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The Supreme Court tightens employer protections against claims for equitable relief by the NLRB

6/26/24

By: Allison H. Eddy

On June 13, 2024, the United States Supreme Court issued its opinion in Starbucks Corp. v. National Labor Relations Board, resolving a long-standing Circuit split over the test district courts must employ to evaluate petitions by the National Labor Relations Board (“NLRB”) for injunctive relief under Section 10(j) of the National Labor Relations Act. The new rule, discussed below, utilizes the four-part test established in Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008). This rule raises the burden the NLRB must meet in order to be granted injunctive relief by the courts, thereby protecting companies that take adverse employment actions against workers who may violate company policy and procedure.

Section 10(j) of the National Labor Relations Act authorizes a federal district court to grant equitable relief as it deems “just and proper” during the pendency of a NLRB administrative proceeding. In this case, the NLRB sought injunctive relief when Starbucks terminated the employment of seven workers trying to unionize at one of its locations in Tennessee. Because the NLRB brings in-house enforcement proceedings when it suspects employers and unions engage in unfair labor practices, and because these proceedings can take up to two years, the NLRB sought equitable relief in the form of reinstatement of the seven terminated Starbucks employees while its investigation was underway. In evaluating the petition for preliminary injunction under Section 10(j), the District Court applied the two-part test established by Sixth Circuit precedent. This test asks 1) whether “there is reasonable cause to believe that unfair labor practices have occurred,” and 2) whether injunctive relief is “just and proper.” See McKinney v. Ozburn-Hessey Logistics, LLC, 875 F. 3d. 333, 339 (6th Cir. 2017). The Supreme Court overruled the application of this test, saying it’s a “watered-down” approach to the traditional equitable principles underpinning injunctive relief.

The new rule, derived from Winter, is not as deferential as the reasonable cause and just and proper standards previously permissible for 10(j) analysis. Rather, in order for the NLRB to prevail upon a motion for equitable relief, the Board must make a clear showing that: 1) it will likely succeed on the merits, 2) the plaintiff will suffer irreparable harm in the absence of the preliminary relief, 3) the balance of equities tips in its favor, and 4) the injunction is in the public interest. Winter, 555 U.S. at 20, 22. The Court was in favor of this test because it determined the test aligns with commonplace considerations of equity when granting injunctive relief in federal courts. Additionally, the Court found the test applied by the 6th Circuit requires the courts to yield to the NLRB’s preliminary view of the facts, law, and equity, essentially making the district court a spectator, rather than a referee, in disputes between the Board and employers.

In application, the Winter test provides greater protections for employers who have legitimate reasons for taking adverse employment actions against employees who are unionizing. The rule does not interfere with the NLRB’s power to reach its own legal conclusions and develop its own record in its administrative proceedings. Rather, the Court believes the more stringent test will provide the district courts with a tool to give equal weight to both employee and employer in actions for injunctive relief.

For more information, please contact Allison H. Eddy at allison.eddy@fmglaw.com or your local FMG attorney.