Judge shopping battle rages in SpaceX's NLRB case

The battles over judge and venue shopping continue to rage, in this case over a Space Exploration Technologies Corp. challenge to the constitutional authority of the National Labor Relations Board concerning the firing of eight employees at the company's Hawthorne, California facility.

The SpaceX venue fight is not over, even after the 5th U.S. Circuit Court of Appeals - based in New Orleans - upheld a three-judge panel decision last week affirming a Southern District of Texas judge's decision to transfer the lawsuit to Senior U.S. District Judge Consuelo B. Marshall of Los Angeles, an appointee of President Jimmy Carter.

The NLRB complaint stems from unfair labor practice charges filed with the agency's Los Angeles office. SpaceX challenged the constitutionality of an agency administrative law judge hearing the case, because that judge is insulated from control by the president.

The U.S. Supreme Court heard arguments last fall in a similar case challenging whether the Securities and Exchange Commission could decide a charge in-house against a hedge fund manager. Securities and Exchange Commission v. Jarkesy, 22-859 (S. Ct., filed March 8, 2023).

The SpaceX case has been the subject of an increasingly common struggle over venue. Wednesday's 5th Circuit decision not to take the case en banc, on an 8-8 vote, left the three-judge panel decision in favor of transfer intact. In re: Space Exploration Technologies Corp., 24-40103 (5th Circ., filed Feb. 16, 2024).

Morgan, Lewis & Bockius LLP attorneys filed a motion for reconsideration with U.S. District Judge Rolando Olvera, the same judge who ordered the case transferred to California in the first place, after the 5th Circuit decision.

The tie vote occurred because 5th Circuit Judge James C. Ho, an appointee of President Donald Trump, recused himself from the case. The court offered no explanation, but Ho - two days before the 5th Circuit decision - blasted the Judicial Conference of the United States' policy to encourage district courts not to allow new complaints to be assigned to single-judge divisions.

That policy change turned out to be advisory, and the Northern District of Texas rejected it, rendering it toothless. But Ho has kept up his criticisms.

"The Judicial Conference isn't shy about why they're doing this," Ho told the Midland County Bar Association last Monday, according to Bloomberg News. "They're targeting single-judge divisions. Its announcement repeatedly mentions 'single-judge divisions' as the purported evil they're trying to combat."

The judge shopping debate has pitted mainstream Republicans, including Chief Justice John G. Roberts Jr. And 6th U.S. Circuit Court of Appeals Judge Jeffrey S. Sutton, both Bush appointees, against other judges appointed by GOP presidents as well as Senate Minority Leader Mitch McConnell, R-KY, and other congressional Republicans.

In the meantime, SpaceX is trying to keep the NLRB case in Texas, in part by citing dissents by 5th Circuit judges who wanted to reconsider the transfer.

"SpaceX continues to believe that it filed this action in a lawful forum under 28 U.S. § 1391(e) and that resolution of the pending motions in this Court is the most expeditious path to halting the ongoing constitutional injury it is incurring from the unconstitutional administrative proceedings," Morgan Lewis associate Catherine L. Eschbach wrote.

Until Olvera, an appointee of President Barack Obama rules, the case remains in limbo. But if the judge reaffirms his original decision, it would be sent back to Marshall.

5th Circuit Judge Jennifer Walker Elrod, a Bush appointee, dissented from the en banc decision, arguing that while most of the allegations took place in SpaceX's California facility, it would affect the company's facilities nationwide.

"Although scheduled to take place in California, the administrative proceedings initiated by NLRB would regulate SpaceX's operations and policies everywhere, including the Southern District of Texas," she wrote. "The administrative action is not limited in geographic scope to California employees and facilities."

Six judges appointed by Republican presidents, including Elrod, blasted the NLRB for "engaging in shabby tactics" to move the case to California.

"In their zeal to deprive this court of mandamus jurisdiction and nullify the stay of the transfer order issued by the panel, NLRB lawyers misrepresented facts to this court and have failed to acknowledge error," they wrote.

5th Circuit Judge Dana M. Douglas, an appointee of President Joe Biden, disagreed with the criticism of the NLRB attorneys. She wrote that "the NLRB unequivocally did not violate any law or rules throughout this complicated proceeding, and its conduct amounted to nothing more than zealous advocacy."