Starbucks’ Supreme Court Victory Is Win for CEOs Over Unions

The Supreme Court of the United States delivered a pivotal ruling on June 13 in the case of Starbucks vs. McKinney, resolving a circuit split and providing consistency and clarity for businesses, the National Labor Relations Board (NLRB), and lower courts across the country. 

The ruling may make CEOs more inclined to defend company policies in court rather than settle claims of labor law violations. In years past, the pressure to settle claims brought by the National Labor Relations Board (NLRB) has been tremendous because numerous courts have quickly granted so-called Section 10(j) injunctions. No more.

Emily M. Dickens, SHRM chief of staff and head of government affairs, noted in a statement that the NLRB’s stance in the case posed workflow disruptions by potentially chilling the ability of business leaders to communicate directly and transparently with employees. The Supreme Court’s decision “reaffirms the importance of not creating, through the overuse of legal mechanisms, artificial stopgaps or barriers to allowing open and honest dialogue within organizations, which is essential for maintaining a healthy and productive workplace environment,” she said.

In a December 2022 letter to NLRB General Counsel Jennifer Abruzzo, SHRM had asked her to preserve the right of employers and employees to communicate important business information that directly affects workplace culture.

Decision Weakens NLRB Authority

Section 10(j) of the National Labor Relations Act is “a tool for the NLRB to seek quick relief against possible labor law violations before any violation actually has been found, such as reinstating a worker who alleges they were unlawfully terminated,” said David Pryzbylski, an attorney with Barnes & Thornburg in Indianapolis.

In this opinion, the Supreme Court clarified that Section 10(j) injunctions should not be as leniently granted as in the past, he explained. “The potential practical effect from this ruling could be huge for any employer facing NLRB proceedings,” Pryzbylski said.

The ruling may ease the pressure on employers to settle NLRB claims, said Patrick Muldowney, an attorney with BakerHostetler in Orlando, Fla., and New York City.

Historically, the NLRB has had a higher than 90% success rate in securing Section 10(j) injunction cases on an annual basis, Pryzbylski said.

“These proceedings can be costly for companies, so this ruling could be significant for all companies who have or anticipate NLRB litigation” if it means the agency is less likely to seek these injunctions, he said.   

‘Memphis Seven’ Organizers Fired

The case involved seven Starbucks workers fired after their union-organizing efforts at a Memphis, Tenn., store. An NLRB regional director issued an unfair labor practice complaint against Starbucks, though Starbucks said the employees were fired for violating company policy. While the agency proceedings were pending, the NLRB regional director filed a petition for temporary relief for the workers, such as reinstatement to their jobs.

The district court granted the petition in part, applying a relaxed two-part standard on the Section 10(j) injunction. In affirming, the appeals court applied the same standard.

Starbucks appealed, arguing the traditional, more stringent four-factor test should have been applied. The fired employees had violated company policy by entering closed stores and letting in unauthorized people—members of the media—the company said.

In the majority opinion, eight Supreme Court justices fully agreed with Starbucks that this traditional four-factor test should have been applied, while Justice Ketanji Brown Jackson partially concurred and partially dissented in a separate opinion. The high court vacated the injunction against Starbucks, indicating that the lower courts applied the wrong test and erred in preventing Starbucks from dismissing the Memphis Seven.  

More Leeway for Executives, Blow to Unions

The decision makes it less likely the NLRB general counsel will be granted injunctions, said Phil Wilson, president of the Labor Relations Institute and an attorney with LRI Consulting Services in Broken Arrow, Okla.

The NLRB has been placed “on the same legal basis as any other party seeking an injunction,” said Tom Mandler, an attorney with Akerman in Chicago.

And that, in turn, may give CEOs more leeway to retain such policies as prohibiting access to company facilities by unauthorized people.

For unions, organizing now may be more challenging—and possibly more difficult to flout company rules, including civility rules, in the name of organizing.

The ruling also will make it harder for the NLRB to temporarily halt what it views as unfair labor practices, including unlawfully dismissing workers involved with organizing efforts.

Starbucks’ Reaction to Decision

In a statement, Starbucks said, “Partners [employees] are the core of our business, and we are committed to providing everyone who wears the green apron a bridge to a better future. We will continue to focus [on] making progress toward our goal of reaching ratified contracts for represented stores this year. Consistent federal standards are important in ensuring that employees know their rights and consistent labor practices are upheld no matter where in the country they work and live.”

The case, Starbucks Corp. v. McKinney, isn’t finished, as the high court vacated the lower court ruling and sent it back to the lower courts for further proceedings consistent with its decision.