The U.S. Supreme Court on Thursday ruled in favor of Starbucks in a challenge to a federal judge's labor union ruling, making it harder for a key federal agency to step in when companies are sued for illegally suppressing unionization efforts.
Eight justices joined the majority opinion written by Justice Clarence Thomas. Justice Ketanji Brown Jackson wrote a separate opinion in which he agreed with the overall judgment but dissented on several points.
The ruling came in a lawsuit filed by Starbucks over the firing of seven Memphis employees who were trying to unionize at the store in 2022. The company said it fired them for allowing television crews into the store while it was closed. The employees, who call themselves the “Memphis Seven,” argued that they were fired because of their efforts to unionize and that the company generally did not enforce the rules they allegedly violated.
After the firings, the National Labor Relations Board filed a complaint alleging that Starbucks' actions were intended to encourage the workers to “join or support a union or engage in concerted activity and to prevent employees from engaging in such activity.” Separately, the board's lawyers sought an injunction in federal court in Tennessee to reinstate the workers, and the court issued an order in August 2022.
The labor department urges judges to reinstate workers in such cases because the legal issues underlying such cases could take years to resolve, during which time other workers may be discouraged from organizing even if the fired workers ultimately win their cases.
In its petition to the Supreme Court, the company argued that different federal courts use different standards to decide whether to order workers back to work, something the National Labor Relations Board has the authority to do under the National Labor Relations Act.
Some courts apply a looser standard, requiring the labor commission to prove that it had “reasonable cause” to believe the company violated labor law, while others apply a stricter standard, requiring the commission to prove that not reinstating the worker would cause “irreparable harm” and that it is likely to succeed. (Some courts combine elements of the two standards.)
Starbucks argued that the stricter standard for reinstating employees should be applied nationwide. The Labor Board argued that the apparent difference between the two standards was one of meaning, and that in practice one standard was already in place, so there was no need for the Supreme Court to intervene.
The majority rejected the Board's argument that the difference between the two standards was semantic. “The good cause standard is more than a mere tweak of the traditional standard,” the majority wrote. “It substantially lowers the bar for securing a preliminary injunction.”
The opinion noted that when other laws allow a judge to issue a preliminary injunction, a stricter standard typically applies. It concluded that there is nothing in the Labor Code to suggest that courts should deviate from that approach when it comes to reinstating workers.
More than 400 Starbucks stores representing more than 10,000 employees have unionized in the U.S. since 2021, and the two sides began national discussions on a contract framework in April. Starbucks owns and operates about 10,000 stores across the United States.
The court is likely to side with Starbucks during arguments in April, with conservative justices questioning why the NLRB should have a looser standard for seeking injunctions than other agencies.
Thursday's ruling sent the case back to a lower court.
Legal experts say the injunctions are one of the NLRB's most effective tools to stop companies from illegally suppressing union activity by blocking them from firing workers who try to unionize.
The NLRB requested fewer than 20 preliminary injunctions last year. But they are a powerful deterrent to fired workers trying to organize a union, said Sharon Block, a Harvard Law School professor and former NLRB member. With tougher standards for winning reinstatement for fired workers, more companies may feel empowered to crack down on unionization efforts, Block said.
In his opinion, Judge Jackson agreed that the Commission would have to prove irreparable harm if employees were not reinstated and that the Commission was likely to win a substantial victory. But he argued that these showings would be relatively easy in cases where the Commission sought injunctive relief.
For example, she argued, because labor law violations typically take years to adjudicate, it's almost always easy to prove irreparable harm: When workers are fired with no prospect of resolution for several years, the commission's ability to remedy the situation is irreparably impaired, and remedies inevitably come too late.
Judge Jackson pointed to Congressional language that suggested that even if the laid-off workers were ultimately fully compensated, other workers might become discouraged and abandon their organizing efforts.
But some believe the NLRB has used the injunction inappropriately in recent years, accusing it of acting as an advocacy group. Don Schroeder, a partner and labor and employment attorney at the law firm Foley & Lardner, said the NLRB has used the injunction too frequently in the past few years and that the order should be issued rarely.
“If the bar is very low, the NLRB has a lot of influence,” Schroeder said. Issuing an injunction is “not like finding a unicorn,” he added. “But at the same time, it shouldn't happen every day.”
Starbucks expressed satisfaction with the Supreme Court's decision. “Consistent federal standards are important to ensure that employees know their rights and are protected by consistent labor practices no matter where they work or live in the country,” a company spokesman said.
He added that the company aims to have ratified contracts in place at unionized stores this year.
Lynn Fox, president of Workers United, the union that represents Starbucks employees, called the ruling disappointing. “When employers break the law, workers have few recourse to protect and defend themselves,” she said in a statement. “That makes the Supreme Court's decision today particularly egregious.”
The NLRB did not comment on the ruling, but pointed to earlier comments from the board's general counsel, Jennifer Abruzzo. “Without this temporary relief, violators would enjoy the full benefits of violating workers' rights over time, including by thwarting early organizing efforts,” Abruzzo said. “Because even if the Board were to grant relief in a timely manner, it would come too late to adequately address the harm.”
Starbucks' lawsuit ( Starbucks Corp. v. McKinney, Case No. 23-367) was the latest in a series of challenges to the NLRB's authority. In February, Amazon argued in court papers that the board itself was unconstitutional, following similar arguments from SpaceX and Trader Joe's.
The Supreme Court's decision also marks the continuation of a larger movement on political rights that seeks to strip power not just from the NLRB but from a broader range of federal agencies. In January, the Supreme Court appeared likely to overturn a key doctrine known as Chevron deference.
Legal experts say overturning the principle, which says judges must defer to federal agencies when interpreting vague laws passed by Congress, could undermine the government's ability to regulate areas such as the environment and health care.
“This is yet another lawsuit that undermines the professional standing of the executive branch,” Bullock said, adding that it joins other lawsuits currently before the court.