U.S. Supreme Court Rejects NLRB’s Standard for Injunctions in Labor Disputes

Introduction

In a nearly unanimous decision (Justice Ketanji Brown Jackson partially concurred and partially dissented), the U.S. Supreme Court resolved a split in the federal circuit courts over the test to be applied when evaluating a request by the National Labor Relations Board (NLRB) for injunctive relief during the pendency of a labor dispute.  In Starbucks Corp., v. McKinney, 602 U.S. __________ (2024), issued on June 13, 2024, the U.S. Supreme Court held that “the traditional four-factor test for a preliminary injunction” is the proper test, rather than a less demanding two-part test applied by the 6^th Circuit Court of Appeals (6^th Circuit).

Background

Under Section 10(j) of the National Labor Relations Act, the NLRB can ask a court to grant an injunction if it is deemed “just and proper.”  Federal courts have differed as to what the NLRB needs to establish in court to obtain a preliminary injunction against an employer to preserve the status quo during the usually lengthy administrative processing of unfair labor practice charges.  In Starbucks, the dispute arose after Starbucks fired multiple employees, who the company alleged had violated company policy by holding a media event in the Starbucks store after hours to promote the employees’ union organizing efforts.  The union with whom the employees were coordinating filed unfair labor practice charges alleging Starbucks interfered with the employees’ organizing rights and discriminated against those employees supporting the union.  The NLRB issued a complaint and filed a petition for a 10(j) preliminary injunction in federal court for the United States District Court for the Western District of Tennessee (District Court).  The injunction sought reinstatement of the employees, along with other relief.

The District Court applied the test consistent with 6^th Circuit precedent, which consisted of two inquiries:  Is there “reasonable cause to believe that unfair labor practices have occurred”; and is the relief request “just and proper.”  In the 6^th Circuit, reasonable cause only required a showing that the NLRB’s legal theory was “substantial and not frivolous”, and a return to the status quo pending NLRB proceedings would meet the “just and proper” prong.  (See McKinney v. Ozburn-Hessy Logistics, LLC, 875 F.3d 333, 339 (6^th Cir. 2017)).  The District Court granted the injunction and the 6^th Circuit affirmed.

U.S. Supreme Court Decision

The U.S. Supreme Court rejected the NLRB’s argument that the 6^th Circuit’s “reasonable cause” analysis was appropriate, holding that the “traditional” four factor test, which evaluates (1) the likelihood of success on the merits, (2) irreparable harm if not granted, (3) the balance of the equities favor the plaintiff, and (4) whether an injunction is in the public interest, is the appropriate test.  The U.S. Supreme Court cited Winter v. Natural Resources Defense Council, Inc. 555 US 7 (2008) as articulating the appropriate test, and noted some other circuits, (including the 7^th Circuit Court of Appeals) apply the four-factor test when reviewing 10(j) injunctive requests.

The U.S. Supreme Court criticized the lower reasonable cause standard saying it “substantively lowers the bar for securing a preliminary injunction by requiring courts to yield to the NLRB’s preliminary view of the facts, law, and equities.”  Starbucks at ___ (Slip Opinion p. 8).  The NLRB argued that 10(j) proceedings are different in statutory origin and nature from non-labor civil litigation preliminary injunctions, and thus should be evaluated differently with more deference to the agency.  That argument was not persuasive to the U.S. Supreme Court, saying “Section 10(j)’s statutory context does not compel this watered-down approach to equity.”  Id at _____ (Slip Opinion p. 10).  The U.S. Supreme Court vacated the 6^th Circuit’s judgment and remanded for further proceedings consistent with the approved analysis.

Conclusion

Wisconsin private sector employers facing 10(j) injunctive actions will not see a change in analysis because, as noted previously, the 7^th Circuit Court of Appeals, has applied the four-factor test to 10(j) cases as reflected in Bloedorn v. Francisco Foods, Inc. 276 F.3d 270, 286 (7^th Cir. 2001).   Nonetheless, the Starbucks decision is significant for Wisconsin private employers because it provides confirmation as to the appropriate analysis and removes any question previously existing as to how the U.S. Supreme Court would resolve the prior split among the federal circuit courts.