Starbucks’ Subpoena Row With Labor Board Reaches Second Circuit

Starbucks Corp. will try to fend off a National Labor Relations Board effort to win an injunction against the company from a circuit court after a federal judge threw out the agency’s petition due to a fight over discovery.

The NLRB is set to press its case against Starbucks—and the Trump-appointed judge whose subpoena-focused decision shielded the company from the injunction petition—during oral argument Friday at the US Court of Appeals for the Second Circuit in Manhattan.

The Second Circuit can instruct the district court to grant the petition based on the record, the board argued in case papers. The appeals court can preserve the appearance of justice by reassigning the case to a federal judge who hasn’t demonstrated hostility toward the NLRB and its proceedings, it said.

The case is one part of a high-stakes battle between Starbucks and the NLRB over the agency’s attempts to get immediate court orders against the coffee giant. The outcome of that clash may determine whether those injunctions against employers will remain one of the NLRB’s most powerful tools to enforce federal labor law.

The US Supreme Court announced last week that it granted Starbucks’ request to consider what legal test courts should use to assess NLRB petitions for 10(j) injunctions, which are named after the section of the National Labor Relations Act that permits the agency to go directly to court to halt alleged unfair labor practices.

NLRB prosecutors—with the authorization of the board—can try to obtain those injunctions to preserve the status quo while administrative cases are pending, or when there’s a chance that the remedies that come out of board proceedings arrive too late to fix the harm from the labor law violations. Those court orders, which the NLRB rarely seeks and usually gets, dissolve once the board rules in the underlying cases.

The injunctions that the NLRB obtains in court are potent because of their speed and the judicial muscle behind them. Employers can flout NLRB orders without punishment until they’re enforced by a court, which can add up to a multi-year process. A 10(j) injunction can come much more quickly and force employers to comply lest they face fines or even jail time for contempt of court.

Starbucks has been a frequent target of 10(j) petitions since the NLRB started cracking down on the company’s response to its workers’ nationwide unionizing campaign, which has drawn more than 125 board complaints alleging the coffee chain violated federal labor law.

Although the NLRB has won a few immediate court orders against Starbucks, the company’s aggressive discovery strategy has succeeded in slowing many injunction bids.

The dispute set for argument Friday shows how discovery issues in 10(j) cases can grow in complexity, obstruct the agency’s attempts for immediate court orders, and spread across multiple interlocking proceedings.

Subpoena Tussles

The fight over the injunction grew out of a massive unfair labor practice case that Buffalo NLRB Regional Director Linda Leslie filed against Starbucks. An administrative law judge ruled against the company last year, finding hundreds of labor law violations. Starbucks is appealing that decision to the NLRB.

In conjunction with that unfair labor practice case, Leslie asked a federal court in 2022 for a nationwide order blocking Starbucks from violating labor law and requiring the company to rehire fired union activists.

US District Judge John Sinatra approved Starbucks’ subpoena requests to get information on workers’ level of union support, union activities and organizing strategy, publicity of union activities and unfair labor practice allegations, workers’ employment activities, and documents provided to the NLRB.

The NLRB and Starbucks Workers United tried unsuccessfully to get the Second Circuit to block the subpoenas, with the court pointing to other options. The union and workers can refuse to comply with the requests and then challenge any contempt proceedings, or the NLRB and the union can ask Sinatra to reconsider his order allowing the subpoenas, the appeals court said.

Meanwhile, NLRB lawyers issued a separate complaint against Starbucks based on the subpoenas. An administrative law judge found most of the subpoenas were illegal—based on being irrelevant to Starbucks’ defense, having an unlawful objective, or the company’s defense interests being trumped by workers’ confidentiality interests—and ordered the company to withdraw them. Starbucks is appealing that ruling to the board.

Sinatra, who viewed the NLRB as undermining his discovery order and helping the union and workers stonewall Starbucks’ information requests, gave the NLRB an ultimatum: drop all efforts to fight back against the subpoenas, including the ongoing administrative case, or he would dismiss the 10(j) petition.

The agency held its ground and the judge threw out the petition without ruling on its merits.

The NLRB’s challenge to Sinatra’s dismissal will be heard by a panel composed of Judge Debra Ann Livingston, a George W. Bush appointee; John Walker, a George H.W. Bush appointee; and Susan Carney, an Obama appointee.

Boundaries of Power

Sinatra’s dismissal was “built upon layers of legal error and misapplications of law to fact,” the NLRB said in its brief.

The judge approved improper subpoenas, then exceeded his power by imposing sanctions on the NLRB based on the union’s and workers’ noncompliance with the subpoenas, which the agency doesn’t control, the board said.

Sinatra crossed a constitutional boundary by trying to snuff out an ongoing unfair labor practice case and turn the NLRB into his tool to get compliance with the subpoenas he approved, even as he showed antipathy and bias related to the agency’s procedures, the board said.

“The district judge consistently criticized the Board’s proceedings for their lack of discovery mechanisms,” the NLRB said. “For instance, during the September 23, 2022, hearing, the district judge distinguished his courtroom on the eighth floor from the Board’s proceedings on the sixth floor of the same building, stating ‘[w]ell, here’s the thing. Here’s where you are. You’re on the eighth floor now and both sides get a fair shot on this floor.’”

Starbucks Workers United, which will appear in support of the NLRB at oral argument, said Sinatra only considered the company’s need for information and the agency’s need to proceed quickly when he approved the subpoena requests. He ignored the legally protected confidentiality interests of the union and organizing workers, the union said in its brief.

The company argued in its brief that Sinatra followed civil procedure rules when he approved a limited number of subpoena requests, as well as when he gave the board a choice to either stop trying to invalidate the subpoenas or face dismissal of its petition.

“Congress empowered district courts alone to adjudicate § 10(j) injunctions,” Starbucks said. “The Board usurped that authority by purporting to resolve what discovery the district court could take.”

If the appeals court reverses Sinatra’s dismissal, then it should send the case back to that judge, given that he simply questioned the fairness of an NLRB proceeding, the company said.

NLRB spokesperson Kayla Blado declined to comment. Starbucks’ lawyer, Sarah Harris of Williams & Connolly LLP, and the union’s attorney, Ian Hayes of Hayes Dolce, didn’t immediately respond to requests for comment.

The case is Leslie v. Starbucks Corp., 2d Cir., No. 23-1194, oral argument scheduled 1/19/24.