[co-authors: Josie Forney and Mackenzie Matulich]
In an eight-to-one decision this month, the Supreme Court ruled in favor of Starbucks in Starbucks Corp. v. McKinney, involving a longstanding legal battle against the National Labor Relations Board (NLRB). The NLRB was advocating on behalf of a labor union organizing committee formed by Starbucks employees, which the NLRB alleged committed an unfair labor practice when it terminated several pro-union employees.
Background Incident & NLRB Involvement
In 2022, Starbucks fired seven employees at a store located in Memphis, TN, for hosting a local news station after hours to promote their unionizing effort. The NLRB filed an administrative complaint alleging Starbucks had engaged in unfair labor practices and filed a petition seeking a preliminary injunction under §10(j) of the National Labor Relations Act (NLRA).
The NLRB can bring in-house proceedings against employers and labor unions for engaging in unfair labor practices. However, the NLRB’s internal complaint process can take years to conclude. To immediately cease alleged unfair labor practices, §10(j) of the NLRA allows the NLRB to ask any federal district court to grant a preliminary injunction while the internal procedures take place. This injunction has the effect of allowing the court to give the NLRB whatever temporary “relief” is necessary until the case is resolved or goes to trial, depending on the situation at hand. Examples of relief include reinstating previously terminated employees, providing backpay, and damages.
Differing Standards of Review
The District Court granted the preliminary injunction, requiring Starbucks to reinstate the fired employees. The Sixth Circuit Court of Appeals affirmed this ruling. Both decisions at the lower courts were overturned by the Supreme Court’s decision. The key reasoning behind the different results between the courts lies in the standard of review the courts applied when assessing whether the injunction should be granted.
Most lower courts in the 6th Circuit faced with NLRB requests for injunctive relief were applying a two-part test under McKinney v. Ozburn-Hessey Logistics, LLC, which asks whether there is “reasonable cause to believe that unfair labor practices have occurred,” and whether injunctive relief is “just and proper.” Essentially, all that the NLRB had to show was that its legal theory was not frivolous, and that injunctive relief would be necessary to return the parties to the status quo until the NLRB internal investigation was conducted. This standard made it much easier for the NLRB to prevail in preliminary injunction issues, as the bar of proof was very low.
However, the Supreme Court argued that courts must exercise their authority to grant equitable relief in a manner “consistent with tradition” and the four part test used in federal civil matters as devised in Winter v. Natural Resources Defense Council, Inc. The traditional four-part test requires the party seeking injunctive relief to make a clear showing that:
- it is likely to succeed on the merits
- it is likely to suffer irreparable harm if the relief is not allowed
- the balance of equities tips in its favor
- the injunction is in the public interest
This decision tightened the standards for preliminary injunctions requested by the NLRB in federal district courts, establishing a four-factor test that must be met.
What This Decision Means for Employers
The Supreme Court in Starbucks has established a new precedent for preliminary injunctions sought under §10(j) with this decision. District courts must now use the traditional four-part test when evaluating all NLRB requests for a preliminary injunction under §10(j) in the future. That gives employers the upper hand in upending unionization efforts which have significantly increased across various business sectors in America.
Employers will face a reduced risk of having to immediately reinstate or maintain an employee challenging their termination. Because of the increased burden on the NLRB to demonstrate that injunctive relief is appropriate, employers can proceed with employment decisions without immediate legal repercussions. However, employers need to be cognizant that under the make whole remedy instituted by the NLRB in 2022, should the NLRB prevail on its unfair labor practice and later compel reinstatement, the employees will be entitled to all costs incurred due to their loss of employment for what may be a rather long period of time.
The Impact on Employees
By increasing the threshold for injunctive relief, it may become harder for labor officials to protect the rights of workers in America during the pendency of an unfair labor practice charge. The heightened standard of review creates a stricter set of criteria and evidentiary requirements for granting an injunction. The NLRB will have to meet the four-factor test to prevail in an injunction hearing at the district court level. This decision tilts the balance in favor of employers, making it less feasible for employees to obtain immediate relief from potentially adverse employment decisions before having their claims fully heard.
Key Takeaways
Making it more difficult to prove a right to a preliminary injunction in turn makes it less risky for an employer to proceed with adverse employment decisions. Courts will be less inclined to intervene in NLRB actions unless it can demonstrate a strong case for immediate relief. However, employers who consistently shoot down their workers’ efforts to unionize often face severe public and media backlash. It is crucial for employers to carefully consider their employees’ union involvement and explore potential compromises to maintain a positive public image and employee relations.
