US labor board will suspend case against SpaceX pending company's legal challenge

FILE PHOTO: Spectators gather on South Padre Island to watch the planned launch of SpaceX's next-generation Starship spacecraft from the company's Boca Chica launchpad, near Brownsville, Texas, U.S. March 14, 2024. REUTERS/Cheney Orr/File Photo

(Reuters) -The U.S. National Labor Relations Board told a federal judge in Texas that it will suspend an administrative case accusing SpaceX of illegally firing engineers critical of CEO Elon Musk while the rocket maker pursues a lawsuit challenging the agency's structure.

In a filing in federal court in Brownsville, Texas, late Thursday, the labor board said halting the underlying case against SpaceX will expedite a final ruling on the company's claims that the agency's in-house enforcement proceedings violate the U.S. Constitution.

The board said it does not agree with SpaceX's claim in a pending motion that pausing the administrative case is appropriate, but it was agreeing to do so "in the interest of conserving scarce judicial resources (and) avoiding unnecessary expense and delay."

The case has gone back and forth between U.S. District Judge Rolando Olvera and the New Orleans-based 5th U.S. Circuit Court of Appeals on procedural issues, and an appeal by SpaceX is pending before the 5th Circuit.

The board on Thursday said it would suspend the administrative case once Olvera issues an order explaining how he would rule on the motion to block it, which would allow the 5th Circuit to send the lawsuit back to him.

Olvera on Friday separately rejected SpaceX's request that he reconsider an earlier decision transferring the lawsuit to California, where the company is based and the board case is being heard, at the board's request. The 5th Circuit rejected SpaceX's appeal of that ruling.

Olvera said the case should be transferred in 21 days, giving SpaceX time to file another appeal. The judge did not weigh in on the board's Thursday filing.

SpaceX and its lawyers, two of whom were NLRB members during the Trump administration, and a lawyer for the fired engineers did not respond to requests for comment.

The board in a January complaint pending before an administrative judge in Los Angeles said SpaceX illegally fired the eight engineers for signing a letter to company executives accusing Musk of sexism.

SpaceX, which denies the firings were unlawful, sued the board the next day, seeking to block the case from moving forward. SpaceX says NLRB administrative judges and the five board members appointed by the president are improperly insulated from removal, and that the agency's administrative process violates its constitutional right to a jury trial.

SpaceX has since filed a second lawsuit in federal court in Waco, Texas, prompted by a separate NLRB complaint accusing the company of forcing workers to sign illegal severance agreements. A judge earlier this month temporarily blocked the board's case from proceeding.

Starbucks,, Trader Joe's, and at least three Starbucks baristas who oppose unionizing at the stores where they work have made similar claims over the board's structure in pending board cases or lawsuits.

(Reporting by Daniel Wiessner in Albany, New York; Editing by Chizu Nomiyama, Alexia Garamfalvi and Jonathan Oatis)

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