Starbucks Wins at Supreme Court as Labor Board Power Curbed

The US Supreme Court sided with Starbucks Corp. over the National Labor Relations Board in a decision that will make it more difficult for the agency to win temporary reinstatement of workers fired during labor disputes.

Bloomberg
First Published13 Jun 2024, 11:32 PM IST
Starbucks Wins at Supreme Court as Labor Board Power Curbed
Starbucks Wins at Supreme Court as Labor Board Power Curbed

(Bloomberg Law) -- The US Supreme Court sided with Starbucks Corp. over the National Labor Relations Board in a decision that will make it more difficult for the agency to win temporary reinstatement of workers fired during labor disputes.

Federal judges should review NLRB requests for immediate court orders the same way they would examine any other petition for a preliminary injunction, the Supreme Court held in a 9-0 ruling Thursday.

In an opinion authored by Justice Clarence Thomas, the justices rejected the NLRB’s argument that the National Labor Relations Act directs judges to apply a more lenient standard to the agency’s petitions than they would for preliminary injunction requests that arise in private litigation.

The ruling will slow the process and increase the burdens for the NLRB to win immediate court orders, weakening what has been one of the agency’s most potent tools to protect workers’ rights under the NLRA.

The NLRB requests 10(j) injunctions—named after the section of the NLRA that permits the agency to pursue them—to quickly address the workplace impact of an alleged labor law violation, and to prevent a situation in which the board’s eventual remedy comes too late to fix the harm caused by the violation. The agency seeks court orders while the underlying administrative cases are pending, and they dissolve when the board rules.

The issue stems from Starbucks’ challenge to a US Court of Appeals for the Sixth Circuit decision upholding a federal judge’s temporary order to reinstate a group of pro-union workers known as the “Memphis Seven.”

The Supreme Court threw out the Sixth Circuit’s ruling and sent the case back, setting up the district court to reassess the NLRB’s bid for an injunction to be reassessed under the new, more exacting standard.

Starbucks, which is in talks with the Starbucks Workers United union about reaching collective bargaining agreements, said it’s focused on making progress towards that goal.

“Consistent federal standards are important in ensuring that employees know their rights and consistent labor practices are upheld no matter where in the country they work and live,” the company said in a statement.

The union said Starbucks should have dropped the Supreme Court case when the company committed to charting a new path forward with its workers.

“It’s incongruous to want to build a productive, positive relationship with workers and at the same time lead an attack on one of the few mechanisms they have to defend themselves against unscrupulous employers,” Lynne Fox, president of Starbucks Workers United, said in a statement.

NLRB spokesperson Kayla Blado declined to comment on the ruling.

Raising the Bar

Thursday’s decision settled a circuit split over what legal test courts should use for 10(j) injunction requests, although a Bloomberg Law analysis found that district courts granted NLRB injunction petitions at largely the same rate in recent years regardless of which framework they used.

The justices held that courts should analyze the NLRB’s petitions under the traditional four-factor test for preliminary injunctions set forth in the Supreme Court’s 2008 decision in Winter v. Natural Resources Defense Council. That test looks at a petitioner’s likelihood of success on the merits, the chance of irreparable harm if the injunction isn’t granted, a balance of the parties’ interests, and whether an injunction is in the public interest.

Some circuit courts instead had employed variants of a two-part standard that turned on whether the NLRB can show that there’s “reasonable cause” to believe an unfair labor practice was committed, and that it’s “just and proper” to issue injunctive relief.

“Nothing in §10(j)’s text overcomes the presumption that the four traditional criteria govern a preliminary-injunction request by the Board,” Thomas wrote for the court.

But the practical impact of the decision hinges less on which test courts use, and more on how stringently they apply the elements of the test.

The Supreme Court disagreed with the NLRB that the context of federal labor law requires courts to apply the factors in a less exacting way, and that the Sixth Circuit’s reasonable-cause standard appropriately accounts for that context.

“The reasonable-cause standard goes far beyond simply fine tuning the traditional criteria to the §10(j) context—it substantively lowers the bar for securing a preliminary injunction by requiring courts to yield to the Board’s preliminary view of the facts, law, and equities,” Thomas said.

The NLRA’s context doesn’t “compel this watered-down approach to equity,” he said.

Justice Ketanji Brown Jackson wrote an opinion concurring in the judgment, but also dissenting in part. The majority’s ruling empowers judges to fully apply their discretion on 10(j) requests without regard to the NLRB’s authority or the legal framework allowing the agency to go directly to court for immediate, interim relief, she said.

“I am loath to bless this aggrandizement of judicial power where Congress has so plainly limited the discretion of the courts, and where it so clearly intends for the expert agency it has created to make the primary determinations about both merits and process,” Jackson said.

The case is Starbucks Corp. v. McKinney, U.S., No. 23-367, 6/13/24.

To contact the reporter on this story: Robert Iafolla in Washington at riafolla@bloombergindustry.com

To contact the editors responsible for this story: Rebekah Mintzer at rmintzer@bloombergindustry.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Laura D. Francis at lfrancis@bloomberglaw.com

(Updated with additional reporting throughout.)

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

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First Published:13 Jun 2024, 11:32 PM IST
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