The Supreme Court sided with Starbucks in its labor dispute. One expert says it probably won't stop people from unionizing.

By Bill Peters

Starbucks Workers United says the ruling 'underscores how the economy is rigged against working people.' The coffee chain says it levels the playing field.

The Supreme Court on Thursday sided with coffee chain Starbucks Corp. in a case stemming from the firing of seven workers at a Memphis store who were trying to unionize - a ruling that could make it tougher for the government to use the courts to protect workers' organizing efforts.

The court's 8-to-1 decision, in which Justice Clarence Thomas wrote the majority opinion, comes as more businesses push back against a more labor-friendly federal government under President Joe Biden. However, at least one labor-law professor downplayed the ruling's impact.

The decision also follows a recent thawing in relations between Starbucks (SBUX) and the union representing thousands of employees at hundreds of stores, paving the way for renewed contract negotiations in April. The union, Starbucks Workers United, slammed the ruling and said the coffee chain should have dropped the case as tensions eased following an aggressive campaign by the chain to stifle organizing efforts.

The ruling goes back to a dispute in 2022, when the Starbucks workers in Memphis tried to unionize their store. Starbucks said it fired the workers after they violated company policy by conducting interviews with a local television news crew after the store had closed.

In turn, the National Labor Relations Board, the U.S. agency that oversees unionization efforts, filed an administrative complaint and accused Starbucks of unfair labor practices, as the court's ruling explained. The labor board also sought an injunction - a court order telling someone to do something or barring them from doing something - to make Starbucks rehire the employees during administrative proceedings. A district court granted that injunction, and the U.S. Sixth Circuit Court of Appeals affirmed it.

At issue, however, were the guidelines that courts use to allow the labor board to step in during such clashes between employers and their employees.

Starbucks argued that courts apply those criteria inconsistently. The Supreme Court, in its ruling, said the district court made its decision on the injunction based on a two-factor test that simply asks whether there was "reasonable cause to believe that unfair labor practices have occurred" and that an injunction was "just and proper."

However, the Supreme Court said that district courts should use criteria that set a higher bar for the labor board when it seeks injunctions - namely, that a plaintiff is likely to succeed on the merits, that irreparable harm is likely without relief, and that an injunction is in the public interest.

"We remain focused on making progress toward our goal of reaching ratified contracts for represented stores this year," Starbucks said in a statement. "Consistent federal standards are important in ensuring that employees know their rights and consistent labor practices are upheld no matter where in the country they work and live."

The union representing Starbucks begged to differ.

"Working people have so few tools to protect and defend themselves when their employers break the law," Lynne Fox, the president of Workers United, said in a post on Thursday. "That makes today's ruling by the Supreme Court particularly egregious. It underscores how the economy is rigged against working people all the way up to the Supreme Court."

Observers quoted in other media outlets said the ruling could embolden employers to take harsher actions against unionizing workers and discourage them from organizing.

However, Risa Lieberwitz, a law professor of labor and employment law at Cornell University, told MarketWatch that injunctions being analyzed by the Supreme Court are rare, adding that there are multiple steps the labor board has to go through to seek an injunction.

By the time that request lands at the district court, she said, the board has already analyzed factors such as the likelihood of success, the nature of the harm being suffered, and whether the public interest was being served.

"The outcomes in a district court are likely to be similar to what happened before this case, because the board has already gone through a rigorous process of deciding whether it's appropriate to seek an injunction from a district court," Lieberwitz said.

She added: "I don't think that this decision will have a significant impact or perhaps any impact on employees' ability to unionize."

The Supreme Court ruling follows a series of high-profile union victories at companies like Starbucks, Apple Inc. (AAPL) and Amazon.com Inc. (AMZN) in recent years, as workers worn out by the pandemic and inflation have sought stronger job protections. But as unfair-labor-practice allegations by the NLRB have piled up, companies including Amazon, Trader Joe's and SpaceX have asserted that the labor board itself is unconstitutional.

In an email, the National Labor Relations Board said it had no comment on the Supreme Court ruling. However, the board pointed to remarks in April by Jennifer Abruzzo, its general counsel, who said that injunctive relief "is one of the most important tools available to the NLRB to protect workers' statutory rights through effective enforcement of the only federal labor law in the country."

Abruzzo added later in that statement: "Without obtaining this temporary relief, the lawbreaker will fully reap the benefits of having violated workers' rights - such as by snuffing out a nascent organizing drive - through the passage of time, because a board remedy in due course will come too late to sufficiently address the harm."

Starbucks has dangled higher pay and better benefits as more employees at its stores try to unionize. More recently, the chain has suffered from weaker sales as consumers, grappling with higher prices, have grown more cautious with their spending. Others have called for a boycott of the company after it opted not to pick sides in the war between Israel and Hamas in Gaza.

Shares of Starbucks were down 0.4% on Thursday.

-Bill Peters

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06-14-24 1250ET

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