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Fifth Circuit Upholds Injunction Against NLRB Proceedings, Distinguishing Humphrey's Executor
The Court concludes that limitations on the removal of NLRB Board members and NLRB administrative law judges are both unconstitutional.
Today, in Space Exploration Technologies Corp. v. NLRB, the U.S. Court of Appeals for the Fifth Circuit concluded that the structure of the National Labor Relations Board (NLRB) is unconstitutional in (at least) two ways. First, the NLRB's administrative law judges are insulated by a double-for-cause removal protection of the sort invalidated in Free Enterprise Fund v. PCAOB (and which the Fifth Circuit had previously declared unconstitutional in Jarkesy). Second, the court concluded that for-cause removal protection for NLRB Board members is also unconstitutional because the NLRB exercises significant executive power and is not sufficiently like the Federal Trade Commission to be protected by Humphrey's Executor.
Judge Willett wrote for the court, joined by Judge Duncan. Judge Wiener concurred in part and dissented in part. Judge Wiener agreed with the majority on the merits, but disagreed on whether the companies challenging the NLRB were entitled to a preliminary injunction against being subject to Board proceedings. In Judge Wiener's view, the companies did not demonstrate that they would suffer irreparable harm.
Judge Willet summarized his opinion this way:
Congress created the National Labor Relations Board in 1935 to administer and enforce the National Labor Relations Act, the cornerstone of American labor law. Like many independent federal agencies, the NLRB relies heavily on "administrative adjudication." Its administrative law judges (ALJs) preside over claims of NLRA violations and issue initial decisions, which are subject to review by the agency's five-member Board—a quasi-judicial body of presidential appointees that sits atop the NLRB's hierarchy.
Board Members may be removed by the President only "for neglect of duty or malfeasance in office[.]"1 And ALJs may be removed only "for good cause," as determined by the Merit Systems Protection Board (MSPB)—itself an independent, quasi-judicial agency that adjudicates "[f]ederal employee appeals from agency personnel actions."
In this consolidated appeal, SpaceX, Energy Transfer, and Findhelp (together, the Employers) each faced unfair-labor-practice complaints. Before administrative proceedings began, each filed suit in a different federal district court, challenging the constitutionality of the NLRB's structure—specifically, the dual for-cause removal protections shielding both Board Members and ALJs. Each court granted a preliminary injunction, halting the agency's proceedings.
On appeal, the NLRB argues that the district courts (1) lacked jurisdiction to enjoin ongoing Board proceedings, and (2) abused their discretion in doing so, because the Employers are unlikely to prevail on the merits and have not shown irreparable harm.
We disagree on both counts. First, nothing in federal law strips federal courts of jurisdiction to hear these claims—or to enjoin unconstitutional agency proceedings. Second, the district courts acted well within their discretion in granting preliminary relief.
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.
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.
On how the NLRB is sufficiently different from the FTC to get around Humphrey's Executor, Judge Willett writes:
Humphrey's Executor carved out an "'exception' to the general 'rule' that lets a president remove subordinates at will." There, the Supreme Court upheld removal restrictions—"for inefficiency, neglect of duty, or malfeasance in office"—for the Federal Trade Commission's multi-member body of experts, reasoning that its commissioners exercised "quasi legislative and quasi judicial" functions and did not, at the time, wield "executive power in the constitutional sense."
In the 90 years since, courts have been reluctant to extend Humphrey's Executor beyond its facts. The Supreme Court has recognized it as a narrow exception, limited to "multimember expert agencies that do not wield substantial executive power."
Unlike the FTC commissioners in 1935, NLRB Board Members today "wield substantial executive power." They determine bargaining units, direct representation elections, adjudicate unfair-labor-practice charges, and seek enforcement of their orders in federal court. They also appoint inferior officers, including the executive secretary, attorneys, regional directors, and ALJs. And the NLRA empowers the Board to petition federal district courts for injunctive relief against alleged unfair labor practices. In short, Board Members execute the NLRA through "administrative, policymaking, and prosecutorial authority."81 That they may be removed only "for neglect of duty or malfeasance in office, but for no other cause" renders the removal provision constitutionally suspect under modern separation-of-powers doctrine.
Recent Supreme Court precedent points the same way. In staying an injunction that barred President Trump from removing NLRB Board Members Gwynne Wilcox and Cathy Harris, the Court observed that "the Government is likely to show that both the NLRB and MSPB exercise considerable executive power." While the Justices were careful to say that they "d[id] not ultimately decide" the issue, their stay order reinforces our conclusion that Board Members' insulation from presidential removal likely violates Article II.
The NLRB insists its removal protections survive because its structure mirrors that of the Consumer Product Safety Commission (CPSC) in Consumers' Research v. CPSC. There, we reaffirmed that Humphrey's Executor "still protects any 'traditional independent agency headed by a multimember board.'" The CPSC, like the FTC in Humphrey's Executor, has five members, and no more than three from the same political party—reflecting Congress's intent that the agency remain "non-partisan" and "act with entire impartiality." Although the CPSC "exercises substantial executive power (in the modern sense)," its structure mirrors that of the FTC: a multimember board whose staggered appointment schedule "means that each President does 'have an[] opportunity to shape [the Commission's] leadership and thereby influence its activities.'" Additionally, the CPSC does not receive funds outside the appropriations process—so "the President can 'influence' the Commission's activities via the budgetary process." Those characteristics led us to uphold the CPSC's removal protections.
Our precedent therefore requires looking not only at whether officers "wield substantial executive power," but also at whether the agency shares the FTC's structural hallmarks and whether for-cause removal "'combine[s]' with 'other independence-promoting mechanisms' that 'work[] together' to 'excessively insulate' an agency from presidential control." As we observed in Consumers' Research, "[t]he contours of the Humphrey's Executor exception depend upon the characteristics of the agency before the Court." And there, the CPSC was the "mirror image" of the FTC.
Here, the NLRB departs in critical respects. Both the Board Members and the General Counsel wield prosecutorial power. But while the General Counsel is politically accountable, the Board Members are not. In Exela Enterprise Solutions v. NLRB, we held that Humphrey's Executor did not justify insulating the General Counsel's "quintessentially prosecutorial functions" from presidential control. If that exception does not extend to the politically accountable General Counsel, it cannot reach the even-less-accountable Board members.
Moreover, unlike the FTC and the CPSC, the NLRB has no statutory party-balancing requirement. The Supreme Court has cabined Humphrey's Executor as "permit[ting] Congress to give for-cause removal protections to a multimember body of experts" where that body is statutorily "balanced along partisan lines." That is not true of the NLRB. A President may fill four of its five seats with members of his own party, and the Board's work is widely acknowledged as politically charged. This absence of structural balancing undermines the "independence" rationale underlying Humphrey's Executor.
Admittedly, the merits question for Board Members' removal protections is a closer call than for ALJs. But both the Supreme Court and this circuit have declined to extend Humphrey's Executor to agencies that are not a "mirror image" of the FTC. The NLRB's structure and powers take it outside that narrow exception.
