Legal Updates

Supreme Court Clarifies Standard For Preliminary Injunction Requests Under NLRA

This past summer, the Supreme Court settled a split amongst the federal circuit courts by ruling, in Starbucks v. McKinney, that the National Labor Relations Board (“Board” or “NLRB”) must meet the same four-part test as other litigants when the Board seeks a preliminary injunction under Section 10(j) of the National Labor Relations Act (“NLRA”).

In so holding, the Court expressly rejected the more lenient two-factor test that several of the circuit courts had adopted.

Background

In response to an unfair labor practice (“ULP”) charge alleging that an employer or union has violated the NLRA, an NLRB regional director is authorized, after conducting an investigation, to file a formal administrative complaint with the Board. That complaint triggers adjudicatory proceedings, first before an NLRB administrative law judge and, potentially, later before the five-member Board in Washington, D.C. If a party seeks review of the Board’s final order, a federal court of appeals can review it.

As this enforcement process can take years, Section 10(j) of the NLRA permits the Board to ask a federal district court to issue a preliminary injunction against the employer or union while the ULP charge is pending. For instance, if a union alleges that an employer is attempting to squelch a union organizing campaign by threatening to fire the employees spearheading the campaign, the NLRB might seek a preliminary injunction ordering the employer to cease and desist from such unlawful threats.

The statute does not specify what standard a district court should apply when deciding whether to issue a preliminary injunction. Rather, the NLRA simply directs the district court to grant an injunction “as it deems just and proper.”

The Starbucks v. McKinney Case

The case started when pro-union employees of a Starbucks in Memphis, Tennessee, invited a news crew from a local television station to the store after business hours to interview the employees about their unionizing efforts. When management learned about the event the following day, they terminated several of the employees for violating company policy by organizing the media event.

The union coordinating the employees’ organizing campaign filed ULP charges with the NLRB, alleging that Starbucks had unlawfully interfered with the employees’ right to unionize. Following an investigation, the NLRB issued an administrative complaint and also filed a petition in the U.S. District Court for the Western District of Tennessee (located in the Sixth Circuit), seeking a preliminary injunction reinstating the terminated employees under Section 10(j) of the NLRA.

At the time, the federal courts of appeals were split over the proper standard to apply when presented with a request for preliminary injunctive relief under the NLRA. The Fifth, Sixth, Tenth, and Eleventh Circuits used a two-factor test, requiring the NLRB to show (1) that reasonable cause exists to believe that a ULP has occurred, and (2) that injunctive relief would be “just and proper.”

Conversely, the Fourth, Seventh, Eighth, and Ninth Circuits applied the traditional four-factor test articulated by the Supreme Court in its 2008 Winter v. Natural Resources Defense Council, Inc. decision, considering whether (1) the movant has shown a likelihood of success on the merits, (2) the movant will suffer irreparable harm absent injunctive relief, (3) the balance of the equities tips in the movant's favor, and (4) an injunction would be in the public interest. The First and Second Circuits used a hybrid of these two approaches.

Applying the Sixth Circuit’s two-factor test, the district court issued the requested injunction, and the Sixth Circuit affirmed.

Supreme Court’s Holding

The Supreme Court vacated the Sixth Circuit’s decision and remanded the case, concluding that district courts must apply the traditional four-part Winter test when faced with a request for a preliminary injunction under Section 10(j). In so holding, the Court explained that only a clear command from Congress can overcome the “strong presumption” that courts will exercise equitable authority consistent with the traditional standard for preliminary injunctive relief.

Reading the statute, the Court concluded that there is no such clear command in Section 10(j). Rather, Section 10(j) merely authorizes a district court to issue preliminary relief that the court “deems just and proper.” In the Court’s view, far from constituting a clear command to “jettison” the normal rules, this statutory language simply invokes “the discretion that courts have traditionally exercised when faced with requests for equitable relief.”

Under the competing “reasonable cause” test, the Court noted, “[I]t is hard to imagine how the Board could lose … if courts deferentially ask only whether the Board offered a minimally plausible legal theory, while ignoring conflicting law or facts.” Conversely, under the Winter standard, the Board has to show that it is “likely” to succeed on the merits.

The NLRB also argued that Section 10(j) should be interpreted in light of the deference granted by courts of appeals to final decisions of the Board. The Court rejected that claim, concluding that because the Board’s views, as advanced in a Section 10(j) petition, are preliminary and do not represent the Board’s formal position, deference to them would be “entirely inappropriate.”

Key Takeaways For Employers

The Court's decision will make it more difficult for the NLRB to win Section 10(j) injunctions against employers accused of unfair labor practices in those federal circuits that were not already using the Winter test.

Additionally, because the Winter test requires that the NLRB show, in part, that it is likely to succeed on the merits, employers are likely to have an earlier and more comprehensive insight into the NLRB’s overall view of cases in which the Board seeks preliminary injunctive relief. This may help an employer assess its liability risks and settlement options at an early stage of the proceeding.

In case there was any doubt, however, about whether the Starbucks decision might discourage the NLRB from seeking Section 10(j) injunctions, the NLRB General Counsel, Jennifer Abruzzo, reaffirmed her commitment to doing so in a new memorandum issued about a month after the Supreme Court’s ruling. In the memorandum, General Counsel Abruzzo asserted that application of the Winter test in forums where a less stringent standard had been previously applied would not have any significant impact on the Board, which has “ample experience” in litigation seeking Section 10(j) injunctions.

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If you have questions about the Supreme Court’s Starbucks decision or any other union-related issues, please feel free to contact one of our experienced labor lawyers.