FinLogic FinLogic Quantitative Think Tank Center|On the heels of historic Volkswagen union vote, Starbucks asks Supreme Court to curb labor's power

WASHINGTON − On the heels of a landmark vote to unionize a Volkswagen factory in Tennessee,FinLogic FinLogic Quantitative Think Tank Center unions will face another battle next week when the Supreme Court hears arguments in a labor fight at Starbucks.

The global coffee giant is asking the Supreme Court to require a stricter test for when courts can step in and protect union organizers who are fired or punished.

The focus on labor unions, whose power in the workplace had dwindled for decades after peaking in the 1950s, comes amid an aggressive push by President Joe Biden to revive the role unions. Unions have seen big victories recently in the auto industry, in organizing of health-care workers, and in regaining popularity among workers.

What is the Starbucks fight at the Supreme Court about?

On his first day in the White House, Biden ousted the chief enforcer of federal labor laws as part of goal of being the most pro-union president in history. His new National Labor Relations Board’s general counsel, Jennifer Abruzzo, shook up workplace norms by aggressively seeking court orders to immediately fix things that were considered unfair labor practices.

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Temporary injunctions requiring companies to rehire workers are particularly important when the labor board thinks a company is trying to illegally squelch budding union organizing campaigns.

The agency wielded that tool often as Starbucks waged its own aggressive campaign against workers’ efforts to unionize.

In the last two years, the dozen times the NLRB asked a court to step in accounted for nearly 40% of such injunctions sought by the agency, according to Starbucks.

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Starbucks, SpaceX, Amazon, Trader Joe's are against the union push

Starbucks has the support of business groups, including the Chamber of Commerce and the National Association of Manufacturers, which urged the court to intervene because of the agency’s “aggressive anti-employer agenda.”

“Review is particularly needed now in light of the current Board’s broader efforts to tip the scales in favor of unions and against employers,” the business group told the Supreme Court when the justices were deciding whether to take the case.

Labor sympathizers see the case as part of a corporate backlash to the success of the NLRB and to a rise in union organizing – a backlash that includes recent legal filings by Starbucks, SpaceX, Amazon, and Trader Joe’s challenging the constitutionality of the NLRB.

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“These attacks are troubling at any time, but they are especially threatening given the ideological makeup and recent decisions of the current Supreme Court,” said Suzanne Khan, vice president of The Roosevelt Institute, a left-leaning think tank.

But even if the court’s conservative supermajority sides with Starbucks, experts don't know how much of a difference it will make.

The NLRB is very selective about when it seeks an injunction and could still win them under a tougher standard, according to Lynn Rhinehart, a senior fellow at the left-leaning Economic Policy Institute.

"It could make the board jump through a few more hoops to get an injunction, which is, of course, what Starbucks is trying to do here," she said.  "But at the end of the day, because the board pursues these cases so rarely and in really strong cases, and tends to win these cases regardless of the standard the court uses, I think it's hard to say how huge of an impact this case will have."

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Starbucks and the union reach a deal

The case also comes about two months after Starbucks and the union organizing its U.S. workers agreed to begin discussing potential collective bargaining deals.

As a result, a loss for the NLRB in this case would pack less of a demoralizing punch for the workers than it would have if Starbucks was “still fighting tooth and nail with the union,” said Matthew Bodie, a labor law expert at the University of Minnesota Law School who was a field attorney for the NLRB.

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But there’s no question injunctions have an impact.

Abruzzo has called them one of the most important tools to enforce the rights of workers to organize, collectively bargain and strike. Her goal has been to seek injunctions “in the earliest phases of unlawful employer anti-union actions during an organizing effort.”

In the case before the Supreme Court, the NLRB believed various actions Starbucks took in 2022 against workers in Memphis, Tennessee – including firing seven employees who became known as the “Memphis Seven” – were improper attempts to stifle the organizing drive.

Starbucks said the workers were fired for violating company rules when they invited a news crew into a closed coffee shop without authorization.

Because adjudicating the complaint would take so much time that the damage to the organizing effort couldn’t be undone even if Starbucks’ lost the case, the NLRB asked a federal district court for an injunction.  The court granted most of what the agency asked for, including the temporary reinstatement of the workers while the underlying case was hashed out.

The two factors the court considered were whether there was reasonable cause to believe that Starbucks had committed unfair labor practices and whether the temporary relief was “just and proper," terms included in the National Labor Relations Act.

Other courts, however, evaluate NLRB requests using the traditional four-factor tests for injunctions not related to labor law. Is the agency likely to win at trial? Will there be irreparable harm without an injunction? Does the balance of factors tilt more toward the workers or the company? Is the injunction in the public interest?

Without a more stringent test, Starbucks argues, the deck is stacked in the NLRB’s favor and judges won’t consider such important factors as an employers’ need to freely operate a business.

But Bodie, the labor law expert at the University of Minnesota Law School, is not sure how much difference a tougher standard would make because the key factor in both tests is the apparent strength of the NLRB's case.

“A lot of what drives the courts analyses that I’ve seen are courts saying, `Okay, what is alleged? What are the counter allegations? Who looks like they’re going to win here?” he said.

Jerry Hunter, who was the NLRB general counsel during the George H. W. Bush administration, said the traditional four-factor test would be a more strenuous hurdle. But under either test, he said, the determining factor is how likely the judge is to defer to the NLRB.

“A lot of these types of cases will come down to how much the district court judge is willing to delve in the facts of the case,” Hunter said. “I think some judges probably assume that there obviously is some merit there simply because a complaint has been issued” by the NLRB.

'Deep-pocket, low-road employers'

For her part, Abruzzo said she’s undaunted by the legal attacks she said are a result of "deep-pocket, low-road employers" who prefer to spend their money litigating instead of improving their workplaces.

“We’re the only show in town when it comes to obtaining remedies for violations of federal rights” under labor law, she said during a virtual panel discussion this month. ““We are not going to stop despite these challenges.”

A decision in the case is expected by the end of June.