US court tries to bring SpaceX lawsuit against US labor board back to Texas

By Thomson Reuters Feb 26, 2024 | 4:55 PM

By Daniel Wiessner

(Reuters) – A U.S. appeals court in an unusual step on Monday moved to claw back rocket maker SpaceX’s lawsuit claiming a U.S. labor board’s structure is unconstitutional, after a judge in Texas granted the agency’s request to send it to California.

A panel of the New Orleans-based 5th U.S. Circuit Court of Appeals in a brief order said the Los Angeles federal court should not have processed the transfer last week, days after the appeals court paused it pending an appeal by SpaceX.

But the 5th Circuit, which covers Texas, Louisiana and Mississippi, has no power over the California court, so it ordered U.S. District Judge Rolando Olvera in Brownsville, Texas, who had transferred the case, to request that it be sent back to his court.

The fracas involves a technical issue but could have a major impact on SpaceX’s case, as federal courts in Texas are generally seen as having more conservative judges who are more likely to be open to attempts to limit the powers of the federal government.

The 5th Circuit is seen by many as the most conservative U.S. appeals court while the 9th Circuit, which covers California, has the reputation of being among the most liberal.

SpaceX and the National Labor Relations Board did not immediately respond to requests for comment.

SpaceX filed the lawsuit one day after the labor board last month accused the company in an in-house proceeding of illegally firing engineers for criticizing CEO Elon Musk. SpaceX has denied wrongdoing.

Since then, Trader Joe’s, Amazon.com and Starbucks have raised similar claims in cases pending at the labor board. The companies say the agency’s in-house enforcement proceedings deprive them of the constitutional right to a jury trial, and that limits on the removal of administrative judges and the board’s five presidentially-appointed members also violate the U.S. Constitution.

Olvera ruled last week that because SpaceX is headquartered in California and the events that triggered the case took place there, it made no sense for the lawsuit to proceed in Texas.

SpaceX filed a petition with the 5th Circuit a day later seeking to reverse Olvera’s ruling. The court last Monday paused the transfer, but the Los Angeles court continued to process it and assigned a judge and case number to the lawsuit later in the week.

The labor board in a filing in the California court on Friday said that if Olvera did request the return of the case, the court is not required to send it back if it determines that doing so would be inappropriate.

(Reporting by Daniel Wiessner in Albany, New York, Editing by Alexia Garamfalvi and Deepa Babington)