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In what may prove to be a watershed decision for the National Labor Relations Board (NLRB or the Board), the United States Court of Appeals for the Fifth Circuit, in <em>Space Exploration Technologies Corporation v. National Labor Relations Board</em>, affirmed the grant of a preliminary injunction halting unfair labor practice proceedings.

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A divided Fifth Circuit majority reasoned that because Board members are not “politically accountable” given that they can only be removed “for neglect of duty or malfeasance in office but for no other cause,” the “NLRB’s structure and powers take it outside of the narrow exception” to the general rule that allows the president to remove subordinates at will.

The majority opinion went even further with respect to the NLRB’s administrative law judges (ALJs), who, it found, are “insulated by two layers of for-cause protection,” and held that those “removal restrictions are unconstitutional.”

Having reached these twin determinations regarding the NLRB’s board members and ALJs, the court held that because the “Constitution does not countenance unlawful power,” the issuance of a preliminary injunction was warranted. The court emphasized that forcing employers “to appear before an unconstitutionally structured agency inflicts irreparable harm.” The dissent would have required a showing of “some harm that the alleged unconstitutional clause caused to the underlying agency proceedings.”

It is no understatement that the Fifth Circuit’s decision, if sustained, represents potentially the most significant challenge to the Board’s construction and operation in its 90-year history. Today, at least in the Fifth Circuit, parties to NLRB unfair labor practice proceedings before an ALJ or the Board can move to enjoin them from proceeding. The long-term effects of the Fifth Circuit’s decision are difficult to fathom. Will the current administration accept or challenge the ruling? What will happen upon remand to the district court? Will other circuits adopt the Fifth Circuit’s reasoning? Will the issue ultimately be addressed by the Supreme Court? Will unions seek remedies through self-help or other legal processes? Will states step up their efforts to enact legislation to fill in the potential gap?

The answers to these questions lie in the future, and we will continue to cover them here at The Bargaining Table. However, regardless of one’s views on the potential consequences of the court’s decision, there is an important takeaway for parties seeking to challenge the validity of NLRB unfair labor practice proceedings. The Fifth Circuit distinguished its decision from earlier cases denying relief on the grounds that “those cases arose after final judgments and permanent relief—not at the preliminary injunction stage.” Prudent parties seeking to enjoin ALJ proceedings based on the Fifth Circuit’s decision should do so at an early juncture, including before the proceedings begin. In the interim, stay tuned.

Whither Goes the NLRB? Recent Fifth Circuit Decision Portends Potential Meteoric Change in Labor Law