SpaceX asks Texas judge to block NLRB case over severance agreements

By Daniel Wiessner

April 26 (Reuters) - SpaceX has asked a Texas federal judge to block the National Labor Relations Board from pursuing claims that the Elon Musk-led rocket maker required workers to sign illegal severance agreements, pending the outcome of the company’s second challenge to the agency’s structure.

SpaceX late Thursday filed a motion seeking a preliminary injunction from a federal judge in Waco, Texas, arguing that the board’s in-house enforcement proceedings violate the U.S. Constitution and the company should not have to face an NLRB complaint filed last month while the case plays out.

The board’s general counsel claims SpaceX required separated employees to sign severance agreements with confidentiality, arbitration, and non-disparagement clauses that restrict them from exercising their rights under U.S. labor law.

But SpaceX’s lawyers in the motion told U.S. District Judge Alan Albright that the agency lacks the power to process the case because its administrative judges and five presidentially appointed members are improperly insulated from removal.

“And on top of its constitutional injury and injuries to its business interests, SpaceX will suffer the practical harms of undergoing an extensive administrative proceeding that distracts from its important missions, including launching satellites critical to U.S. defense and intelligence agencies and flying NASA astronauts to space,” the company’s lawyers wrote.

An NLRB spokeswoman declined to comment on SpaceX’s new lawsuit and Thursday’s motion. The board in court filings has said the U.S. Supreme Court decades ago rejected claims that similar removal protections for federal agency officials were invalid.

Amazon.com, Starbucks and Trader Joe’s, which all are facing nationwide unionizing campaigns, have also raised challenges to the NLRB’s structure in pending board cases.

SpaceX is already attacking the board’s constitutionality in a lawsuit in federal court in Brownsville, Texas, which stemmed from a separate NLRB complaint accusing the company of illegally firing engineers who criticized Musk, its chief executive.

In that case, U.S. District Judge Rolando Olvera in February granted the board’s motion to transfer the lawsuit to California, where SpaceX is based and the administrative case is being heard. SpaceX has asked Olvera to reconsider that ruling after the 5th U.S. Circuit Court of Appeals rejected the company’s petition to block the transfer.

SpaceX has denied wrongdoing in both of the NLRB cases. In Thursday’s filing, the company said that its severance agreements serve the important purpose of “providing clarity and certainty governing the parties’ relationship.”

“Each day that passes with the possibility of new developments in an unconstitutional administration proceeding creates a cloud of additional uncertainty and irreparable harm to these important business interests,” the company said.

Its motion in Waco contained no reference to its pending, similar case before Olvera, an appointee of Democratic former President Barack Obama. Albright, an appointee of Republican former President Donald Trump, is the only active judge in Waco.

In the case involving the fired engineers, an administrative judge held an initial hearing last month but did not hear opening statements or testimony.

The judge was scheduled to hold further hearings beginning in May, but the timeline was pushed back after the appointment of a special master to review both sides’ objections to subpoenas.

The case is Space Exploration Technologies Corp v. National Labor Relations Board, U.S. District Court for the Western District of Texas, No. 6:24-cv-00203.

For SpaceX: Catherine Eschbach, Michael Kenneally and Harry Johnson of Morgan Lewis & Bockius

For the NLRB: Maxie Miller

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