Starbucks termination case before Supreme Court could impact unionization rights

WASHINGTON (CN) — The Supreme Court will hear arguments April 23 in a case that could make it easier for large employers to fire unionizing employees by raising the burden of proof necessary for a judge to order reinstatement of terminated workers.

The case, Starbucks Corp. v. McKinney, stems from the termination of seven Starbucks employees at a store in Memphis, Tennessee, in February 2022. Those fired employees have since become known as the “Memphis 7."

After their termination, Kathleen McKinney, regional director for the National Labor Relations Board, asked a federal judge to order reinstatement of the employees while their case proceeded before the board. The judge agreed, and the group returned to work in September 2022. 

Starbucks appealed the judge’s decision to the Sixth Circuit Court of Appeals, which affirmed. The coffee giant appealed to the Supreme Court, arguing that the Sixth Circuit erred in applying what it calls a labor-friendly two-factor test rather than a more stringent four-factor test. 

“Section 10(j) injunctions are potent weapons: They can ‘interfere with day-to-day business operations’ and ‘require fundamental changes to business models’ based on yet-unproven labor-law violations,” Starbucks said in its brief, urging the high court to “restore uniformity” under the National Labor Relations Act. That section of the NRLA offers a basis for seeking injunctions against employers during ongoing labor disputes.

Part of the case comes down to how exactly courts weigh the legal correctness of worker terminations. In what's known as the two-factor test, courts only need to determine whether there is reasonable cause to grant relief and if an injunction would be just and proper.

The four-factor test requires courts to weigh those first two factors along with two others: the likelihood that the NLRB would succeed on the merits that a labor violation occurred, and whether denying relief would cause irreparable harm. That standard also considers whether the first two factors outweigh potential hardships on the employer and if an injunction serves the public interest. 

Meanwhile, the so-called hybrid test asks whether an injunction would be just and proper considering elements from the four-factor test. U.S. appellate courts fall into three camps on the issue. Four circuits — the Fourth, Seventh, Eighth and Ninth — use the stricter four-factor test, while five — the Third, Fifth, Sixth, 10th and 11th — use the looser two-factor test. Last but not least, two circuit — the First and Second — use a hybrid test.

Mark Pearce, former chairman of the NLRB and visiting professor at Georgetown Law, said in an interview with Courthouse News that the four-factor test favors employers like Starbucks and Amazon, while the two-factor test favors the NLRB. 

In circuits bound to the four-factor test, courts must go through the discovery process, where large employers can use their resources to dig up information about the employees bringing a complaint, intimidate witnesses and chill union activity among their workers, Pearce said. 

He said he held little optimism that the conservative-dominated Supreme Court would side with the NLRB, describing the case as another opportunity for the high court to dismantle regulation and undermine deference to agencies. 

“Corporations are expecting that opportunity and are pushing to pursue their agenda,” Pearce said. “It’s a wider strategy of ‘we’re going to challenge the NLRB’s authority in that way and hope a sympathetic Supreme Court imposes judicial restraint.’”

In its brief, the NLRB argued that the split among the circuits is just “different verbal formulations” and does not reflect substantive differences in how the tests are applied. 

“The courts that apply the two-part test thus evaluate the merits in essentially the same way as the courts that apply the four-part test,” the NLRB said in its brief. 

The labor agency also noted that it uses Section 10(j) rarely and that its use has gone down over the last decade. It filed 38 such petitions in 2014 and 36 in 2015, but only 21 in 2022 and 14 in 2023.

The firing of the Memphis employees came as they were trying to unionize the store. Starbucks justified the decision by arguing they broke company policy by reopening the store after close and inviting non-employees, including a television crew, to come inside. 

Despite the terminations, the store still voted to join Workers United in June 2022, along with more than 400 other stores. The Supreme Court will hear arguments on April 23. 

Follow @Ryan_Knappy

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