Starbucks to Fight Memphis Labor Law Order Before Sixth Circuit

Starbucks Corp.'s challenge to an order requiring it to rehire a group of fired union organizers presents the first federal appeals court test of the NLRB general counsel’s strategy to mobilize judicial power to combat a host of alleged labor law violations at the world’s largest coffee chain.

Starbucks Workers United’s decisive 11-3 victory in the election at a Memphis, Tenn., store—held after the terminations of the workers known as the “Memphis Seven"—shows that the injunction wasn’t justified, the company will assert during oral argument at the US Court of Appeals for the Sixth Circuit Thursday.

“There can be no more powerful evidence of an absence of the erosion of Union support arising from the discharges than a substantial union victory in a subsequent election,” the company told the court in a brief.

National Labor Relations Board General Counsel Jennifer Abruzzo has steadily been seeking court orders against Starbucks as the agency moves forward with a staggering number of cases targeting the company.

Starbucks’ anti-union campaign has sparked nearly 90 NLRB complaints alleging labor law violations, many of them in the early stages of litigation. Agency administrative law judges have ruled against the coffee chain in 10 cases thus far, while the company has prevailed once. The board has ruled against Starbucks in one case connected to the unionization wave that started in late 2021.

As those cases are litigated in administrative proceedings, the NLRB has used its authority under Section 10(j) of the National Labor Relations Act to petition courts for temporary injunctions against Starbucks to restore the status quo in the affected workplaces.

Some NLRB watchers have called Section 10(j) the teeth of the NLRA because it allows the agency to quickly recruit judicial power to halt alleged unfair labor practices, as the damage can’t always be undone by the time the board rules.

The board also can’t enforce its own orders, meaning it has to go to court if an employer refuses to comply—a time-consuming process that the board doesn’t always win, making early court involvement critical.

NLRB prosecutors so far have petitioned federal courts six times for injunctions against Starbucks, with two wins, one loss, and three other cases pending. The board last month authorized a seventh bid for an immediate court order against the company.

Starbucks also appealed a federal judge’s court order involving a Michigan store to the Sixth Circuit, raising the chance that the appeals court’s decision in the Memphis case will have a broader impact in the near term.

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The case arose from a high-profile union drive at the Memphis store that went public in January 2022. Seven workers appeared on a local TV news segment, one of several early efforts to publicize their campaign and build public support.

Starbucks fired the seven workers about three weeks later, saying they had an unauthorized, after-hours meeting with the news crew at the store.

The NLRB regional director in New Orleans, however, issued a complaint in April 2022 accusing Starbucks of terminating the workers in retaliation for trying to form a union. Regional Director Kathleen McKinney also alleged the company removed pro-union materials from a bulletin board, disciplined the lead union organizer, and committed other unfair labor practices.

McKinney filed a 10(j) petition in the US District Court for the Western District of Tennessee in May.

The workers elected Starbucks Workers United as their union in June.

US District Judge Sheryl Lipman, an Obama appointee, issued an injunction in August calling for the reinstatement of the seven workers. Her decision also included a broad cease-and-desist order and required Starbucks to roll back discipline against the lead organizer.

Starbucks challenged Lipman’s ruling, but rehired the workers after the Sixth Circuit lifted an earlier order halting the injunction pending the company’s appeal.

Focus on Remedy

Judges Jeffrey Sutton, a George W. Bush appointee; Danny Boggs, a Reagan appointee; and Chad Readler, a Trump appointee, will hear Starbucks’ appeal Thursday. Readler sat on the Sixth Circuit panel that let the lower court’s injunction take effect.

Starbucks didn’t contest the district judge’s finding that there was reasonable cause to believe it violated the law—the first of the Sixth Circuit’s two-prong standard for issuing 10(j) injunctions.

Instead, the company focused its challenge on the judge’s holding that the injunction is just and proper to protect the NLRB’s remedial power. That part of the test turns on the notion that the board can’t fix the damage from some unfair labor practices without the court’s help.

“Simply put, the election victory and certification establish that there could be no remedial failure as far as support of Union organizing was concerned,” the company said in its brief.

But the NLRB said mass discharges inherently chill union activity, and the judge cited “several hallmark indicia of chill” in her ruling. For example, all but one union-supporting worker stopped wearing their union pins after the seven workers were fired, the agency said.

“Contrary to Starbucks’ claim, the fact that a majority of employees were willing to anonymously vote for the Union in the secret ballot election and the employees are not attempting to bargain does not undercut the district court’s conclusion that interim relief is warranted,” the NLRB said in its brief.

Starbucks spokesman Andrew Trull said the company will “continue to challenge the merits of the case and the necessity of the injunctive relief.”

NLRB spokeswoman Kayla Blado declined to comment.

Arthur Carter of Littler Mendelson PC will represent the company at oral argument. Laurie Monahan Duggan will argue for the agency.

The case is McKinney v. Starbucks Corp., 6th Cir., No. 22-05730, oral argument 5/4/23.