Supreme Court Sides With Starbucks, Deals Big Blow to NLRB

The Supreme Court just dealt a blow to the National Labor Relations Board (NLRB) by making it harder for the federal labor agency to win early court injunctions for employees in cases involving labor disputes.

By raising the bar that the NLRB must clear to get preliminary injunctive relief, the new ruling essentially reduces the agency’s power to implement an employee-friendly status quo while the often yearslong administrative process of resolving labor disputes plays out.

The ruling is a win for businesses/employers and a loss for pro-union advocates.

Supreme Court ruling: Case background

The Supreme Court’s decision says that in 2022, six employees at a Memphis, Tennessee, Starbucks location formed an organizing committee and announced plans to unionize the store.

To help promote that effort, several store employees invited a local television news crew to visit the store after normal operating hours. A local news crew showed up and talked to the employees about why they were trying to unionize and what they hoped to achieve.

Starbucks management was not happy to learn about the media event, and it quickly launched an investigation. It later fired seven employees – who have since been dubbed the “Memphis 7” – who were involved with the event, saying they violated company policy.

The union that was aiding the employees filed charges with the NLRB, accusing Starbucks of violating federal labor law by interfering with the right to unionize and discriminating against union supporters.

The NLRB investigated and then issued a complaint against Starbucks.

NLRB moves to reinstate employees

Then the NLRB made the move that would lead to the Supreme Court decision. Specifically, it asked a federal district court in Tennessee to issue a preliminary injunction that would, among other things, reinstate the terminated employees during the pendency of the board’s administrative proceedings.

To support its request, it relied on statutory language from the National Labor Relations Act that says district courts can grant such preliminary injunctive relief when it is “just and proper” to do so.

The district court granted the board’s request, finding there was reasonable cause to believe that unfair labor practices had occurred and that the requested relief was just and proper. Thus, it applied what is referred to as the “reasonable cause” standard.

After the U.S. Court of Appeals for the Sixth Circuit upheld the district court’s decision in the NLRB’s favor, the Supreme Court agreed to accept the case for further review.

Supreme Court: Hold on a minute

The high Court explained that traditionally and in the vast run of cases, to get preliminary injunctive relief the party seeking such relief must show four things:

• They are likely to succeed on the merits.
• They are likely to suffer irreparable harm if the requested preliminary relief is not granted.
• The balance of equities tips in their favor.
• An injunction is in the public interest.

Before this decision, some courts applied this more stringent standard while others applied the reasonable cause standard to NLRB requests for preliminary injunctive relief.

The NLRB argued to the high Court that the lower standard should apply. But the Court decided that the agency placed too much reliance on the relevant statute’s “just and proper” language, explaining that those words are not powerful enough to displace the normally applicable four-part test.

“We do not understand the statutory directive to grant relief when the district court ‘deems’ it ‘just and proper’ to jettison the normal equitable rules,” the Court explained.

Traditional standard for injunctions applies

The “just and proper” language means only that courts have discretion when it comes to granting or denying requests for equitable relief, it said.

The board also argued that courts should apply a more deferential standard to its requests for preliminary injunctive relief because federal appeals courts review final board decisions with deference. The Court rejected this argument as well.

As a result, the Supreme Court ruled that courts considering NLRB requests for preliminary relief must apply the traditional four-part test.

The decision below was vacated, and the case was remanded.

Starbucks Corp. v. McKinney, No. 23-367 (U.S. 6/13/24).