Hiltzik: Musk and Bezos move to emasculate government regulators

Business Columnist

Dec. 12, 2024 3 AM PT

“If the law is against you, talk about the evidence. If the evidence is against you, talk about the law, and, ... if the law and the evidence are both against you, then pound on the table and yell like hell.”

Thus the poet Carl Sandburg’s version of an ancient lawyer’s adage in his epic poem, “The People, Yes.” It isn’t his fault that his rendering is incomplete, since he was writing in 1936 and the modern legal mind has cooked up a further advisory, applicable when the entity against you is a government agency: If pounding the table and yelling won’t succeed, then get your adversary declared unconstitutional.

That’s the weapon being wielded at this moment against the National Labor Relations Board and the Consumer Financial Protection Bureau. The first was created by Congress in 1935 to protect workers’ organizing and bargaining rights, the second in 2010 to protect consumers from ripoffs by financial service firms.

The NLRB and the courts have recognized for years that delay to a union certification and the bargaining process causes irreparable loss of support among employees.

— Teamster attorney Julie Gutman Dickinson

Those agencies are under assault by two of the richest men in the world: Elon Musk, who controls Tesla and SpaceX, among other enterprises, and Jeff Bezos, the founder and executive chair of Amazon. To put it succinctly, these are agencies devoted to serving the little guy by fighting battles against Big Business. Is there any mystery about why they’re targeted by billionaires?

I reported in January on the effort by SpaceX to persuade a federal judge to declare the NLRB unconstitutional.

Amazon is pursuing the same goal in its own fight with the NLRB, in which it’s trying to stave off an order that it enter into contract negotiations with 8,000 workers at a warehouse in Staten Island, N.Y. Amazon is also trying to overturn the victory in the workers’ 2022 vote by a union that subsequently affiliated with the Teamsters.

As for the CFPB, Musk on Nov. 26 tweeted, “Delete CFPB.... There are too many duplicative regulatory agencies.” He was responding to a fatuous spiel by venture investor Marc Andreessen, who in an appearance on Joe Rogan’s webcast called the CFPB “Elizabeth Warren’s personal agency, which she gets to control.” Sen. Warren (D-Mass.) conceived of the agency and pushed for its creation after the recession of 2008, but she has zero “control” over it.

As Helaine Olen of the American Economic Liberties Project has observed, what really sticks in Andreessen’s craw about the CFPB is that it has worked to protect consumers from financial services outfits, including fintech firms in which Andreessen, along with other Silicon Valley bros, has invested. (I asked Andreessen via his substack column to expand on his claims, but haven’t heard back.) Rogan, wearing his persona as a babe-in-the-woods naif, listened to this nonsense in slack-jawed stupefaction.

“Duplicative”? What makes the CFPB so important is that it’s virtually unique among federal agencies in possessing the explicit responsibility to protect ordinary Americans from the depredations of financial snake-oil sales forces.

In its more than 13 years of existence, the bureau has secured more than $17.5 billion in compensation and other relief for consumers mulcted by the financial services industry and built up a victims relief fund worth more than $4 billion.

Musk’s campaign against these two agencies warrants notice because of his elevated role within the coming Trump administration. Along with Vivek Ramaswamy, another right-wing activist, he has been anointed as head of a Department of Government Efficiency, with the goal of rooting out supposed sources of government waste. If Musk uses that perch to wage his personal campaign against the NLRB, that could make things, um, complicated for Trump’s nominee for Secretary of Labor, the pro-union Lori Chavez-DeRemer.

That brings us to the claims that the agencies are unconstitutional. I asked SpaceX and Amazon to comment on their lawsuits. SpaceX hasn’t replied. Amazon, through spokesperson Eileen Hards, said it filed its lawsuit raising the issue “because we believe the NLRB is acting beyond its mandate, including by having its Members serving as both prosecutors and judges on the same case. This is a clear violation of separation of powers, and furthermore, they feel emboldened to do so because they are unconstitutionally insulated from removal.”

The company said further that it doesn’t believe the “election process was fair, legitimate, or representative of what the majority of our team wants.... We’ll continue to use all legal avenues available to us as we believe the decision will be overturned when it’s reviewed by an unbiased court.”

The unconstitutionality charge was laid against the CFPB by payday lending firms, supported by credit unions, the U.S. Chamber of Commerce and a passel of right-wing legal organizations, which based their case on the fact that the bureau’s funding comes from the Federal Reserve rather than the U.S. Treasury.

