Starbucks Decision Changes Employer Settlement Calculus With NLRB

The US Supreme Court’s decision raising the bar for the National Labor Relations Board to receive injunctive relief while its in-house tribunal handles disputes will shift those proceedings’ dynamics in the employers’ favor. The June 13 decision also gives some hints about how the justices see their roles in these issues.

The high court held 8-1 (with Justice Ketanji Brown Jackson issuing a partial dissent concurring in the judgment) that courts must apply the traditional four-factor test to requests for injunctive relief under Section 10(j) of the National Labor Relations Act. This decision rejected the more lenient two-factor standard adopted by a majority of the circuit courts of appeal.

Here’s the background: The NLRB enforces labor law through in-house proceedings, which can take years to resolve. To address this, Congress empowered the NLRB—through section 10(j) of the NLRA—to seek preliminary injunctions in federal court.

Traditionally, courts grant preliminary injunctions only when a plaintiff meets a strict four-factor test, but the US Court of Appeals for the Sixth Circuit and other appeals courts adopted a lenient, board-deferential standard for Section 10(j) injunctions.

The essentially unanimous decision rejecting the lenient approach displays an adherence to separation of powers and an institutionalist view of the court where, in the absence of statutory directives otherwise, the judiciary is to apply its standards to litigants across the board—regardless if they are agencies or private individuals and businesses.

We can take three things from the decision.

Heightened Standard

It will be more difficult for the NLRB to obtain a Section 10(j) injunction moving forward. The Sixth Circuit’s pre-Starbucks test was so deferential that Justice Clarence Thomas found it “hard to imagine how the Board could lose.” No longer.

Post-Starbucks, a Section 10(j) injunction is only available if the board clearly shows: there is a likelihood of success on the merits; there is a likelihood of irreparable harm absent preliminary relief; the balance of equities favors an injunction; and an injunction is in the public interest.

In determining a likelihood of success, courts won’t defer to the board’s view of the facts or theory of the case. Instead, they must conduct an exacting search to determine whether the board is likely to succeed on the merits.

New Settlement Calculus

Section 10(j) injunctions create strong incentives for employers to settle because they often restrict an employer’s core business operations and remain in place for years. The NLRB has labeled the Section 10(j) injunction “one of the most important tools available” and has emphasized the importance of obtaining the injunction at the earliest stages of the proceeding.

The Supreme Court’s decision in Starbucks could relieve some of this pressure. Before filing a Section 10(j) petition, the board will likely seek more evidence during the administrative process, and after filing, the board will likely face aggressive discovery from employers. Both steps will impose additional costs on the board and demand additional resources, which due to the board’s already limited resources may impact the number of threatened injunctions.

What’s more, the increased discovery will prolong proceedings, delaying any relief the board ultimately receives and reducing the burden on employers. The increased time and energy necessary to obtain a section 10(j) injunction, along with the heightened standard, could reduce the settlement pressure on employers and change the settlement calculus moving forward.

An Emerging Ally

In her two years on the Supreme Court, Jackson has dissented just twice from an eight-member majority opinion. In 2023, she dissented from an opinion that held the NLRA doesn’t shield a union from liability for damages caused by a workers’ strike. And last week, in Starbucks, she penned a dissent that advocated for a lower standard for Section 10(j) injunctions that recognizes the board’s central role in labor disputes.

In both dissents, Jackson broke from her colleagues to urge a labor-friendly interpretation of the NLRA that defers to the board’s expertise over labor disputes. These dissents follow a series of pro-labor opinions Jackson authored while sitting as circuit judge.

Given these data points, employers shouldn’t be surprised if Jackson continues to side against management in future labor relations cases. Unlike in Starbucks, however, Jackson most likely will be joined by at least two other justices—Sonia Sotomayor and Elena Kagan—in such decisions.

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

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Pat Muldowney, a partner with BakerHostetler based in Orlando and New York, advises private- and public-sector management clients in connection with traditional labor and employment law issues.

William Weber, an Orlando-based associate with BakerHostetler, represents employers in a broad range of employment issues.

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