Why did court reject Starbucks' appeal of NLRB? Drama explained

Café giant Starbucks has previously fired many employees for various reasons. However, on December 27, 2024, the U.S. Court of Appeals for the Third Circuit ruled that the coffee company had illegally fired two employees from Philadelphia Echo Nowakowska and Tristan Bussiere who tried to unionize their outlet in 2020.

The café giant has been instructed to rehire the two employees with the backpay, an order previously given by the National Labor Relations Board (NLRB). The board alleged that the two employees were also deprived of certain monetary benefits that they were entitled to and ordered for reimbursement.

NLRB had also held that the two employees were illegally terminated from their jobs but Starbucks decided to appeal the claim, which was rejected by the Third Circuit court.

The brewing company argued that the employees were terminated from their jobs because of poor performance and justified the claims with recordings from earlier meetings. However, the appeals court did not accept any of those.

Additionally, the court has also rejected an NLRB order to provide the sacked employees with due compensation for job searches and medical bills. The judges stated that the company cannot be forced to compensate the employees for monetary losses that are direct or reasonably anticipated due to unfair labor practices.

Starbucks attacked NLRB’s 2022 decision that allowed monetary benefits over and beyond backpay. The board had previously argued that it could mandate "make-whole relief" that extends beyond backpay, covering miscellaneous costs.

However, a 2022 Supreme Court decision in SEC v. Jarkesy limited the authority of administrative law judges by ruling that they cannot impose legal remedies like monetary or punitive damages. As per the Seventh Amendment, there is a right to a jury trial in such cases.

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What did the judges say regarding NLRB's reimbursement order to Starbucks?

Third Circuit Judges Kent Jordan, Theodore McKee, and Thomas Ambro argued that requiring Starbucks to pay for the job search and interim employment expenses of Nowakowska and Bussiere went beyond the NLRB’s authority as demarcated under the National Labor Relations Act.

They explained that the Act limits remedies to equitable solutions like reinstatement or backpay, and the relief granted exceeded those boundaries. The court vacated this part of the order and sent it back for reconsideration, clarifying that while some monetary relief is allowed, it cannot surpass what the employer wrongfully withheld.

Starbucks tried to question the authority of the NLRB, claiming its judges were too protected from being removed by the president, which might make them less accountable. However, the federal appeals court decided the company could not continue with this challenge because it didn’t prove that these protections caused the company any harm.

Starbucks also stated that the reimbursement order was unlawful and did not fall under its jurisdiction. The court was also presented with evidence suggesting that the company had unjustly reduced Nowakowska’s working hours besides sacking the two employees for their attempts to be a part of the worker’s union.