Starbucks Labor Dispute Ruling

By Jonathan Stempel

(Reuters) – A federal appeals court largely rejected Starbucks' appeal regarding the National Labor Relations Board (NLRB) finding that the coffee chain illegally fired two Philadelphia baristas, Echo Nowakowska and Tristan Bussiere, for attempting to organize a union.

The 3rd U.S. Circuit Court of Appeals ruled that Starbucks lacked the standing to challenge the constitutionality of NLRB administrative law judges, posing a potential challenge for other companies, including Amazon, Trader Joe's, and SpaceX, seeking to limit NLRB's enforcement powers.

Circuit Judge Thomas Ambro stated that there was substantial evidence supporting the NLRB's conclusion that Starbucks engaged in unfair labor practices, including the reduction of Nowakowska's hours and her firing. The court noted that Starbucks was aware that the baristas had recorded supervisor meetings without consent before the firings took place and dismissed Starbucks' claim regarding the rehiring of the baristas.

However, the court ruled that the NLRB overstepped its authority when ordering Starbucks to cover the baristas' foreseeable expenses, such as costs related to job hunting and medical expenses.

Starbucks claimed it terminated Nowakowska for poor performance and misconduct towards customers and Bussiere for spreading false rumors. Neither Starbucks nor its legal team responded to media inquiries, and an NLRB spokesperson declined to comment.

Amid a nationwide push to unionize, many Starbucks employees have accused the company of unfair labor practices, claims that Starbucks denies. Recently, more than 300 stores staged strikes as part of their campaign, which is coordinated by Starbucks Workers United.

This ruling marks the first instance where a federal appeals court deliberated on wider challenges to NLRB powers, particularly regarding the constitutional protections for its administrative law judges against presidential removal. Ambro emphasized that Starbucks could not prove harm in challenging these protections.

The cases are NLRB v Starbucks Corp (NASDAQ:SBUX), 3rd U.S. Circuit Court of Appeals, No. 23-1953; and Starbucks Corp v NLRB in the same court, No. 23-2241.