June 14, 2024Client Alert

The U.S. Supreme Court Sides with Starbucks and Affirms Four-Factor Injunction Test

On June 13, 2024, the United States Supreme Court issued its opinion in Starbucks Corp. v McKinney, affirming that courts must use a familiar four-part test for injunctions brought under Section 10(j) of the National Labor Relations Act (NLRA). This is a welcome outcome for employers, as the decision establishes a higher bar for the National Labor Relations Board (NLRB) to obtain an injunction against employers accused of violating federal labor laws.

In Starbucks, several Memphis-based employees working at a union-free store engaged in protected concerted activity when they invited a local news station to visit the store after-hours to promote their union-organizing efforts. Starbucks fired the employees for violating company policies, including allowing unauthorized individuals to enter a closed store. The NLRB filed a complaint against Starbucks, alleging that the terminations constituted unfair labor practices. Additionally, the NRLB filed a petition for a preliminary injunction against Starbucks to stop it from engaging in additional unfair labor practices during its administrative proceeding and requiring Starbucks to reinstate the terminated employees.

Section 10(j) of the NLRA permits the NRLB to petition for “temporary relief” from a district court against an employer who it believes committed the unfair labor practice. This comes in the form of a preliminary injunction. This injunction prohibits the employer from engaging in unfair labor practice charges while the parties engage in the administrative process (which can take years).

Prior to the Starbucks decision, a circuit split existed on whether courts should use a two- or four-part test when determining whether to issue the 10(j) injunction. The Third, Fifth, Sixth, Tenth, and Eleventh Circuits used a two-factor test asking: (1) whether there is reasonable cause to believe that an unfair labor practice occurred and (2) whether injunction relief is just and proper. The Fourth, Seventh, Eighth, and Ninth Circuits instead use a four-part test that looked at: (1) whether the Board has likelihood of success on the merits; (2) whether the NLRB faces irreparable harm; (3) whether the balance of the hardships favored the NLRB; and (4) whether the injunction is in the public interest. The Supreme Court articulated this four-part test in Winter v. Natural Resources Defense Council, Inc.

The NLRB argued that the two-part test was proper because the language of Section 10(j) allows the district court to grant the injunction as it deems “just and proper.” This was an extremely NLRB-friendly test – it only required a showing by the Board that there was “reasonable cause to believe unfair labor practices have occurred.” The district court judge in Starbucks analyzed the NLRB’s request under the two-part test because the judge and court were in the Sixth Circuit Court of Appeals jurisdiction and consistent with Circuit authority, the district court ultimately granted the injunction.

The Supreme Court reversed and remanded the case, holding that district courts must instead use the four-factor test articulated in Winter, even for 10(j) injunctions. The Court noted that “[f]or preliminary injunctions, the four criteria identified in Winter encompass the relevant equitable principles. Nothing in §10(j) displaces the presumption that those traditional principles govern.” It noted that Congress did not provide any “clear command” that it intended for the standard in analyzing 10(j) relief is different than other preliminary injunctions. This creates a uniform test for employers to rely on moving forward.

Further, the NLRB was not entitled to deference in its findings. The Court rejected the deference argument, noting that “it is hard to imagine how the Board could lose under the reasonable-cause test if courts deferentially ask only whether the Board offered a minimally plausible legal theory, while ignoring conflicting law or facts.”

The NLRB’s General Counsel, Jennifer Abruzzo, has been vocal about her desire to have the Regional Directors use Section 10(j) injunctions as “one of the most effective tools to enforce the Act.” We  doubt this decision will slow the Board’s desire to obtain Section 10(j) injunctions especially considering that according to the NLRB Section 10(j) Injunctions - Litigation Success Rate Report, the NLRB has a higher success rate under the four-part test (73.5%) compared to the two-part test (67.7%). Employers should expect that these petitions will continue to be sought by Regional Directors but take solace in the fact that the standard of review is now unified across the country. The NLRB also seeks this relief in just a handful of cases - in 2023, the NLRB only sought 14 injunctions, while investigating  thousands of cases each year.

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