The Supreme Court rejected that argument by a 7-2 vote in May.

The claims against the National Labor Relations Board are different. In separate lawsuits, SpaceX and Amazon assert that because the board members and the board’s administrative law judges are insulated from at-will removal by the president, it’s in violation of several constitutional principles and provisions.

SpaceX’s case arose from an NLRB accusation that it improperly fired nine employees in 2022 for publishing an open letter complaining about safety provisions at the company’s plants. union organizing activities, among other illegal acts. Its lawsuit has had a complicated procedural history.

SpaceX originally filed its lawsuit in federal court in Brownsville, Texas, where it had a 50-50 chance of drawing a Trump-appointed judge but where appeals go to the notably conservative 5th Circuit Court of Appeals, in what appeared to be a flagrant example of forum-shopping.

As it happened, the case came before Rolando Olvera, an Obama appointee. He didn’t think much of a Hawthorne-based company suing the NLRB, which is located in Washington, D.C., over the firings of employees who mostly worked in California. (The lone exception was an employee located in Washington but whose supervisors were in California.)

“It is undisputed that no party resides in the Southern District of Texas,” Olvera ruled. He ordered the case transferred to federal court in Los Angeles. SpaceX appealed to the 5th Circuit Court, which obligingly ordered the case returned to Texas. The case is currently held in abeyance while the appeals court ponders various issues.

Amazon filed its case against the NLRB in September in San Antonio federal court, where three of the five judges are Republican-appointees but appeals also go to the 5th Circuit, even though the company’s dispute with the NLRB involves Teamster-represented workers in Staten Island, N.Y. It was assigned to Xavier Rodriguez, an appointee of George W. Bush.

One can’t overstate the stakes in this battle for the company and the union. The Staten Island warehouse was the first Amazon facility to win a union representation campaign.

Amazon is seeking an injunction blocking the NLRB from “pursuing unconstitutional administrative proceedings,” asserting that the board members are “insulated from removal in contravention of Article II of the Constitution.” The NLRB’s structure, the company argues, “violates the constitutionally mandated separation of powers and Amazon’s due process rights.”

The Teamsters, which represents the Staten Island workers, sees the quest for an injunction as nothing but an effort to use the courts to delay the company’s obligation to meet the workers at the bargaining table.

“Granting the injunction would send the message to all these workers that it’s irrelevant that their bargaining representatives have been certified by the NLRB,” which creates a duty to start bargaining, Julie Gutman Dickinson, the Los Angeles labor attorney representing the Teamsters, told me.

“The NLRB and the courts have recognized for years that delay to a union certification and the bargaining process causes irreparable loss of support among employees,” Dickinson says. “The chilling effect goes far beyond the Amazon employees in the New York facility but extends to hundreds of thousands of employees across the country, many of whom are involved in organizing campaigns to seek union representation, who will see that the NLRB’s legal process is completely futile.”

Oral arguments in a second case, involving unionized drivers and dispatchers at a warehouse in Palmdale that the workers maintain is jointly operated by Amazon and a labor subcontractor, are scheduled for Dec. 18 in Los Angeles federal court.

The Teamsters argues that Amazon appears to be a recent convert to the idea that the NLRB is unconstitutional. For more than two years, or since the Staten island election, Amazon pursued the NLRB’s administrative process to overturn the vote.

“At no time did Amazon assert any constitutional claims or allege the NLRB or its processes were constitutionally deficient,” the union said in a legal filing. Not until September, when it was facing an order to explain why it hadn’t bargained with the union, did the company raise the constitutional question.

It’s worth noting that the constitutionality of the NLRB has already been reviewed by the Supreme Court. That happened in 1937, with a 5-4 vote (the minority votes came from the cadre of reactionary justices known then as the Four Horsemen).

The majority opinion by Chief Justice Charles Evans Hughes didn’t explicitly address the president’s authority to remove the board members at will, but he did find that the “procedural provisions” of the National Labor Relations Act, which created the NLRB, met constitutional muster.

Amazon may be right to believe that it will prevail before what it calls “an unbiased court.” If it’s referring to the Supreme Court, it’s in with a chance, given the overt hostility the current court majority has shown toward organized labor. But declaring the NLRB to be unconstitutional, some 90 years since it was created by Congress, would be a big step indeed.