Starbucks Argues NLRB Received Too Much Deference on Preliminary Injunction

In a brief to the U.S. Supreme Court, Starbucks argued that an appeals court granted the National Labor Relations Board (NLRB) too much deference when it affirmed a preliminary injunction against the coffee store chain. The case involved allegations that Starbucks had interfered in union activity.

The appeals court applied a “relaxed two-factor” standard for so-called Section 10(j) injunctions, rather than a more stringent four-factor test that it should have applied, according to the company. If the Supreme Court, which has agreed to hear the case, lets courts apply this standard to NLRB Section 10(j) injunctions, other agencies—such as ones in the U.S. Department of Labor—might similarly seek injunctions under a more relaxed standard, Starbucks cautioned.

Section 10(j) injunctions “are often case-ending because they are so onerous and long-lasting that employers face enormous pressure to settle,” Starbucks said in its brief. It added, “Under the NLRB’s theory, the sheer breadth of statutory regimes that might yield to agency deference is mind-boggling.”

Under the National Labor Relations Act, the NLRB issues, prosecutes and adjudicates complaints alleging that employers committed unfair labor practices. Section 10(j) of the act authorizes federal district courts, while the NLRB adjudication remains pending, to grant preliminary injunctive relief at the NLRB’s request as the court deems just and proper. This means applying a four-factor test, according to Starbucks.

Case Focuses on Firing of Union-Organizing Employees

In the case that was initially before the district court then affirmed by the appeals court, an NLRB regional director issued an unfair labor practice complaint against Starbucks. The case involved seven Starbucks workers fired after their union-organizing efforts at a Memphis, Tenn., store. Starbucks said the employees were fired for violating company policy. While the agency proceedings were pending, the regional director filed a petition for temporary relief on behalf of the board.

The district court granted the petition in part, according to the NLRB in its brief opposing Starbucks’ petition for review of the case. The court ruled that temporary relief under Section 10(j) may be granted only if 1) there is reasonable cause to believe that an unfair labor practice has occurred and 2) injunctive relief is just and proper.

The court found sufficient evidence to support the agency’s claims that the company had interfered with its employees’ union activity and had discriminated against employees to discourage union membership.

The court also determined that a temporary injunction was just and proper. The court said that Starbucks’ conduct—including firing more than 80 percent of the union-organizing committee at a Memphis, Tenn., store—had discouraged and eroded support for a unionization movement. For example, employees stopped publicly supporting the union, wearing union pins, engaging in union protests and discussing union activity in the Memphis store, according to the NLRB.

In affirming, the appeals court applied the same standard.  

Starbucks Contests Finding for NLRB

Starbucks argued in its brief that a more stringent four-factor test should have been applied. Under that test, the party seeking a preliminary injunction must show that: 1) they are likely to succeed on the merits; 2) they are likely to suffer irreparable harm in the absence of preliminary relief; 3) the balance of equities tip in their favor; and 4) an injunction is in the public interest.

The fired employees had violated company policy by entering closed stores and letting in unauthorized people—members of the media—the company said. Starbucks fired seven of the employees who entered the store without authorization; five belonged to the union organizing committee, the company stated in its brief. Starbucks did not terminate the one organizing-committee member who wasn’t present in the closed stores. A few months after the terminations, the Memphis store employees voted to unionize.

“The two-part test significantly lowers the NLRB’s burden in securing an injunction as compared to the traditional four-part test,” Starbucks said in its brief. “The two-part test first asks the NLRB to establish mere reasonable cause to believe that unfair labor practices have occurred—which the NLRB can do by pointing to a nonfrivolous legal theory even supported by conflicting evidence.”

That dramatically departs from the four-factor test’s showing of a likelihood of success on the merits.

As for whether an injunction is just and proper—that interpretation “wrongly centers on the NLRB’s asserted policy and remedial concerns, at the expense of irreparable harm, the equities and the public interest—indispensable considerations under the four-part test,” Starbucks wrote.

The NLRB maintained in its brief that district courts evaluating Section 10(j) requests must defer to the NLRB’s expert judgments, power to interpret labor law and significant pre-filing consideration.

“Extending the NLRB that novel, extreme form of deference would violate bedrock administrative-law principles,” Starbucks said in its brief. “Ordinarily, only final agency action receives limited deference. Here, the NLRB asks courts to defer to the preliminary legal and factual views of NLRB attorneys—views that the agency will revisit throughout its in-house administrative proceedings.”

In its brief, the NLRB said Starbucks erred in arguing that the four-part formulation is a more demanding standard than the two-part formulation of the test. While different courts have articulated the test governing a court’s review of Section 10(j) petitions in somewhat different terms, these distinctions “are essentially terminological rather than substantive,” the NLRB wrote.

In addition, the NLRB said courts applying the two-part test recognize that a Section 10(j) injunction is an extraordinary remedy to be invoked by the NLRB only in limited circumstances.

Starbucks “overstates the frequency with which the board seeks Section 10(j) injunctions,” the NLRB said. In 2022, the agency sought only 21 Section 10(j) injunctions.

Who Might This Ruling Affect?

Historically, 10(j) proceedings are commonly pursued by the NLRB general counsel during union-organizing campaigns or during the bargaining of first contracts, said Michael Berkheimer, an attorney with Seyfarth in Washington, D.C.

“So, the industries most affected will be those facing organizational drives, such as warehousing, retail coffee establishments and health care,” he said. “If the UAW were to follow through on its intentions to organize the nonunion automakers, we may see a flurry of 10(j) activity there.”

Starbucks said in a statement, “Currently, there is an inconsistency—certain circuits apply a two-prong test to evaluate whether to grant a 10(j) injunction while others apply a four-prong test. We are asking the Supreme Court to reconcile that inconsistency so that a single standard is applied regardless of where the NLRB seeks injunctive relief.” The company added that it was not challenging whether the NLRB can pursue injunctive relief, or whether Section 10(j) can be used to reinstate separated employees while the merits of an unfair labor practice case are fully adjudicated.