Starbucks High Court Case Weighs Tests Yielding Similar Outcomes

The US Supreme Court granted Starbucks Corp.'s request to consider what legal test applies to National Labor Relations Board requests for temporary orders against companies accused of labor law violations. The agency usually prevails when it asks courts for those injunctions, regardless of the standard used, a Bloomberg Law analysis found.

Over the past decade, the NLRB has secured scores of “10(j) injunctions"—which call for remedies like reinstating fired workers, bargaining with unions, and ceasing unfair labor practices—as the underlying administrative cases play out at the agency.

Federal district courts have issued those temporary orders in 78% of the 124 decisions on injunction petitions that the NLRB authorized agency lawyers to seek since 2013.

Judges apply one of three legal tests when considering the agency’s petitions, depending on the federal circuit where they’re located.

Starbucks, which is challenging an order to rehire workers allegedly fired because of their union activities, argues that the high court should ditch the “more lenient” standards and require the “stringent” test that’s used for other types of preliminary injunctions.

The outcome of the high court case—and what the justices say about court procedure for NLRB injunction requests, beyond what test to apply—could determine the extent to which they remain one of the most potent weapons in the agency’s enforcement arsenal. The NLRB has obtained court orders against Starbucks, Amazon.com Inc., and UPS Supply Chain Solutions Inc. in recent years.

Many elements go into a judge’s determination of whether to grant the NLRB’s injunction request, including the particular facts of the case, the presiding judge’s views, and the advocacy skills of lawyers involved.

But the broad trends in NLRB success rates suggest that the outcome of a petition isn’t necessarily controlled by the test the judge uses.

“Anytime you’re running into court for a preliminary injunction, the judge is going to give you their best seat-of-the-pants assessment and the legal standard is going to matter very little,” said Steven Suflas, a management-side attorney with Holland & Hart LLP. “It comes down to what’s fair, what’s the just result. No matter what the test is, the judge is viewing it as a binary decision: thumbs up, thumbs down.”

Three-Way Split

Courts in five federal circuits apply a two-part test that examines whether a district judge has reasonable cause to believe there was a labor law violation and if an injunction would be “just and proper.”

Courts in four circuits employ the four-factor test that’s commonly used for other types of injunctions, which turns on the petitioner’s likelihood of success on the merits, the chance of irreparable harm, a balance of the parties’ interests, and whether an injunction is in the public interest.

In addition, courts in two circuits combine those two approaches by weighing elements of the four-part test to decide whether the injunction is just and proper.

Courts that use the two-part test granted injunctions in 80% of the 30 decisions on petitions authorized over the past decade, according to Bloomberg Law’s analysis. This compares to 75% of the 61 decisions from courts applying the four-part test and 81% of the 33 decisions from courts employing the hybrid test.

Potent Weapon

The Supreme Court case is one part of a fight between the NLRB and Starbucks over the agency’s ability to obtain immediate orders from federal courts. The company and the board squared off during oral argument at the US Court of Appeals for the Second Circuit last week in a case involving subpoenas in an injunction case.

The NLRB authorizes agency prosecutors to ask a federal district court for a temporary injunction when the time it takes for a board decision threatens to make an eventual remedy ineffective, or to protect the status quo at a workplace during litigation.

The board’s power to seek 10(j) injunctions—named after the section of the National Labor Relations Act that created that authority—helps mitigate two of the agency’s major enforcement weaknesses: the time it takes to litigate a case to a board ruling, and the fact that the board needs a court to enforce its orders.

The injunction at issue in the Supreme Court case calls on Starbucks to rehire the “Memphis Seven,” a group of workers who the company fired after they appeared on a local television news segment on their organizing efforts.

The Sixth Circuit upheld a district court’s reinstatement order that was based on the two-factor test for assessing 10(j) petitions.

While Starbucks portrayed the four-factor test as appropriately tough and the other two standards as improperly lenient, the NLRB said in its brief to the high court that the legal tests are basically the same and only really differ in their terminology.

For example, the reasonable cause prong of the two-part test parallels the likelihood of success element of the four-factor test, the board said.

NLRB spokesperson Kayla Blado declined to comment. Starbucks didn’t respond to requests for comment.

Complicating the Process

About half of the 124 rulings in Bloomberg Law’s analysis came from courts that apply the four-factor test, which included 22 cases that reached decisions in California federal courts.

The Ninth Circuit, which covers the Golden State, as well as the Fourth, Seventh, and Eighth circuits use that traditional test for injunctions. The Third, Fifth, Sixth, Tenth, and Eleventh circuits apply the two-part test, while the First and Second circuits use the hybrid standard.

Although the Bloomberg Law analysis found small differences in the rates that injunctions were issued under the three different tests, those variations aren’t insignificant, said Joel White, a former NLRB attorney who practices at the management-side firm Fox Rothschild LLP.

The four-part test is “fairer and more balanced” and covers things that courts aren’t required to specifically address under the two-pronged standard, like the important “likelihood of irreparable harm” factor, he said.

A Supreme Court decision making the four-part test the standard for 10(j) petitions would add to the complexity of litigation by increasing the factors that need to be briefed and argued, said Catherine Fisk, a workplace law professor at the University of California at Berkeley.

“More subtly, lawyers for companies may be hoping that by requiring district courts to look at 10(j) injunctions the same way they look at every other type of preliminary injunction, the number of cases that can be cited as precedent will go up exponentially,” Fisk said. “There are probably 100,000 cases in the last 50 years applying the four-factor test. That allows judges to do almost whatever they want, because they can find a case saying almost anything.”

But the NLRB goes through an intensive sorting process to decide whether a case merits a petition for a 10(j) injunction, making them unlike other requests for immediate court orders, said Richard Michael Fischl, a labor law professor at the University of Connecticut.

A ruling from the justices that treats 10(j) petitions like any other injunction bid would complicate and weigh down the process, potentially discouraging the NLRB from seeking court orders and contradicting Congress’ determination that the board needs a way to get quick relief in special cases, said Fischl, a former NLRB attorney.

“I worry less about what verbal formulation they settle on for a test than everything else the court might say about employer due process rights,” he said.