Starbucks’ Supreme Court Battle to Test Reach of Labor Board

Starbucks Corp.’s challenge to a court order requiring the company to rehire fired union activists is giving the US Supreme Court another opportunity to dial back federal agency power.

The coffee giant and National Labor Relations Board are set to appear before the justices April 23 to argue over how federal courts should treat the agency’s requests for such orders, which remain in place during the NLRB process for resolving the underlying unfair labor practice cases.

The NLRB seeks 10(j) injunctions—named after the section of the National Labor Relations Act that gives the agency that power—to protect or restore the status quo at workplaces while the cases move forward administratively, and to prevent situations in which a final board order is too late to remedy the harm from the violations.

The Supreme Court’s consideration of the issue is the first of numerous cases involving Starbucks to make it to the nation’s highest court.

And it comes amid the justices’ overall re-balancing of authority in the federal government away from agencies and toward the courts.

The high court’s conservative majority, which has rolled back agency power in recent years by invoking the “major questions doctrine,” may be poised to topple a decades-old precedent calling for courts to defer to agency interpretations of ambiguous laws. The justices are also considering a challenge to the Securities and Exchange Commission’s in-house adjudication of alleged securities fraud.

Starbucks is asking the Supreme Court to decide whether courts should use a “traditional, stringent four-factor test” to analyze NLRB requests for injunctions, or if they should use something more “lenient.”

Fight Over Factors

Federal appeals courts are currently split over what standard should apply, 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.

Four circuits use the four-factor test that’s commonly invoked for other types of injunctions, looking at the 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.

Five circuits instead apply a two-part test that examines whether a district judge has reasonable cause to believe there was a labor law violation and if an injunction would be “just and proper.”

Two circuits combine those approaches by weighing elements of the four-part test to decide whether the injunction is just and proper.

The NLRB told the Supreme Court in its brief that “the number of factors or parts is largely beside the point.”

Instead, the case boils down to whether federal judges should analyze an NLRB injunction request the same as they would injunctions in lawsuits they ultimately decide themselves—or whether they should account for the specific function NLRB-specific injunctions play in the overall structure of federal labor law, the agency said.

The NLRB’s ability to go directly to federal court to quickly obtain 10(j) injunctions is a key enforcement tool, NLRB General Counsel Jennifer Abruzzo said in a statement.

“Without obtaining this temporary relief, the lawbreaker will fully reap the benefits of having violated workers’ rights—such as by snuffing out a nascent organizing drive—through the passage of time, because a Board remedy in due course will come too late to sufficiently address the harm,” she said.

From Starbucks’ perspective, the case is about leveling the playing field for employers, a move the company said will also benefit workers by ensuring they know that they have the same rights no matter where they work.

“As the Supreme Court has often said, preliminary injunctions are supposed to be extraordinary, and federal courts must verify that the same, traditional across-the-board criteria are met before they are granted,” the company said in a statement.

‘Memphis Seven’ Case

The legal debate stems from Starbucks’ challenge to a US Court of Appeals for the Sixth Circuit decision upholding a federal judge’s temporary order for the company to reinstate a group of pro-union workers known as the “Memphis Seven.” Courts in the Sixth Circuit use the two-factor test.

That 10(j) injunction will dissolve once the NLRB issues its decision in that case, which has been pending before the board since an administrative law judge ruled against Starbucks nearly a year ago. Although such a decision would seemingly moot the Supreme Court case, the justices could still keep it under an exception for issues that can come up again yet evade review.

Supreme Court debate follows intense litigation over the NLRB’s attempts to get court orders against Starbucks, which has been targeted for 10(j) injunctions in a dozen cases. The company has successfully delayed rulings with its novel strategy of aggressively seeking discovery to defend against the agency’s bids for court orders.

The court battles over injunctions are one part of the NLRB’s larger attempt to prosecute unfair labor practice cases arising from Starbucks’ efforts to repel union organizing across the country.

The NLRB argued in its brief that precedent supports courts handling 10(j) injunction petitions differently than injunctions in other types of cases.

The Supreme Court repeatedly has recognized for more than a century that courts have more flexibility to fashion equitable remedies like injunctions when federal agencies sue to enforce federal law in the public interest than they would in litigation over purely private interests between two parties, the agency said.

“It would be inconsistent with the arrangement Congress prescribed to conduct a preliminary mini-trial before one adjudicator (the district court) in advance of a full-fledged hearing before another (the agency),” the NLRB said.

But nothing allows such considerations to water down the analysis of the four-factor injunction test required by the Supreme Court’s 2008 decision in Winter v. Natural Resources Defense Council, Starbucks said in its brief.

“Courts apply Winter’s traditional criteria to other statutory contexts every day,” the company argued. “Section 10(j) should be no different.”

The case is Starbucks Corp. v. McKinney, U.S., No. 23-367, oral argument scheduled 4/23/24.