A divided federal appeals court on Wednesday rejected rocket maker SpaceX's latest bid to keep a lawsuit the Elon Musk-led company filed challenging the structure of the National Labor Relations Board in Texas rather than California.
The New Orleans-based 5th U.S. Circuit Court of Appeals on a 8-8 vote declined to reconsider a panel's ruling last month that rejected SpaceX's bid to block the transfer of the case at the NLRB's request from Brownsville, Texas, to Los Angeles.
Its decision to not have the full, or en banc, court rehear the matter came over the objections of a block of conservative judges on the 5th Circuit who said a lower-court judge wrongly denied SpaceX its choice of venue to litigate its claims.
The NLRB and SpaceX did not respond to requests for comment.
SpaceX in a lawsuit filed in January alleged the NLRB's in-house enforcement proceedings violate its constitutional right to a jury trial, and that limits on the removal of the agency's board members and administrative judges also violate the U.S. Constitution.
The company sued in Brownsville, Texas, one day after the NLRB general counsel issued a complaint alleging the company had unlawfully fired eight employees for circulating a letter criticizing Musk, its founder and CEO. SpaceX denies the allegations.
An NLRB administrative judge held an initial hearing in that case last month but did not hear opening statements or testimony. The judge said she planned to hold further hearings beginning in May.
At the NLRB's urging, U.S. District Judge Rolando Olvera in February transferred the case to Los Angeles, saying "the most substantial part of the events" giving rise to the lawsuit happened in California.
The 5th Circuit stayed the transfer order on Feb. 19 to allow SpaceX to pursue an appeal. A 2-1 panel later rejected the rocket company's bid to keep the case in Texas, and the company sought to have the full court reconsider the transfer.
Its request was rebuffed when the full court cast a tied vote that left the earlier panel ruling in place. The court then lifted the stay on the transfer.
The tie was the result of the recusal of U.S. Circuit Judge James Ho, an appointee of Republican former President Donald Trump, who in a speech on Monday harshly criticized a new federal judicial policy that would curb "judge shopping" by conservative litigants challenging government policies in Texas.
U.S. Circuit Judge Edith Jones in a dissenting opinion joined by five other appointees of Republican presidents said SpaceX was allowed to sue in "what it perceived as a statutorily permissible venue for its challenge to the constitutional setup of NLRB adjudication procedures."
She said SpaceX did nothing wrong, unlike the NLRB's attorneys, who she contended "engaged in shabby tactics to accomplish their own forum shopping" in advocating for the transfer of the case to California.
In a separate order, though, a 5th Circuit panel cleared two NLRB attorneys of wrongdoing, though it did conclude they "made some errors" and needed advice on how to inform courts of factual errors in filings and dispute jurisdiction in the future.
The NLRB has said it had based its information about the transfer's status on a call to the California clerk's office. It said it understood the transfer occurred essentially instantaneously after Olvera's order and said the California judge had a separate duty to assess jurisdiction.
In re: Space Exploration Technologies, 5th U.S. Circuit Court of Appeals, No. 24-40103.
For SpaceX: Harry Johnson, Michael Kenneally, Catherine Eschbach and Amanda Salz of Morgan Lewis & Bockius
For the NLRB: David Boehm
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