The U.S. Court of Appeals for the Sixth Circuit is the latest federal appeals court to hear a challenge to the National Labor Relations Board's (NLRB) expansion of the remedies available for employees subjected to unfair labor practices. Starbucks, the coffee shop giant, has urged the court to reject an NLRB order requiring the company to rehire a barista fired allegedly due to her union support and pay her more than just back wages.

Starbucks Fights NLRB's Expanded Remedies, Raising Concerns over Statutory Authority

Questioning the NLRB's Authority to Order "Make-Whole Relief"

Starbucks is targeting the NLRB's 2022 decision in Thryv Inc. v. NLRB, which allowed the agency to order "make-whole relief" for those who suffered an unfair labor practice. This includes compensation for "all direct or foreseeable pecuniary harms," such as credit-card fees, mortgage charges, child-care bills, and medical expenses. Sixth Circuit Judge Chad Readler questioned the NLRB's authority under U.S. Supreme Court precedent to order such relief, stating that it "just feels like a major departure" from past practices.Employers have targeted the Thryv decision in other circuits as well. In an appeal to the ruling itself, the Fifth Circuit held in May that software and marketing services company Thryv did not violate labor law by failing to bargain in good faith when it laid off six employees. The Fifth Circuit vacated an NLRB order that required the company to reimburse the workers for medical expenses and credit-card fees, though the court did not answer whether the NLRB could impose such relief in the future.

Starbucks' Argument: NLRA Only Allows for Reinstatement and Back Pay

Starbucks, in its brief, argued that the National Labor Relations Act (NLRA) only allows the NLRB to order employers to cease and desist from violating the law and take "affirmative action" such as reinstatement or back pay. The agency, however, countered that the statute broadly allows "direct or foreseeable pecuniary harms" necessary to restore employees to the situation they were in prior to the unlawful conduct.The NLRB's attorney, Eric Weitz, pointed to the U.S. Supreme Court's 1983 ruling in Bill Johnson's Restaurants Inc. v. NLRB, which required a company to pay legal expenses incurred by an employee defending against a retaliatory lawsuit brought by the employer. Weitz argued that the Thryv decision is a "major change" because the NLRB is now including this type of relief as a standard part of its review, rather than on an ad hoc basis.

Starbucks' Constitutional Argument: Seventh Amendment Concerns

Starbucks also argued that only courts and juries can award compensatory damages to private parties under the Seventh Amendment. The company pointed to the Supreme Court's recent holding in SEC v. Jarkesy, which found the U.S. Securities and Exchange Commission's imposition of civil fraud penalties unconstitutional.Sarah Harris, Starbucks' attorney from Williams & Connolly, reiterated the company's position that the NLRA's reference to "affirmative action" only refers to equity, not compensatory damages. She argued that the Fifth Circuit's characterization of Thryv as permitting "novel, compensatory damages-like remedies" is a significant issue for the NLRB.In contrast, the NLRB argued that Congress enabled the agency to order make-whole relief to vindicate public rights, so the Seventh Amendment argument is invalid.

Judges Express Concerns and Seek Clarity on NLRB's Authority

During the Sixth Circuit hearing, Judge Jane Stranch seemed wary of Starbucks' position that Thryv conflicts with Supreme Court precedent. She noted that case law shows the NLRB has been granting make-whole remedies since the 1940s, questioning whether Starbucks' argument that this is a "wholly new" approach holds merit.Judge Alice Batchelder also sat on the Sixth Circuit panel, indicating the court's interest in thoroughly examining the issues surrounding the NLRB's expanded remedies and their potential impact on employers.As the Sixth Circuit considers Starbucks v. NLRB, No. 23-1767, the outcome of this case could have far-reaching implications for the NLRB's ability to provide comprehensive relief to employees who have been subjected to unfair labor practices.