Starbucks Subpoenas in Injunction Case Debated at Second Circuit

A federal appeals court pondered Starbucks Corp.’s right to discovery in a labor injunction proceeding during oral argument, and whether a district judge should have dismissed the National Labor Relations Board’s injunction petition against the company.

At the US Court of Appeals for the Second Circuit on Friday, the NLRB challenged a federal district judge’s decision that tossed its request for a temporary court order against Starbucks. The judge faulted the board for refusing to halt a separate administrative case alleging the company’s subpoenas violated federal labor law.

Starbucks’ attorney, Sarah Harris of Williams & Connolly, told the three-judge panel that throwing out the NLRB’s petition was a reasonable sanction for the board facilitating the union’s and workers’ noncompliance with the company’s information requests by pursuing the unfair labor practice case targeting the subpoenas.

Her statement drew a query from Judge Susan Carney.

“The exercise of its discretion pursuant to its statutory authority to respond to a ULP charge filed by a union was sanctionable conduct?” asked Carney, a Barack Obama appointee.

Harris said it was, characterizing the NLRB as trying to wrest control from the district court and decide what discovery Starbucks was entitled to obtain.

The case is one in a series of clashes over the NLRB’s attempts to win immediate federal court orders against Starbucks while the underlying administrative cases proceed at the agency. In another high-profile dispute, the US Supreme Court recently granted the company’s request to consider what legal tests courts should apply when evaluating the NLRB’s injunction bids.

Subpoena Squabbles

While the NLRB has sought court orders against Starbucks in a series of cases, the company has responded with an aggressive discovery strategy that has slowed many of the agency’s injunction bids.

The dispute at the Second Circuit stems from Starbucks’ attempt to get discovery to back its defense to the injunction request. The coffee chain has argued that there are other causes, including the conduct of Starbucks Workers United, for the purported nationwide chill on worker organizing that the NLRB alleged was the result of the company’s unfair labor practices.

US District Judge John Sinatra, a Donald Trump appointee, approved some of the Starbucks’ subpoenas over the objection of the NLRB and the union.

The union also filed an unfair labor practice charge with the NLRB over the subpoenas, which led to a complaint from agency prosecutors and then a decision from an administrative law judge finding that most of the subpoenas violated federal labor law.

Not The ‘Sun, Moon, and Stars’

Harris, Starbucks’ lawyer, said during the hour-long oral argument that district courts use their discretion to make sure workers’ confidentiality concerns are addressed when granting employers’ requests for information to defend against NLRB allegations in injunction proceedings.

“But district courts can abuse their discretion by issuing overbroad discovery orders that pursue tangential theories,” responded Judge Debra Ann Livingston, a George W. Bush appointee. “What I’m hearing you say now is that, ‘Well, they introduced evidence that our client has engaged in misconduct, so we’re entitled to test that evidence.’ In a preliminary proceeding, that seems to be a recipe for ‘that’s not so preliminary anymore.’”

NLRB attorney David Boehm said discovery in injunction proceedings is supposed to be limited, not the “sun, moon, and stars.”

Judge John Walker, a George H.W. Bush appointee, said Sinatra was mindful of the board’s concerns when he issued his discovery order, even quashing some of Starbucks’ subpoenas.

Boehm disagreed, saying the transcript and written orders suggest he applied the rules for traditional pre-trial discovery rather than the standards for expedited discovery.

Punishable Encouragement?

Starbucks Workers United’s lawyer, Ian Hayes of Hayes Dolce, emphasized that the union filed the ULP charge related to the subpoenas, and NLRB officials were required to investigate whether there was a violation and prosecute when they found merit to the union’s allegations.

“That’s what Congress told the agency it needs to do, that’s what happened in this case,” Hayes said. “So that conflation among the union, the subpoenaed workers, and the NLRB as one mass of actors is a fundamental flaw in both the district court’s opinion and Starbucks’ submission to this court.”

Boehm made a similar point, arguing the NLRB’s lack of control over the workers and the union means that Sinatra shouldn’t have sanctioned the agency by dismissing its injunction request.

Walker expressed some doubt that the board has clean hands.

“Granted the nonparties are separate, but whether the NLRB is giving them permission to take the position that they’re taking is another question,” Walker said. “Or encouraging them to take the position that they’re taking is another question.”

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