Supreme Court, in Starbucks ruling, Curbs Labor Regulator’s Authority

The Supreme Court ruled in Starbucks’ favor Thursday in a case challenging a federal judge’s labor law ruling that makes it harder for a key federal agency to intervene when a company is accused of illegally suppressing union organizing.

Eight justices supported the majority opinion, which was written by Justice Clarence Thomas. Justice Ketanji Brown Jackson wrote a separate opinion that concurred with the overall judgment but dissented on certain points.

The ruling came in a lawsuit filed by Starbucks over the firing of seven Memphis workers who tried to unionize a store in 2022. The company said they were fired for allowing a television crew into a closed store. The workers, who called themselves the Memphis Seven, said they were fired for their efforts to unionize and that the company failed to enforce rules they were accused of violating.

Following the firings, the National Labor Relations Board filed a complaint alleging that Starbucks acted because the workers “had joined or assisted the union and engaged in union activities, and to discourage employees from engaging in these activities.” Separately, attorneys for the board asked a federal judge in Tennessee for an order to reinstate the workers, and the judge granted the order in August 2022.

The agency is asking judges to reinstate workers in such cases because resolving the underlying legal issues could take years. During that time, other workers may become discouraged from organizing, even if the laid-off workers ultimately win.

In its petition to the Supreme Court, the company argued that federal courts applied different standards in deciding whether to issue injunctions to reinstate employees, which the NLRB has the authority to request under the National Labor Relations Act.

Some apply a looser standard, requiring the labor board to demonstrate that there were “reasonable grounds” to believe the company had violated labor law. Others apply a stricter standard, requiring the board to demonstrate that failure to rehire the employees would cause “irreparable harm” and that the board would likely prevail in the case. (Some courts combine elements of the two standards.)

Starbucks argued that the stricter standard for reintegrating workers should apply nationwide. The Labor Board argued that the apparent differences between the two standards were semantic and that there was in fact one standard already, making it unnecessary for the Supreme Court to intervene.

The majority opinion rejected the board’s argument that the differences between the two standards were semantic. “The reasonable cause standard goes much further than simply refining the traditional criteria,” the majority wrote. “It substantially lowers the threshold for obtaining a preliminary injunction.”

The opinion noted that in cases where other laws allow judges to issue interim injunctions, the stricter standard has typically been applied. It concluded that there was nothing in the labor law to indicate that courts should deviate from this approach when it comes to rehiring workers.

More than 400 Starbucks stores representing more than 10,000 employees in the United States have unionized since 2021, and the two sides began nationwide talks on a contract framework in April. Starbucks owns and operates approximately 10,000 stores nationwide.

During arguments in April, it appeared the court would side with Starbucks, with conservative justices questioning why the NLRB needed a looser standard than other agencies for seeking an injunction.

The decides on Thursday remanded the case to the lower courts.

Legal experts say the order is one of the NLRB’s most effective tools to stop companies from illegally suppressing union activity by discouraging companies from firing workers who try to organize.

The NLRB requested fewer than 20 orders last year. But they serve as a powerful deterrent against firing employees who try to unionize, said Sharon Block, a Harvard Law School professor and former member of the NLRB. With a stricter standard for rehiring laid-off workers, more companies may feel empowered to crack down on unionization efforts, Ms. Block said.

In her ruling, Judge Jackson agreed that the board would have to prove irreparable harm if the employees were not reinstated, and that it would likely prevail on the merits. But she argued that these were relatively easy to demonstrate in cases where the board sought a cease and desist order.

For example, she argued that irreparable harm was almost trivial to prove because labor law violations typically take years to settle. If an employee is fired and there is no opportunity for resolution for several years, she argued, it irreparably harms the board’s ability to remedy the situation — relief will inevitably come too late.

Judge Jackson pointed to Congress’s language showing that other employees might become discouraged and abandon their organizing campaign, even if the fired employee were ultimately compensated.

But some say the agency has used the injunction improperly in recent years, accusing the NLRB of assuming the role of an advocacy group. Don Schroeder, a partner at the law firm Foley & Lardner who practices labor law, said the agency has used the injunction too often in recent years. He said it should be granted rarely.

“It gives the NLRB a lot of leverage if the standard is very low,” Mr. Schroeder said. Issuing an order “is not like spotting a unicorn,” he added. “But at the same time, it shouldn’t be an everyday occurrence.”

Starbucks said it was pleased with the Supreme Court’s decision. “Consistent federal standards are important to ensure that workers know their rights and consistent employment practices are enforced, no matter where in the country they work and live,” a company spokesperson said.

He added that the company has been trying this year to reach ratified contracts with the stores where the union is active.

Lynne Fox, president of Workers United, the union representing Starbucks workers, said the decision was regrettable. “Working people have so few tools to protect and defend themselves when their employers break the law,” she said in a statement. “That makes today’s Supreme Court ruling particularly scandalous.”

The NLRB did not comment on the ruling, but pointed to an earlier comment from its general counsel, Jennifer Abruzzo. “Without obtaining this temporary relief, over time the lawbreaker will be able to reap the full benefits of violating workers’ rights — for example, by undermining a nascent organizational drive,” Ms. Abruzzo said, “because in due course time, an administrative measure. Of course, it will come too late to adequately address the damage.”

The Starbucks case (Starbucks Corporation v. McKinney, No. 23-367) was the latest in a series of challenges to the NLRB’s authority. In February, Amazon argued in a legal document that the council itself was unconstitutional, following similar arguments from SpaceX and Trader Joe’s.

The Supreme Court’s ruling also marks the continuation of a larger movement across the political right to strip power not just of the NLRB but of federal agencies more broadly. In January, the justices seemed likely to overturn a key legal doctrine known as the Chevron deference.

Legal experts say that eliminating the principle, which required judges to defer to federal agencies when interpreting ambiguous laws passed by Congress, would hamper the government’s regulatory power over the environment, health care and more.

Combined with other cases before the court, this is “another piece in the court that undermines the expert status of administrative agencies,” Ms. Block said.