The Fifth U.S. Circuit Court of Appeals on Tuesday ruled that the structure of the National Labor Relations Board is likely unlawful and blocked the NLRB from pursuing cases against SpaceX, pipeline operator Energy Transfer, and Aunt Bertha, which operates a social services search engine, pending the outcome of their lawsuits.
The ruling came from a three-judge panel, two of whom were appointed by Trump and one by G. H. W. Bush.
At issue was the NLRB's enabling legislation that allegedly prevents the president from firing either NLRB members or the administrative law judges employed by the NLRB.
There is also the issue of the NLRB bringing charges against companies based on its interpretation of the law, with cases being heard by NLRB employees, fines being decided by the NLRB, and all appeals being adjudicated by the NLRB.
Judge Don Willett said, in imposing an immediate end to NLRB's investigation, "The Employers have made their case and should not have to choose between compliance and constitutionality. When an agency’s structure violates the separation of powers, the harm is immediate—and the remedy must be, too. "
You'll note that the Fifth Circuit did not follow the example of other judges in issuing a nationwide order stopping NLRB actions. Adhering to American practice, something that seems increasingly foreign to Democrat-appointed judges, the decision applies only to the parties in the lawsuit.
This case upholds a July 23, 2024, opinion by Trump-appointed Judge Alan Albright, who found that the double insulation for NLRB administrative law judges was an unconstitutional infringement of the president's power to fire minor officers. In this case, a Byzantine system essentially ensures that administrative law judges can do as they please. Administrative law judges can only be removed for good cause determined by the Merit Systems Protection Board. The MSPB has the same protection. The appointed members of the NLRB are only removable “for neglect of duty or malfeasance in office.” The Supreme Court has twice ruled that this level of insulation from the consequences of one's actions to be unconstitutional; see Seila Law LLC v. Consumer Financial Protection Bureau and Collins v. Yellen.
ALJs are inferior officers insulated by two layers of for-cause removal protection—an arrangement the Supreme Court and this circuit have both held unconstitutional. As for the Board Members, precedent is less definitive. But the Supreme Court and this court have both cautioned against extending Humphrey’s Executor to agencies that are not a “mirror image” of the Federal Trade Commission.
Currently, the NLRB is paralyzed since Trump fired the allegedly unfireable Gwynne A. Wilcox (see Trump Goes Pearl Harbor on the National Labor Relations Board, Fires Chairman and General Counsel – RedState) and created a board with an even number of Republican and Democrat appointees. As a note, the DC Circuit ordered Wilcox rehired (Update: Appeals Court 'Unfires' NLRB and MSPB Appointees, Sets Up Next Legal Showdown – RedState), but the Supreme Court re-fired her (Winning: SCOTUS Settles Legal Showdown Over Trump Firing NLRB and MSPB Appointees – RedState).
This case, which seems destined to reach the Supreme Court, could be the battleground in which Trump's announced goal of overturning the 1935 Supreme Court precedent called "Humphrey's Executor." This precedent launched a virtually unaccountable fourth branch of government in the form of various "independent" agencies and commissions, where the president was unable to fire anyone.
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