfair labor practice cases as they litigate their constitutional challenges, demonstrating the practical power of constitutional challenges to halt regulatory enforcement.
The Road Ahead – Supreme Court and Congressional Response
The Fifth Circuit’s ruling is virtually certain to be appealed to the Supreme Court, setting up what could be one of the most significant constitutional cases affecting federal regulatory authority in decades. The current Supreme Court’s conservative majority has shown increasing willingness to scrutinize administrative agency structures.
SUPREME COURT TRAJECTORY
With the Supreme Court’s conservative majority and recent precedents questioning administrative agency authority, the SpaceX ruling aligns with broader judicial trends favoring structural constitutional challenges to federal regulatory power.
Congressional Response and Reform Options
Congress faces several potential responses to the constitutional challenge, ranging from restructuring the NLRB to clarify its constitutional authority to potentially eliminating certain removal protections. The political dynamics surrounding labor law make comprehensive reform challenging but potentially necessary.
Potential legislative responses include:
- Restructuring NLRB governance to eliminate dual-layer protections
- Clarifying presidential removal authority over board members
- Separating prosecutorial and adjudicatory functions within the agency
- Creating alternative dispute resolution mechanisms for labor conflicts
Corporate America’s Constitutional Strategy
The SpaceX victory demonstrates the growing sophistication of corporate constitutional litigation strategies. Rather than simply defending against individual regulatory actions, companies are increasingly challenging the fundamental authority of federal agencies to regulate their conduct.
Strategic Litigation Trends
The success of structural constitutional challenges encourages other corporations to question not just specific regulatory actions, but the constitutional foundations of federal agency authority itself. This represents a fundamental shift in corporate legal strategy.
This trend toward constitutional challenges could fundamentally alter the relationship between federal regulatory agencies and the industries they regulate, potentially shifting power away from administrative enforcement and toward federal courts for constitutional interpretation.
A Constitutional Watershed Moment
The Fifth Circuit’s ruling in favor of SpaceX represents more than a single legal victory; it signals a potential constitutional watershed moment that could reshape federal regulatory authority for generations. The decision challenges nearly 90 years of accepted practice in federal labor law and opens new avenues for corporate constitutional challenges across the regulatory spectrum.
The implications extend far beyond SpaceX or even labor law, potentially affecting how federal agencies from the SEC to the FTC exercise their regulatory authority. As the case moves toward inevitable Supreme Court review, it carries the potential to fundamentally alter the balance of power between federal agencies, corporate entities, and constitutional governance.
