Supreme Court May Rule for Starbucks in Labor Organizing Dispute

A Starbucks worker boards the Starbucks union bus after workers stood on the picket line with striking actors and writers in solidarity outside Netflix studios in Los Angeles on July 28, 2023. Mario Tama/Getty Images

The Supreme Court seemed sympathetic on April 23 to a request by Starbucks to rein in the National Labor Relations Board’s authority to decide if fired union activists in Tennessee should get their jobs back.

Labor activists argue that such a pro-management ruling could discourage union organizing.

The court has tended to rule for employers in recent years. In June 2023, in Glacier Northwest Inc. v. Teamsters, the court found 8–1 that employers may sue collective bargaining units for damages caused by strikes.

For years, the coffee giant has been battling organized labor, which is trying to unionize baristas across the United States.

The company stated that it terminated the employment of the so-called Memphis Seven because they ran afoul of company policy by letting a television news crew into a store after business hours.

The Starbucks Workers United union complained to the board and filed unfair labor practice charges, claiming that Starbucks interfered with the workers’ right to form a union and discriminated against union members. The board secured a preliminary injunction from a federal district court in 2022 that forced the company to temporarily rehire the fired employees. The U.S. Court of Appeals for the Sixth Circuit found that the district court “did not abuse its discretion” in issuing the injunction and allowed it to stand.

Oral arguments took place before the justices in Starbucks Corp. v. McKinney.

Headquartered in Seattle, the petitioner, the world’s largest coffeehouse chain, reported nearly $36 billion in revenue last year. The respondent is M. Kathleen McKinney, regional director for Region 15 of the board.

Department of Justice attorney Austin Raynor presented the Biden administration’s defense of Ms. McKinney and the board.

More than 400 of the company’s 9,600 corporate-run U.S. stores have reportedly voted to unionize since 2021.

National Labor Relations Board

The National Labor Relations Board, an independent federal agency that aims to protect the rights of private-sector employees to join together to improve their wages and workplace conditions, said Starbucks blocked lawful organizing activities by the baristas.

Under the National Labor Relations Act, the board hears complaints about employers engaged in unfair labor practices. Section 10(j) grants the board the power to seek “appropriate temporary relief or a restraining order” while its adjudication process is ongoing. It also empowers federal district courts to issue “such temporary relief or restraining order as they deem just and proper.”

The board seeks court orders when delays in deciding unfair labor practice cases might undermine the effectiveness of the final ruling or to protect the status quo at a workplace during the case’s administrative process. Once the board makes its decision in a case, these temporary injunctions are typically lifted, according to a Bloomberg Law summary.

The case is not the only ongoing challenge to the board’s authority. SpaceX reportedly claimed in a federal lawsuit this year that the board’s structure was “unconstitutional” after the board alleged that SpaceX unlawfully terminated eight employees for criticizing company head Elon Musk.

In the case at hand, Starbucks argues that the board used the wrong test when deciding if it should seek a temporary injunction against the company.

The Fourth, Seventh, Eighth, and Ninth Circuits of the U.S. Court of Appeals require the board to use the traditional four-prong test under which preliminary injunctions are treated as “an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.”

However, the Third, Fifth, Sixth, 10th, and 11th Circuits impose a looser “reasonable cause” test that’s “no real obstacle” to securing injunctions, the company stated in its petition.

The board only has to demonstrate “reasonable cause” to believe that employers participated in unfair labor practices, which means that the board’s “burden” is “relatively insubstantial,” according to Starbucks.

“As the [board’s] internal manual on section 10(j) injunctions puts it: The ‘threshold of proof ... is low,’” the company stated.

During oral arguments on April 23, the company argued that the courts should have to follow the tougher, traditional standard when considering whether to order the reinstatement of fired employees. The courts should follow the four-factor test used outside Tennessee and the Sixth Circuit instead of opting for the easier-to-meet reasonable cause test.

“What [Starbucks] wants is just a level playing field, the normal injunctive factors that agencies and private parties should get,” company attorney Lisa Blatt told the Supreme Court, responding to a question by Justice Ketanji Brown Jackson.

“So even if the board only sought one injunction ... can you please hold that the four factors apply?”

Justice Clarence Thomas told Ms. Blatt that the government is arguing that the company is using an “ahistorical, decontextualized approach [that] is inconsistent with the statutory text, the basic premises of equity, and over a century of case law.”

Ms. Blatt replied: “I don’t even know where they’re getting that. I mean, this court in Winter and a million other cases have said that these four factors are longstanding, and the clear statement rule goes back to Justice [Joseph] Story,” who served on the court from 1812 to 1854.

In Winter v. Natural Resources Defense Council, the Supreme Court held in 2008 that the four-part test for issuing a preliminary injunction is whether a plaintiff is thought likely to succeed on the merits, whether the plaintiff is likely to suffer irreparable harm in the absence of the injunction, whether the balance of equities and hardships weighs in favor of the plaintiff, and whether the injunction is deemed to be in the public interest.

“Here, we have the four factors,” Ms. Blatt said.

“I don’t even understand the board’s jurisdiction. There are a multitude of contexts where an agency has an adjudication, and if it wants a preliminary injunction, it’s got to make the showing that every other party would have to make.”

Justice Jackson, the sole dissenter in the Glacier Northwest ruling, pushed back, saying that in this case, the board is seeking an injunction under a specific provision of the National Labor Relations Act that takes into account “the board’s prerogatives.”

Congress authorized the board to make the “unfair labor practice determination in the first instance,” and the preliminary injunction in this case “is not the ordinary [preliminary injunction] that ... district courts see,” the justice said.

Ms. Blatt replied, “No, not at all. It is an ordinary preliminary injunction.

“[The board doesn’t get] to walk in and get a coercive injunction on the notion that they have a non-frivolous legal theory and the district court is barred from finding facts, it’s barred from weighing witness credibility, and all that matters is the government has not presented a joke.”

Which Test Applies?

Addressing Mr. Raynor, Justice Neil Gorsuch questioned why the government supports using the looser standard for granting injunctions.

“In all sorts of alphabet soup agencies, we don’t do this,” the justice said.

“So why is this particular statutory regime different than so many others?”

Mr. Raynor said the government’s position enjoys plenty of support among the circuit courts, to which Justice Gorsuch pointed out that the other side’s position also enjoys ample support in the circuit courts.

Justice Gorsuch said, “I struggle to understand what you’re asking lower courts to do and how it would be unique to the [board’s] context as opposed to others.”

Justice Sonia Sotomayor suggested to Ms. Blatt that the current system empowers the board at the expense of the courts.

“I do understand why that needs to be corrected because you’re right, it’s the court that has to decide the likelihood of merits” regarding allegations of unlawful conduct, the justice said.

Justice Elena Kagan asked “why courts should apply a lower standard.”

Mr. Raynor said the courts should do so because “Congress intended the board to be the primary adjudicator here.”

Justice Kagan replied, “Well, it did intend the board to be the primary adjudicator, but it also gave this power over injunctions to the court.”

The Supreme Court is expected to rule on Starbucks Corp. v. McKinney by the end of June.