U.S. District Judge Jeffrey Brown in Galveston, Texas, said Energy Transfer was likely to succeed on its claim that NLRB administrative law judges are insulated from removal by the president in violation of the Appointments Clause of the U.S. Constitution.

The ruling marks the second time that a judge has paused an NLRB administrative case from moving forward in a series of lawsuits challenging the agency's structure on various grounds, after SpaceX earlier this month won a block on a pending board case.

In Monday's decision, Brown, an appointee of Republican former President Donald Trump, cited a 2022 5th U.S. Circuit Court of Appeals ruling in Jarkesy v. U.S. Securities and Exchange Commission that said in-house judges at the SEC were not properly appointed. The Supreme Court last month affirmed a different part of the Jarkesy ruling that said SEC administrative proceedings violate defendants' right to a jury trial, but did not take up arguments involving the agency's administrative judges.

Brown paused an administrative case accusing Energy Transfer and subsidiary La Grange Acquisition of illegally firing a worker for raising concerns about workplace health and safety and filing a prior complaint with the NLRB.

Dallas-based Energy Transfer has denied wrongdoing and says the employee was fired for insubordination.

The company and an NLRB spokeswoman did not immediately respond to requests for comment.

Energy Transfer had sued the NLRB in June alleging the board's administrative judges and five presidentially appointed members are improperly shielded from removal. The company also says the administrative proceedings violate the Constitution by depriving it of a jury trial and allowing the NLRB to wield executive, legislative and judicial power.

The board is facing similar claims in lawsuits by Elon Musk's SpaceX, a Michigan hospital operator, and Starbucks baristas who oppose unionizing at the stores where they work. Starbucks, Amazon.com, and Trader Joe's have raised similar claims about the NLRB's structure in pending administrative cases.

The cases are part of a broader attack by conservative and business groups on the powers of administrative agencies and, if successful, could hobble the NLRB's ability to enforce federal labor law.

U.S. District Judge Alan Albright in Waco, Texas, earlier this month issued an injunction blocking an NLRB case from moving forward that accuses SpaceX of forcing ex-employees to sign illegal severance agreements. Albright, a Trump appointee, said in a subsequent written opinion that NLRB members should be subject to at-will removal by the president, and did not address SpaceX's separate arguments about administrative judges.

In a second lawsuit by SpaceX, the New Orleans-based 5th U.S. Circuit Court of Appeals is considering the company's claim that a judge effectively denied its motion for an injunction by delaying in ruling on it.

The board has argued that the claims lack merit for various reasons, including that the U.S. Supreme Court in a line of cases dating back to the 1930s has upheld the structure of the NLRB and other agencies with in-house proceedings.

And even if Energy Transfer were likely to win its case, it could not show the irreparable harm necessary to obtain a preliminary injunction, the NLRB said in court filings.

Brown on Monday disagreed, saying the company would be harmed by having to defend itself against an unconstitutional proceeding.

"La Grange’s alleged injury is having to participate in a constitutionally defective administrative process," the judge wrote.

The case is Energy Transfer LP v. National Labor Relations Board, U.S. District Court for the Southern District of Texas, No. 3:24-cv-0198.

For Energy Transfer: Amber Rogers of Hunton Andrews Kurth

For the NLRB: Michael Dale, Dalford Owens and Tyler Wiese

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