In Starbucks Corp. v. McKinney, 602 U.S. ____ (2024) (hereafter, "Starbucks"), the U.S. Supreme Court (SCOTUS) recently resolved a circuit split to clarify that if the National Labor Relations Board (the Board) seeks a preliminary injunction to deter alleged unfair labor practices, the Board is not "automatically [] deserving" of an injunction and, instead, must satisfy the traditional four-part equitable standard for obtaining such relief.
The primary question posed in Starbucks was whether the traditional four-factor test for preliminary injunctions set forth in Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008) (hereafter, "Winter") governs the Board's request for such relief under Section 10(j) of the National Labor Relations Act (the Act). SCOTUS granted Starbucks' petition to review the Sixth Circuit's rejection of the traditional Winter four-factor test in favor of a less onerous two-step test. Under the less stringent standard, the Board was merely required to show that there was reasonable cause to believe that the unfair labor practice occurred, and that injunctive relief was just and proper. The Board could establish reasonable cause merely by showing its position was "substantial and nonfrivolous."
Section 10(j) empowers the Board to seek preliminary injunctive relief from a federal district court during the Board's administrative proceedings, and the court may grant such relief when "just and proper." 29 U.S.C. § 160(j). The Board is supposed to utilize 10(j) proceedings to maintain the status quo of the parties as the Board's administrative process plays out, which often takes months or years. However, in recent years, the Board has significantly increased its 10(j) filings in a broader set of circumstances. In jurisdictions that previously applied the less stringent standard, 10(j) injunctions were often granted seemingly as of right. Consequently, many employers facing 10(j) proceedings felt compelled to settle with the Board, notwithstanding their meritorious positions.
The June 13 SCOTUS Starbucks decision resolved the circuit split, and the Court rejected the less stringent standard that the Board had increasingly used to put pressure on employers. In the majority opinion, Justice Thomas emphasized the low threshold that is "reasonable cause":
[I]t is hard to imagine how the Board could lose under the reasonable-cause test if courts deferentially ask only whether the Board offered a minimally plausible legal theory, while ignoring conflicting law or facts. As Judge Readler explained, if the reasonable-cause standard were applied in the traditional civil litigation setting, any complaint that could withstand Rule 12(b)(6) would automatically be deserving of injunctive relief as well, rendering the court more a spectator than a referee when it comes to matters of equity.
Under the traditional standard articulated in Winter, a plaintiff seeking injunctive relief must clearly show (1) he is likely to succeed on the merits of the claim, (2) he is likely to suffer irreparable harm in the absence of preliminary relief, (3) the balance of equities tips in his favor, and (4) that an injunction is in the public interest. Starbucks, at 5 citing Winter. This standard reflects federal courts' approach that preliminary injunctions are an "extraordinary" remedy that is "never awarded as of right." Winter, 555 U. S., at 24.
Of course, "likelihood of success" is significantly more cumbersome than "non-frivolous," and the need to show irreparable harm is more concrete than the truncated two-step test. The additional required showings of equity and public interest are significant as well, given the federal courts' general approach that preliminary injunctions are indeed "extraordinary," among other considerations.
SCOTUS reasoned that this four-part test is the presumed standard that should be applied when any party, not just the Board, seeks injunctive relief in the federal courts. A lesser standard shall be applied only upon a "clear command from Congress[.]" Section 10(j)'s language, that a district court may grant temporary injunctive relief when "it deems just and proper," is not sufficiently clear to justify departure from the traditional test. The Court went on to provide examples of language sufficient to depart from the standard and reasoned that nothing in Section 10(j)'s text warranted such a departure.
Starbucks' victory at the Supreme Court will significantly impact 10(j) litigation across the country and may alleviate at least some of the pressure to summarily settle with the Board when facing such proceedings. Perhaps more importantly, the Board may ultimately modify its strategy and more carefully select the cases it deems appropriate for 10(j) litigation. Regardless, this is certainly one of those historic decisions that changes the calculus for employers crafting their labor strategy.
