In an opinion drafted by Justice Thomas and joined by seven other Justices, on June 13, 2024, the U.S. Supreme Court vacated the Sixth Circuit Court of Appeals’ affirmation of an injunction issued under Section 10(j) of the National Labor Relations Act (“Act”). In doing so, it held that the traditional four-factor test is the proper standard for courts to use when determining whether injunctive relief under the Act is appropriate. Justice Jackson concurred in the judgment but dissented in part.
Injunctions Under Section 10(j) of the Act
The Act grants the National Labor Relations Board’s (“NLRB”) General Counsel the authority to investigate and prosecute unfair labor practice charges against unions and employers. As labor law practitioners are well aware, this process takes considerable time for a matter to be resolved via litigation (and under the current General Counsel’s initiatives, an ever longer period of time). For this reason, Section 10(j) authorizes the General Counsel to seek a preliminary injunction in a federal district could while litigation before the agency is pending. The Act itself does not specify what standard a district court should apply when deciding whether to issue a preliminary injunction. Rather, it merely states that such relief is available when the district court finds it “just and proper” to do so.
The Circuit Courts Split Over the Appropriate Standard
The absence of a definitive standard in the Act regarding the issuance of a 10(j) injunction has led to a split among the federal circuit courts. Five circuit courts – the Third, Fifth, Sixth, Tenth and Eleventh – applied a two-factor test that considers whether: (1) there is reasonable cause to believe that unfair labor practices have occurred; and (2) injunctive relief is just and proper. Reasonable cause, according to these circuits, is established if the NLRB demonstrates that its legal theory is substantial and not frivolous, and the just and proper standard is met if a return to the status quo is necessary to protect the NLRB’s remedial powers under the Act.
Four circuits – the Fourth, Seventh, Eighth and Ninth – used the traditional four-factor test to determine if a 10(j) injunction is appropriate. These courts consider: (1) the likelihood of success on the merits; (2) irreparable harm if the injunction is not granted; (3) whether a balancing of the relevant equities favors the injunction; and (4) whether the issuance of the injunction is in the public interest. Two circuits – the First and the Second – applied a “hybrid” test that looks to the elements of the four-factor test to determine whether an injunction would be just and proper. The D.C. Circuit has not issued a decision setting forth which test it believed appropriate, but the federal district court in the District of Columbia has most recently applied the four-factor test.
The NLRB’s success in obtaining 10(j) injunctive relief during the past 10 years varies significantly among the circuits and, perhaps against expectations, is higher under the two-factor test than the more demanding four-factor test. The NLRB’s overall success rate is 74.1%. The NLRB’s success rate is 67.7% under the two-factor test, 73.5% under the four-factor test, and 80.6% under the hybrid test. When one digs into these numbers a little deeper, however, it becomes apparent that the composition and nature of each respective circuit court is a critical factor in determining the NLRB’s success rate. For example, as the below chart shows, the agency’s success rate is only 33% in the Fifth Circuit, which is traditionally skeptical of administrative authority. The success rate for the four-factor test also varies, from a high of 84.6% in the Seventh Circuit to a low of 50% in the Fourth Circuit.
| Circuit Courts Applying the Two-Factor Test |
Success Rate |
| Third |
100% |
| Fifth |
33% |
| Sixth |
61.1% |
| Tenth |
100% |
| Eleventh |
50%
|
Background of the Case
The underlying unfair labor practice charge involved the discharge of seven employees who had invited local media into a retail establishment in which they worked to publicize their union-organizing efforts. Region 15 of the NLRB petitioned the Western District of Tennessee for a preliminary injunction under Section 10(j) seeking the reinstatement of the discharged employees. Applying the Sixth Circuit’s two-factor test, the District Court granted the injunction, and the Sixth Circuit subsequently affirmed.
The Supreme Court Settles the Circuit Split and Adopts the Four-Factor Test
The Court began its analysis by noting that the four-factor test is the longstanding default standard for the issuance of a preliminary injunction and that courts do not depart from such principles unless Congress has clearly indicated that they should do so. The Court then examined Section 10(j) for such an instruction and found nothing to overcome the presumption in favor of the four-factor test.
Section 10(j) states that a district court is authorized to issue a preliminary injunction “as it deems just and proper.” The Court therefore looked to the meanings of “just” and “proper” near the time Section 10(j) was added to the Act in 1947 and determined that, rather than demonstrating legislative intent to depart from traditional equitable principles, these terms supported a finding that the four-factor test should apply. The Court also observed that the language of Section 10(j) does not resemble the language used by Congress in other statutes and other parts of the Act when it wished courts to depart from normal equity rules. Had Congress intended for a different standard to apply in Section 10(j) cases, it could have articulated one.
The Court also rejected the NLRB’s argument that Section 10(j) should be interpreted in light of the deference granted by courts of appeals to the agency’s final decisions because it placed the bar for an injunction so low that it would essentially require courts to “yield to the Board’s preliminary view of the facts, law, and equities.” This, the Court remarked, is “entirely inappropriate” because such a determination is nothing more than “the preliminary legal and factual views of the Board’s in-house attorneys.”
Impact
Despite the high-profile nature of this case in the labor community and the fact that, in theory at least, the four-factor test presents a higher standard to meet, its impact on the NLRB’s success in obtaining 10(j) injunctions will likely be limited. As demonstrated by the above statistics, the NLRB had greater success in circuits that used the four-factor test rather than the two-factor test. Accordingly, the uniform adoption of the four-factor standard after the Starbucks decision is unlikely to result in a significant decline in the NLRB’s success rate. This fact also shows how critical the judicial philosophy of the judge (at the district court level) or judges (at the circuit court level) assigned to the proceeding is in determining whether a 10(j) injunction issues or not. Further, given the current General Counsel’s scorched earth approach to labor relations, it is unlikely that the agency will be in any way deterred by the Court’s ruling from seeking 10(j) injunctions.
Employers, however, should take heart that the NLRB will be held to the same standards as other litigants in obtaining preliminary injunctive relief. And even though the NLRB wins at a higher rate under the four-factor test, it argued to the Supreme Court that the two-factor test was more appropriate. This demonstrates that the NLRB believed the two-factor test offered it an easier path to a 10(j) injunction. And because the NLRB must now show that it is likely to succeed on the merits, employers will have an opportunity to better assess the NLRB’s evidence and litigation theory prior to the administrative proceeding and will most likely have the ability to engage in discovery under the Federal Rules of Civil Procedure.
