Section 10(j) of the National Labor Relations Act (the “Act”) authorizes the National Labor Relations Board (the “NLRB”) to seek injunctive relief in federal district court against Charged Parties to stop alleged unfair labor practices while the case is being litigated at the administrative level. Under Section 10(j), a federal district court“ shall have jurisdiction to grant to the Board such temporary relief or restraining order as it deems just and proper.” A well-known instance when the NLRB seeks a Section 10(j) injunction involves reinstating a former employee allegedly unlawfully discharged during the pendency of unfair labor practice proceedings before an administrative law judge or the NLRB.
For many years, the NLRB has asserted that to obtain a Section 10(j) injunction it need only establish that: (1) there was reasonable cause to believe that unfair labor practices have occurred; and (2) injunctive relief was just and proper. Some federal appellate courts – including the Sixth Circuit Court of Appeals (whose jurisdiction includes Ohio) – have adopted this deferential standard. Other federal appellate courts, however, have required the NLRB to satisfy the stricter, traditional elements for obtaining a preliminary injunction.
On June 13,2024, the U.S. Supreme Court confirmed that the traditional four-factor preliminary injunction test applies to Section 10(j) injunctions. The Court’s decision in Starbucks Corp. v. McKinney, No. 23-367, 602 U.S. ____ (2024) resolves a circuit split as to the standard controlling the NLRB’s Section 10(j) injunction petitions. The Supreme Court’s majority opinion confirmed that, when seeking a Section 10(j) injunction, the NLRB must show by clear and convincing evidence that: (1) it is likely to succeed on the merits;(2) it is likely to suffer irreparable harm in the absences of preliminary relief; (3) the balance of equities tips in its favor; and (4) that an injunction is in the public interest.
The underlying dispute arose when several Starbucks employees invited local media to visit their Memphis, Tennessee store after hours to promote the employees’ union organization efforts. Starbucks then terminated their employment for violating company policy. The Union coordinating the Memphis store’s organization efforts filed an unfair labor practice charge with the NLRB. After the NLRB’s investigation, it issued a complaint against Starbucks and filed a Section 10(j) petition. The district court granted the injunction, and the Sixth Circuit affirmed. The injunction, among other things, required Starbucks to reinstate the terminated employees while the unfair labor practice charge against Starbucks remained pending.
The Supreme Court noted that the standard asserted by the NLRB and adopted by the Sixth Circuit is quite deferential the to the NLRB—it could establish" reasonable cause” simply by showing that its legal theory is substantial and not frivolous, and it could show relief is “just and proper” if it is necessary to return the parties to the status quo pending the Board’s proceedings so as to protect the Board’s remedial powers under the NLRA. The Supreme Court added that the Sixth Circuit’s standard “substantially lowers” the NLRB’s legal burden when it seeks a Section 10(j) injunction. Indeed, “it is hard to imagine how the Board could lose under the reasonable-cause test if courts deferentially ask only whether the Board offered a minimally plausible legal theory” while an evaluating District Court ignores conflicting laws or facts and fails to examine whether the NLRB’s theory is likely meritorious.
The Supreme Court recognized that there are circumstances where the four-factor test is not the applicable standard, but only when Congress declares so by statute. Section 10(j) lacks any specific instruction suggesting that Congress “altered the traditional equitable rules.”
This is the sticking point of the majority’s decision—Section 10(j) contains no language that could be interpreted as modifying the traditional injunction standard. Accordingly, the Court held that the traditional four factors apply when considering the NLRB’s request for a Section 10(j) injunction.
McKinney’s Practical Implications
1. Agency Deference May Be Dwindling
McKinney suggests that administrative agencies, such as the NLRB, may be afforded less deference as to their interpretations of statutes. As discussed, perhaps the most important consideration when assessing the applicable injunction standard under Section10(j) was what Congress did not say. Section 10(j) itself contains no language that adopts a different standard than the traditional four-factor test.
This reasoning is reminiscent of Encino Motorcars, LLC v. Navarro, 584 U.S. 79 (2018), wherein the Court rejected the Department of Labor’s narrow construction of the FLSA in applying the overtime exemptions to service advisors within the vehicle repair industry. The Court explained: “Because the FLSA gives no ‘textual indication’ that its exemptions should be construed narrowly, ‘there is no reason to give [them] anything other than a fair (rather than a ‘narrow’) interpretation.”
The Court’s similar reasoning in McKinney may be indicative of its forthcoming decision in Relentless Inc. v. Department of Commerce, which could step away from the Chevron doctrine and further limit agency deference. In sum, these decisions remind the NLRB that it must rely on statutory text itself, rather than an overarching purpose of the statutory scheme, to support its interpretation.
2. Employers Have Multiple Grounds to Challenge Employee Reinstatement
McKinney is significant in the employee reinstatement context. The NLRB’s injunction in McKinney required, among other things, reinstatement of the terminated employees while the NLRB’s administrative complaint against Starbucks remained pending. Because the Sixth Circuit’s “reasonable cause” test was so deferential to the NLRB’s assessment of the facts and circumstances, injunctions requiring employee reinstatement were harder for employers to oppose. And, even if the NLRB or the courts later deemed the employer’s terminations to be lawful, the employer would still incur damage by reinstating and compensating a lawfully-terminated employee until the NLRB or the courts rendered that decision.
These circumstances are less likely to occur under the traditional four-factor test. Employers can challenge reinstatement on three of the four grounds. First, District Courts must examine the likelihood of the NLRB’s success on the merits. This means that employers can challenge the NLRB’s position and potentially avoid reinstating employees where the NLRB has not met its burden as to its legal theory underlying the Section 10(j) injunction.
Second, employers can challenge reinstatement on the basis of irreparable harm. Courts have declined to adopt prior NLRB arguments that irreparable harm will occur if an employee is not reinstated because other make-whole remedies exist, such as monetary remedies (including, but not limited to, back pay), which undermine the NLRB’s position when it seeks reinstatement. The NLRB has increasingly fashioned additional monetary remedies for employees where it finds employers committed violations. As such, employers can argue that irreparable harm will not occur if the employee is not, in fact, reinstated.
Third, employers may present evidence that reinstatement fails the “balance of equities” or the“ public interest” factors. Employers could present evidence that reinstatement of a particular employee would be harmful to the workplace overall, thus rendering the NLRB’s argument for reinstatement inequitable overall. For example, say an employee was fired for creating a hostile work environment in violation of company policy and another employment statute, but the NLRB challenged the termination on the basis that the behavior was protected activity under Section 7. Even though the behavior was arguably protected activity, reinstating the employee would still have a damaging effect on the work environment as a whole. Employers could argue that the NLRB’s remedy of reinstatement would be grossly inequitable for the employer, and therefore, the “balance of equities” would not be in the NLRB’s favor.
Closing Thoughts
Although the NLRB now operates under a more exacting standard to obtain a Section 10(j)injunction, in no way does this invite employers to violate the NLRA and other applicable laws. Employers (including non-union employers) must continue to abide by the NLRA and be mindful of employee rights under Section 7. The NLRB may still obtain a Section 10(j) injunction if it meets the four criteria. But the impact of the injunction on employers may change based on the application of the four-factor test. Employers are strongly encouraged to maintain relationships with qualified labor and employment counsel to navigate active and potential complaints and injunction petitions by the NLRB.
*Please contact ZR Team Members George S. Crisci (gsc@zrlaw.com) and Rebecca Singer-Miller (rsm@zrlaw.com) for questions relating to Section 10(j) injunctions and other labor-related matters.