Supreme Court’s New Labor Order Test Boosts Access to Evidence

The US Supreme Court’s decision involving Starbucks Corp. that raised the bar for the National Labor Relations Board to obtain temporary court orders also opened a door for employers to use those proceedings to bolster their defenses in the underlying administrative cases.

The justices held Thursday that federal judges shouldn’t give more deference to NLRB requests for injunctions than those of other litigants. That means evidentiary hearings and discovery will likely become commonplace as judges demand a more well-developed record before ruling on the agency’s petitions.

“The employers will, through discovery in district court, obtain a significant amount of evidence that it may not have otherwise,” said Patrick Muldowney, a management-side lawyer at Baker & Hostetler LLP. “That can only help its defense.”

The Supreme Court’s ruling was a double win for Starbucks. Not only did the justices vacate an injunction against the coffee giant, they also vindicated the company’s novel legal strategy it’s used in response to NLRB injunction petitions.

The NLRB asks federal courts for injunctions 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 textbook case—exemplified in the Starbucks dispute—is an order that reinstates fired union activists so that workers aren’t intimidated into abandoning their organizing campaign.

A 10(j) injunction—named after the section of the National Labor Relations Act empowering the agency to seek it—is meant to be immediate and temporary, expiring when the board rules in the underlying administrative case. The agency pursues those court orders rarely and usually can obtain them.

But Starbucks has found success delaying 10(j) cases by aggressively seeking discovery, despite the courts’ traditionally more lenient treatment of NLRB injunction requests. That strategy has sparked discovery fights and slowed cases en route to reaping potentially helpful information.

Other companies can easily follow Starbucks’ path now that judges will use the traditional procedural rules for 10(j) cases that they use for preliminary injunctions in other civil cases.

“Now there’s going to be little mini-trials,” said Robert Giolito of Giolito Law, a veteran union-side attorney who represents the Starbucks Workers United union. “I think that kills 10(j) as an effective remedy. If the agency can’t go in and get the 10(j) right away, workers get scared and it kills the campaign.”

More Scrutiny, More Evidence

For its part, the NLRB now will likely seek more evidence via investigative subpoenas in administrative cases before filing 10(j) petitions, so agency lawyers can put on stronger cases in federal court, labor law observers said.

While the agency has broad discovery powers at the administrative level, employers’ ability to obtain information in unfair labor practice cases at the board is narrower than in federal court.

“The board takes the position that it does not have to respond to discovery requests,” said Jerry Hunter, a former NLRB general counsel. “The board is very secretive about the evidence it obtains. Employer counsel does not have access to witness affidavits until the administrative hearing.”

However, many federal judges overseeing 10(j) cases won’t be bound by the NLRB’s position on discovery, said Hunter, an attorney at Bryan Cave Leighton Paisner LLP.

The Supreme Court on Thursday created a strong deterrent against seeking 10(j) injunctions by calling for a more exacting analysis of the board’s petitions, said Anne Marie Lofaso, a labor law professor at West Virginia University.

“This totally disincentivizes them, particularly because of discovery and delay,” said Lofaso, a former NLRB attorney. “The board can continue to pursue those cases, but it’s going to take resources away because now they’re going to have to have these mini-trials.”

Cost Justified

But NLRB General Counsel Jennifer Abruzzo, who has emphasized the use of 10(j) injunctions in her enforcement of labor law, is unlikely to back away from seeking them, Hunter said.

The power of the injunction is strong enough to justify the increased expense of trying to obtain them, he said.

The raised bar for 10(j) injunctions will change employers’ risk calculus for responding to ULP charges, said Christopher Foster, a management-side lawyer at McDermott Will & Emery.

Now that it’s more difficult and burdensome for the agency to win an injunction, employers may be less apt to settle charges that include a union request that the board seek a court order, he said.

Nevertheless, it’s not a foregone conclusion that the NLRB will have a problem passing the legal test for preliminary injunctions because of the Supreme Court’s decision.

The justices held that courts must use the traditional, four-factor test for preliminary injunctions. A recent Bloomberg Law analysis found that district courts have granted NLRB injunction petitions at largely the same rate regardless of whether they used a more lenient, two-factor test or the more stringent, four-factor test.

“The board will have no trouble continuing to meet these factors—even if applied more strictly—in the types of egregious cases where the board seeks an injunction,” said union-side lawyer Julie Gutman Dickinson of Bush Gottlieb ALC.

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