Labor Board Drops Case Against Musk’s SpaceX: Key Developments Explained

The US labor board is abandoning a complaint over SpaceX’s severance and arbitration policies, resolving one front of a sprawling legal battle between the agency and Elon Musk’s aerospace company.

In a joint motion filed on December 18, attorneys for both SpaceX and the National Labor Relations Board (NLRB) requested a federal judge in Texas to dismiss one of two lawsuits initiated by SpaceX. This legal action argued that the NLRB’s structure was unconstitutional, particularly after the agency decided to withdraw its complaint against the company.

The case originated from a complaint issued by the NLRB’s Seattle office in March 2024. The agency alleged that certain terms in SpaceX’s severance and arbitration agreements, including confidentiality rules, were illegally coercive. In response, SpaceX filed a lawsuit the following month, challenging the NLRB’s constitutionality. This was the second such challenge, following a similar action against a complaint from the NLRB’s Los Angeles office.

The NLRB’s reversal is a significant victory for SpaceX. The agency has also been reconsidering its complaint issued in California, indicating in April that it was exploring whether it had jurisdiction to pursue that case. This complaint alleged that SpaceX retaliated against employees who criticized Musk.

Since SpaceX initiated its first lawsuit last year, other companies, including Amazon.com Inc., have filed similar cases, many of which are currently pending in US courts. The NLRB is facing comparable challenges from various firms. William Cowen, the NLRB’s acting general counsel, noted that the agency determined the dispute over the SpaceX confidentiality complaint was not the ideal case to bring before the US Supreme Court. He stated, “After considering ‘Is this the horse we want to ride on this issue?’, it was concluded that this was not the path to follow, which is why we backed off.”

SpaceX has not responded to requests for comment regarding this matter.

Elon Musk was the largest single financial contributor in the 2024 election, with most of his contributions supporting Trump. His Department of Government Efficiency played a crucial role during Trump’s first year in office. Although tensions between Musk and Trump escalated earlier this year, they have since eased, highlighted by Musk’s attendance at a November gala dinner at the White House honoring Saudi Crown Prince Mohammed bin Salman.

In May, a three-judge panel granted a request from both the government and SpaceX to pause proceedings in the company’s other lawsuit against the labor board. This pause allows the NLRB to seek input from the National Mediation Board, which oversees railways and airlines, regarding jurisdiction over SpaceX.

President Donald Trump appointed Cowen as the agency’s acting top prosecutor in February. Under his leadership, the NLRB has retracted several high-profile cases initiated by his predecessor, including a complaint concerning the GEO Group Inc.’s treatment of immigrant detainees and another regarding an email from Sean Penn criticizing complaints about working conditions at his nonprofit.

This month, the US Senate confirmed Trump’s nominee for permanent NLRB general counsel, Crystal Carey, a former partner at Morgan, Lewis & Bockius LLP, a law firm that represented companies such as Tesla Inc. and SpaceX. She is expected to be sworn in soon.

Photo: SpaceX offices in Hawthorne, California. Photographer: Alisha Jucevic/Bloomberg

Topics
Aerospace

The US labor board is abandoning a complaint over SpaceX’s severance and arbitration policies, resolving one front of a sprawling legal battle between the agency and Elon Musk’s aerospace company.

In a joint motion filed on December 18, attorneys for both SpaceX and the National Labor Relations Board (NLRB) requested a federal judge in Texas to dismiss one of two lawsuits initiated by SpaceX. This legal action argued that the NLRB’s structure was unconstitutional, particularly after the agency decided to withdraw its complaint against the company.

The case originated from a complaint issued by the NLRB’s Seattle office in March 2024. The agency alleged that certain terms in SpaceX’s severance and arbitration agreements, including confidentiality rules, were illegally coercive. In response, SpaceX filed a lawsuit the following month, challenging the NLRB’s constitutionality. This was the second such challenge, following a similar action against a complaint from the NLRB’s Los Angeles office.

The NLRB’s reversal is a significant victory for SpaceX. The agency has also been reconsidering its complaint issued in California, indicating in April that it was exploring whether it had jurisdiction to pursue that case. This complaint alleged that SpaceX retaliated against employees who criticized Musk.

Since SpaceX initiated its first lawsuit last year, other companies, including Amazon.com Inc., have filed similar cases, many of which are currently pending in US courts. The NLRB is facing comparable challenges from various firms. William Cowen, the NLRB’s acting general counsel, noted that the agency determined the dispute over the SpaceX confidentiality complaint was not the ideal case to bring before the US Supreme Court. He stated, “After considering ‘Is this the horse we want to ride on this issue?’, it was concluded that this was not the path to follow, which is why we backed off.”

SpaceX has not responded to requests for comment regarding this matter.

Elon Musk was the largest single financial contributor in the 2024 election, with most of his contributions supporting Trump. His Department of Government Efficiency played a crucial role during Trump’s first year in office. Although tensions between Musk and Trump escalated earlier this year, they have since eased, highlighted by Musk’s attendance at a November gala dinner at the White House honoring Saudi Crown Prince Mohammed bin Salman.

In May, a three-judge panel granted a request from both the government and SpaceX to pause proceedings in the company’s other lawsuit against the labor board. This pause allows the NLRB to seek input from the National Mediation Board, which oversees railways and airlines, regarding jurisdiction over SpaceX.

President Donald Trump appointed Cowen as the agency’s acting top prosecutor in February. Under his leadership, the NLRB has retracted several high-profile cases initiated by his predecessor, including a complaint concerning the GEO Group Inc.’s treatment of immigrant detainees and another regarding an email from Sean Penn criticizing complaints about working conditions at his nonprofit.

This month, the US Senate confirmed Trump’s nominee for permanent NLRB general counsel, Crystal Carey, a former partner at Morgan, Lewis & Bockius LLP, a law firm that represented companies such as Tesla Inc. and SpaceX. She is expected to be sworn in soon.

Photo: SpaceX offices in Hawthorne, California. Photographer: Alisha Jucevic/Bloomberg

Topics
Aerospace