SpaceX Sues the U.S. Government; Fed Keeps Rates Steady
Dear Investors,
SpaceX has filed a lawsuit against US Attorney General Merrick Garland and two Department of Justice officials. This comes as a response to government allegations of hiring discrimination against asylees and refugees. SpaceX denies these claims and asserts that the DOJ's handling of the complaint is unconstitutional.
The Facts of the Original Case
The DOJ accused SpaceX of discriminating against asylees and refugees in hiring from September 2018 to May 2022, claiming they had little chance of fair consideration.
SpaceX incorrectly asserted in job postings and public statements that federal export control laws required them to hire only U.S. citizens and lawful permanent residents, which the DOJ refuted.
Among 10,000 SpaceX hires during the mentioned period, only one was an asylee, and none were refugees, as per DOJ-cited SpaceX data. This lone asylee was hired four months after the DOJ's IER Section began its investigation.
The DOJ pointed out that SpaceX employed various roles, including welders, cooks, crane operators, baristas, dishwashers, information technology specialists, software engineers, business analysts, rocket engineers, and marketing professionals. Importantly, the lawsuit's scope extends beyond positions requiring advanced degrees.
SpaceX Refutes with a Technicality
SpaceX seeks to stop administrative proceedings by requesting an injunction from the US District Court for the Southern District of Texas.
In its lawsuit, SpaceX asserts it doesn't practice discrimination and actively pursues the best candidates, irrespective of citizenship status. Furthermore, it argues that the administrative process violates the Constitution due to issues like the appointment of the administrative law judge, independence from Presidential authority, adjudication in an administrative proceeding rather than federal court, and denial of the Seventh Amendment right to a jury trial.
SpaceX is leveraging a recent Supreme Court ruling in two cases involving the FTC and Securities and Exchange Commission. This unanimous April 2023 ruling permits defendants in these cases to bypass the administrative process and directly challenge proceedings in district court.
Is This a Witch-Hunt?
At the All-In Summit last week, Elon took the stage and claimed the the Biden administration was unfairly “weaponizing” the judicial body against him. Yet, the facts seem to tell a different story.
The DOJ's complaint against SpaceX cited statements by the company's CEO, Elon Musk, in which he discouraged asylees and refugees from applying to SpaceX. The DOJ pointed to Musk's June 2020 tweet, in which he stated that "US law requires at least a green card to be hired at SpaceX, as rockets are advanced weapons technology."
However, the DOJ lawsuit clarified that asylees and refugees, who have fled their home countries due to a well-founded fear of persecution, are not issued green cards like permanent residents. Still, they have indefinite permission to live and work in the United States once granted asylee or refugee status by the US government.
SpaceX is subject to export control laws and regulations, including the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR), which restrict certain exports. Nevertheless, the DOJ asserted that this does not preclude SpaceX from hiring asylees and refugees. The DOJ alleged that the public statements made by Musk and SpaceX's VP of Human Resources were discriminatory on their face.
This alleged discrimination extended to the recruiting process, with SpaceX recruiters regularly telling candidates between 2014 and 2020 that the company could generally only hire US citizens or lawful permanent residents due to ITAR. The DOJ cited specific cases in which experienced asylee candidates were rejected with the reason "not authorized to work/ITAR ineligible," and another case where a hiring manager cited "not US citizen or green card" as the reason for not hiring an asylee applicant.
In our perspective, it's disheartening to witness an entrepreneur who has made significant contributions to American innovation, spanning from rockets and electric cars to trains, solar energy, and satellite communication, becoming entangled in this situation. Elon Musk, who himself immigrated twice, first from South Africa to Canada and then to the U.S., makes it seem more like an instance of a staff member misinterpreting the law rather than a deliberate attempt to discriminate against immigrants. We’ll have to see how this plays out in court over the next few months…
This Week By the Numbers 📈
Quick Facts:
FOMC keeps rate steady, predicts one more interest hike this year
US national debt reaches an all-time high of $33 trillion
Global debt hits record $307 trillion
US bond yields hit highest level in 16 years
Instacart IPO up 15%
Nvidia CEO sells $120m stock in 3 days
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Until next week,
Tatiana Koffman
About the Author: Tatiana Koffman
Hi there and thanks for reading! If you stumble upon my newsletter, you will notice that I write about money, economics, and technology. I hold a JD/MBA and spent my career in Capital Markets working across Mergers & Acquisitions, Derivatives, Venture Capital, and Cryptocurrencies. I write to make financial topics more accessible and create equal opportunity for the next generation of investors. I have personally invested in 20+ companies and funds (👉 my portfolio).