DOJ to Drop Biden-Era Case Against Space X

Back in August 2023 the Biden Department of Justice announced it was filing a lawsuit against Space X for discriminating against refugees in hiring. In essence the DOJ said Space X was giving American citizens preferential treatment.

In job postings and public statements over several years, SpaceX wrongly claimed that under federal regulations known as “export control laws,” SpaceX could hire only U.S. citizens and lawful permanent residents, sometimes referred to as “green card holders.” Export control laws impose no such hiring restrictions. Moreover, asylees’ and refugees’ permission to live and work in the United States does not expire, and they stand on equal footing with U.S. citizens and lawful permanent residents under export control laws. Under these laws, companies like SpaceX can hire asylees and refugees for the same positions they would hire U.S. citizens and lawful permanent residents.

And for this alleged violation, the DOJ was seeking back pay for people who weren’t hired as well as civil penalties. That will become important in a moment.

The United States seeks fair consideration and back pay for asylees and refugees who were deterred or denied employment at SpaceX due to the alleged discrimination. The United States also seeks civil penalties in an amount to be determined by the court and policy changes to ensure it complies with the INA’s nondiscrimination mandate going forward.

Elon Musk objected at the time, saying Space X had been warned not to hire anyone but permanent US residents to avoid violating arms trafficking laws.

Exactly.

SpaceX was told repeatedly that hiring anyone who was not a permanent resident of the United States would violate international arms trafficking law, which would be a criminal offense.

We couldn’t even hire Canadian citizens, despite Canada being part of NORAD!

This…

— Elon Musk (@elonmusk) August 25, 2023

About a month later, Space X filed a lawsuit claiming that the entire procedure was constitutionally flawed because the DOJ planned to adjudicate the case using an in-house Administrative Law Judge (ALJ) as opposed to a federal court:

SpaceX has not engaged in any practice or pattern of discriminating against anyone, including asylees or refugees. To the contrary, SpaceX wants to hire the very best candidates for every job regardless of their citizenship status, and in fact has hired hundreds ofnoncitizens.

But aside from being factually and legally insupportable, the government’s proceedings are unconstitutional for at least four reasons: (1) the administrative law judge (ALJ) adjudicating the government’s complaint was unconstitutionally appointed; (2) the ALJ is unconstitutionally insulated from Presidential authority because she is protected by two layers of for-cause removal protections; (3) the ALJ is unconstitutionally purporting to adjudicate SpaceX’s rights in an administrative proceeding rather than in federal court; and (4) the ALJ is unconstitutionally denying SpaceX its Seventh Amendment right to a jury trial.

As mentioned above, one thing the DOJ was seeking here was penalties and back pay. Space X argued that under the Constitution, judgments of penalties that involve taking private property (from Space X in this case) can only be made by courts established by Article III of the Constitution, not by ALJs.

In case you aren’t familiar with them, lots of federal agencies use ALJs to process cases, so Space X was objecting to the constitutionality of a common practice in the federal government. The implications of the case were significant well beyond the Department of Justice. 

And at that point, in November 2023, a judge paused the DOJ case against Space X in order to consider the claims made in the company’s lawsuit. 

U.S. District Judge Rolando Olvera in Brownsville, Texas said in a written order late Wednesday that administrative judges at the Justice Department who hear cases involving anti-immigrant bias were not properly appointed.

Olvera blocked the department’s case, which was filed in August, from moving forward pending the outcome of SpaceX’s September lawsuit claiming the administrative case violates the U.S. Constitution.

As of this week, however, the underlying case is being dropped by the Trump DOJ.

In a Thursday court filing in Brownsville, Texas, government lawyers asked a judge to end a pause in proceedings so they could file a notice of dismissal of the case. The Justice Department said it would dismiss the case with prejudice, meaning it could not be brought again.

You really have to step back to appreciate this. Biden’s DOJ sued Space X accusing it of failing to hire an unspecified number of refugees as cooks or welders or something similar (the DOJ press release mentions cooks, welders, dishwashers, etc.). Space X responded by claiming the entire DOJ system of adjudication for such cases was unconstitutional and got it shut down for 15 months.

Frankly, I hope companies subject to this kind of in-house justice continue to raise these constitutional problems. Taking more power away from the federal bureaucracy seems like a good idea.