Amazon Hopes To Avoid Labor Regulation By Simply Abolishing National Watchdogs

Amazon, currently locked in a legal battle with the US National Labor Relations Board (NLRB) over the mega-souk's treatment of workers, is arguing the watchdog is unconstitutional. And it's not the only corporation testing that line of reasoning.

In a February 15 filing in response to a complaint about Amazon's alleged illegal retaliation against workers at a Staten Island warehouse, the e-commerce giant took aim at the government's authority.

Amazon's legal representative wrote, "The structure of the NLRB violates the United States Constitution's separation of powers and Amazon's due process rights under the Fifth Amendment to the United States Constitution because the NLRB’s Board Members concurrently exercise legislative, executive, and judicial powers in the same administrative proceeding."

The NLRB declined to comment.

Donald Polden, former dean and professor of law at Santa Clara University, told The Register that Amazon is about 80 years too late.

"The constitutionality of the NLRB (and some other federal administrative agencies) was settled decades ago," he said. "I think that the likelihood that a credible federal appellate court would take the claim seriously is very remote, although there are some federal circuit courts that are packed with 'Trump judges' and might get enough votes to take a look at such a claim."

While companies have always pushed back on regulatory constraints, Amazon's gambit comes at a time when the Supreme Court and the Fifth Circuit Court of Appeals have indicated they're willing to reconsider the power of some government agencies.

Efforts to trim back regulatory powers are "definitely more common," Jill Fisch, professor of business law at the University of Pennsylvania Law School, told The Register.

"I think it's part of the current court's skepticism about the administrative state and how it should be structured and how much power agencies should have and the extent to which they should be more politically accountable."

Other corporations are pursuing similar strategies. SpaceX in January sued the NLRB and claimed its structure is unconstitutional after the agency accused the firm of unlawfully dismissing eight engineers who criticized Elon Musk.

Supermarket chain Trader Joes, represented by the same law firm as SpaceX and facing similar labor complaints, has also asserted the NLRB is constitutionally defective. Meanwhile, the Supreme Court recently agreed to hear a petition from Starbucks to review an NLRB decision requiring the coffee slinger to reinstate workers who lost their jobs following a unionization campaign.

"Major employers (such as Amazon, Starbucks) are bristling at the ramped up enforcement of labor laws (especially those dealing with rights of employees to form a collective bargaining unit and gain NLRB recognition) by the Biden Admin," said Polden. "A big part of the Administration's labor law agencies (like DOL and NLRB) are aimed at workers' labor rights in gig industries, part time workers, big box and ecommerce retail platforms."

Meta doesn't much like government intervention either. In November, the social ad biz challenged the authority of the Federal Trade Commission (FTC) for trying to limit the social network's data gathering. And Microsoft made a similar argument [PDF] in late 2022 to prevent the FTC from hindering its acquisition of Activision Blizzard, though it subsequently removed that claim in an amended filing [PDF].

Efforts to rewrite agency rules may have been emboldened by the US Fifth Circuit Court of Appeals' decision in Security and Exchange Commission vs. Jarkesy (2022), which held that the financial watchdog's limitations on removing administrative law judges violate the president's constitutional power. That decision is currently before the Supreme Court.

The Supremes are also considering a challenge to the Consumer Financial Protection Bureau by payday lenders.

Fisch said in the past there have been court challenges to specific agency decisions but there hasn't been as much skepticism about the agencies themselves. She pointed to another consequential case before the Supreme Court, Loper Bright Enterprises v. Raimondo, over regulation that requires commercial fishing vessels to pay for federal monitoring.

• Tesla says California's Autopilot action violates its free speech rights
• Musk takes SEC 'Twitter sitter' consent decree appeal to US Supreme Court
• EU lawmakers finalize cyber security rules that panicked open source devs
• Meta goes to war with FTC over right to profit from kids' personal data

As a result of that case and another (Relentless, Inc. v. Department of Commerce), the Supreme Court is considering whether to overturn Chevron v. Natural Resources Defense Council, a 40-year-old precedent that has judges deferring to agencies when dealing with gaps in the law. The Court, said Fisch, is asking "should courts, as systematic matter, defer to agencies or should courts take on a greater role in scrutinizing agency regulation?"

"Some of the interest (by Amazon, Trader Joes and Space X, all of whom are facing agency actions for their conduct in recent labor union formation efforts) in such an off-the-wall argument is the Supreme Court's decision to take a case involving Starbucks and its efforts to block a unionization effort in Memphis, Tennessee," opined Polden.

"The frontal attack on the agency's constitutionality by Amazon likely represents a wing and prayer hope that someone up above will look with disfavor on federal administrative agencies (think about the recent Supreme Court case involving the Chevron doctrine) and be willing to take up some specious theories that were adjudicated decades ago."

Fisch said there's a general view in corporate America that there's too much regulation.

"Part of the reason that we moved to the administrative state as part of the New Deal was the idea that a lot of these industries were complex," she said. "And it wouldn't necessarily be the best way of regulating for Congress to do all of this itself."

One potential consequence of cutting back on the power of administrative agencies, said Fisch, is that instead of an agency like the Environmental Protection Agency making environmental rules, we'd have Congress setting environmental policy.

"I'm not sure that actually leads businesses to a better place," she said.

Firms may be banking on Congress not doing anything due to political paralysis, said Fisch, "but to the extent that Congress does anything, it might not be the best regulation." ®