Supreme Court Ruling in Starbucks v. McKinney: Implications for Employees and Unions

By Hailey Golds and Michael Warner - Franczek P.C.

June 21, 2024

On June 13, 2024, the Supreme Court held that the National Labor Relations Board (the “Board”) is subject to the same standard as any other litigant when it seeks a preliminary injunction in unfair labor practice cases. This ruling, which will make it more difficult for the Board to obtain a preliminary injunction, may provide employers with increased flexibility in making employment decisions during the course of a union organizing campaign.

Case Background

In 2022, several Starbucks employees in Nashville, Tennessee announced plans to unionize and invited a local news crew to visit the store after hours to promote the unionization efforts. When Starbucks learned of this activity, it launched an investigation and ultimately fired multiple employees involved for violating company policy. The Board issued a complaint against Starbucks, and filed a petition pursuant to Section 10(j) of the National Labor Relations Act (a “10(j) Petition”) in federal court seeking a preliminary injunction to require Starbucks to reinstate the fired employees, among other things. 10(j) of the Act authorizes the Board to seek preliminary injunctive relief prior to a final hearing and decision on the merits of an unfair labor practice complaint while the Board’s final resolution of an unfair labor practice charge is pending. In Starbucks, the Board argued that reinstatement of the terminated employees was necessary to prevent the “chilling” effect that the termination of the union supporters might have on the employees’ organizing efforts.

 To determine whether the petition should be granted, the District Court applied a two-part test asking whether:

1.  there is a reasonable cause to believe that unfair labor practices have occurred”; and
2.  whether injunctive relief is “just and proper.”

The District Court granted the Board’s petition for an injunction, and the Federal Court of Appeals for the Sixth Circuit affirmed.

Supreme Court’s Decision

The Supreme Court held that the lower courts erred in applying this deferential standard in ruling in on the Board’s 10(j) injunction.  The Court instead held that in ruling on whether the Board is entitled to a preliminary injunction under 10(j), lower courts should apply a four-part test used more commonly for preliminary injunctions sought by private parties. This test, set forth by the Court in Winter v. Natural Resources Defense Council, requires a party seeking a preliminary injunction to how:

1. it is likely to succeed on the merits;
2. it is likely to suffer irreparable harm in the absence of preliminary relief;
3. the balance of equities tips in its favor; and
4. an injunction is in the public interest.

In so holding, the Court rejected the  Board’s argument that Congress in the NLRA intended that courts give substantial deference to the Board in determining whether a preliminary injunction was necessary to protect employee rights during the pendency of unfair labor practice proceedings. The Court held that the plain language of the Act did not support this interpretation and reasoned that the four-factor test, which is “consistent with traditional principles of equity,” should be used to determine whether the extraordinary remedy of a preliminary injunction should be granted to the Board when it issues a complaint against an employer for an unfair labor practice under the Act.

Conclusion

Nothing in this decision affects the ultimate decision-making authority of the Board, which the Court notes, is still given deference for those determinations.  However, the ruling means that the Board is held to the same standard as any other party when seeking a preliminary injunction.  District Courts will not be required to rubber stamp 10(j) injunctions when the Board determines that there may have been an unfair labor practice. As such, both employers and unions can anticipate that there will be no quick resolution to disputes under the Act and may instead pursue settlement rather than undergo a protracted administrative review.

www.franczek.com