Investing in Space

Federal judge signals SpaceX could face tough time blocking DOJ hiring probe subpoena

Key Points
  • A federal judge on Monday hinted SpaceX could find it difficult to block a subpoena for hiring documents issued by the U.S. Department of Justice.
  • Judge Michael Wilner of the U.S. District Court for the Central District of California issued a scheduling order for a videoconference meeting with Justice Department and SpaceX lawyers.
  • He also pointed to a recent decision he made "in an analogous" subpoena enforcement action — a case which does not bode well for SpaceX's odds of blocking the DOJ's subpoena.
  • The Justice Department's case against SpaceX centers around an employment discrimination complaint the DOJ's Immigrant and Employee Rights Section received nearly a year ago.
The SpaceX Falcon 9 rocket, carrying astronauts Doug Hurley and Bob Behnken in the Crew Dragon capsule, lifts off from Kennedy Space Center, Fla., on Saturday, May 30, 2020. The SpaceX Demo-2 mission is the first crewed launch of an orbital spaceflight from the U.S. in nearly a decade.
Joe Burbank | Orlando Sentinel | Getty Images

A federal judge on Monday hinted SpaceX could find it difficult to block a subpoena for hiring documents issued by the U.S. Department of Justice, which is investigating whether Elon Musk's company illegally discriminates against foreigners in its hirings.

That strong hint came in an order by Judge Michael Wilner of U.S. District Court for the Central District of California, who told SpaceX and DOJ lawyers he wants to talk to them during a videoconference next week. SpaceX has stonewalled the subpoena, according to the DOJ.

Wilner's order noted, and told the parties to look at, a prior decision he made in an unrelated case, in which he flatly rejected a company's arguments against complying with a subpoena for hiring information issued by the U.S. Equal Employment Opportunity Commission.

Wilner's order also suggests that both sides might be able to resolve the dispute "short of full-on litigation."

The DOJ last week asked Wilner to order SpaceX to comply with a subpoena demanding that the space exploration company provide information and documents related to its hiring and employment eligibility verification processes.

The subpoena would require the production of confidential personnel records of more than 3,500 employees, SpaceX has said.

The DOJ's Immigrant and Employee Rights Section opened that probe after a man named Fabian Hutter complained that SpaceX discriminated against him when he was asked about his citizenship status last March during a job interview for a technical strategy associate position.

Hutter is not a U.S. citizen, but according to a document filed by SpaceX in response to the DOJ subpoena he is a "lawful permanent [U.S.] resident holding dual citizenship from Austria and Canada."

Hutter told CNBC in an interview Monday that he believes SpaceX decided not to hire him after he answered a question about his citizenship status, and that the subsequent interview by a recruiter was perfunctory.

"Within five seconds I knew this wasn't a real interview," Hutter said, noting that SpaceX never looked at an example of coding work he was asked to submit, or asked him questions of a technical nature.

According to court records, that DOJ unit is now not only investigating Hutter's complaint, but "also may explore whether [SpaceX] engages in any pattern or practice of discrimination" barred by federal law.

Wilner, in his order Monday, noted that "a topic that likely will come up in this district court is how SpaceX plans to prove that compliance with the subpoena would be unduly burdensome for the company."

"I'd like to explore that topic (and probably others) with the parties before formal briefing begins," Wilner wrote in the order scheduling the teleconference.

Wilner also pointed to a 2018 decision he made "in an analogous" subpoena enforcement action.

In that case, Wilner ruled in favor of the EEOC's subpoena to a janitorial services company accused of discriminating against three workers.

Wilner ruled that the EEOC's subpoena was relevant as its evidence suggested "a broader pattern of misconduct at the company ... that may warrant a broader investigation."

A Falcon 9 rocket is displayed outside the Space Exploration Technologies Corp. (SpaceX) headquarters on January 28, 2021 in Hawthorne, California.
Patrick T. Fallon | AFP | Getty Images

In the SpaceX case, DOJ attorney Lisa Sandoval last Thursday wrote in court documents that SpaceX was refusing to comply with a subpoena issued in October that requested company hiring information. SpaceX did provide the DOJ with a Form I-9 spreadsheet of employee information, but would not turn over additional supporting documentation.

Sandoval wrote that SpaceX acknowledged the subpoena order in December but told the DOJ "that it 'does not intend to produce any additional information in response,'" according to a court filing.

SpaceX can hire non-U.S. citizens who have a green card under U.S. International Traffic in Arms Regulations. Those rules, known as ITAR, say that only Americans or foreigners who have a U.S. green card can have physical or digital access to items on the U.S. Munitions List, which consists of defense-related equipment, software and other material.

The post that Hutter was applying for explicitly required a hire to be in compliance with ITAR.

The DOJ has declined to comment on the probe.

SpaceX did not immediately respond to a request for comment.

But last year, in an effort to have an administrative hearing officer modify the DOJ's subpoena, SpaceX said in a document that Hutter was among hundreds of applicants for the position he sought last year, and was one of just a handful of applicants to be given a "technical phone screen."

"Hutter gave an unimpressive screening interview, and SpaceX rejected his application at that point; in fact, as of July 1, 2020, SpaceX had rejected every candidate it gave a technical screening interview to and had hired no one for the position," the company said in that document.

The company also said that during his initial screen in March 2020, "a SpaceX recruiter asked Hutter to confirm his citizenship and immigration status, reiterating what was in the job posting, namely, that federal regulations impose restrictions on SpaceX's employment of non-US persons."

"Hutter responded by again representing that he was authorized to work in the United States. There was no further discussion of his citizenship or immigration status," SpaceX said in its filing.

In the subsequent technical screen of Hutter, he was not asked about his national original, citizenship or immigration status, according to SpaceX.

The company said also said that, "Apparently, Hutter could not conceive of being rejected for legitimate reasons, and so ascribed SpaceX's decision to discriminatory animus based on his citizenship, despite the fact that SpaceX selected him for an interview from among hundreds of applicants knowing he was not a U.S. citizen."

SpaceX went on to day that the DOJ's Immigration and Employee Rights Section then "used Hutter's narrow (and facially illogical) complaint as the basis for launching an extremely broad and unsupported fishing expedition into SpaceX's company-wide employment practices."

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