A federal appeals court panel has shot down an attempt by Elon Musk’s SpaceX to force a sexual harassment lawsuit by eight former employees into private arbitration, The New York Times reported on Wednesday. The judges cited a 2022 law allowing plaintiffs to bypass arbitration agreements in such cases.
The court found that plaintiffs are not required to prove their sexual harassment claims would survive a motion to dismiss to avoid their case being shuffled off into arbitration, which is notoriously employer-friendly. Basically, judges found the claims qualify, which prevents SpaceX from enforcing arbitration clauses in the plaintiffs’ contracts.
“Congress could have easily drafted the EFAA [Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021] to require courts to send sexual harassment disputes to arbitration only when the complaint ‘fails to state a claim upon which relief may be granted’ or ‘fails to state facts which, if true, would constitute sexual harassment,’” U.S. Circuit Judge Michelle Friedland wrote for the three-judge Ninth Circuit panel in the split decision on Tuesday, according to Courthouse News.
Judge Eric Tung, who was appointed by President Donald Trump, dissented on the grounds that the test would allow any claim that “so much as purports to allege” sexual harassment dodge arbitration, but fellow Trump appointee Judge Danielle Forrest sided with Friedland.
In a statement to the paper, plaintiff Tom Moline wrote, “The Ninth Circuit correctly recognized SpaceX’s claims for what they are: an attempt to hide and distract from the toxic culture of sexual harassment and retaliation that persists to this day.”
SpaceX terminated nine employees who were involved in the creation and distribution of a 2022 letter protesting Musk’s social media posts, including sexual jokes, insults, his odious political views, and a particularly egregious one in which Musk mocked allegations he had inappropriately touched and propositioned a flight attendant for sex. (Musk denies it happened.)
According to the Times, SpaceX stated to many of the workers that the letter played a role in the firings, and one senior SpaceX official told several it had wasted large amounts of the company’s time. Eight of those employees are the plaintiffs in the suit.
SpaceX was able to have initial complaints dismissed by the Trump-controlled National Labor Relations Board on jurisdictional grounds, the Times wrote, and SpaceX was also able to shift the case from labor-friendly California courts into federal courts, where it argued company contracts require private arbitration.
SpaceX lost the arbitration fight in district court in 2025, and it’s not yet clear whether the aerospace company will accept the defeat it was handed in its appeal on Tuesday or petition the full appeals court. SpaceX didn’t respond to Gizmodo’s request for comment on the ruling and whether it would appeal it, but we’ll update if we hear back.
