Second Circuit rules against NLRB in Starbucks case

Michael P. Tremoglie May 14, 2012, 12:54pm

NEW YORK (Legal Newsline) -- The Second Circuit U.S. Court of Appeals has ruled against the National Labor Relations Board in a case regarding Starbucks employees wearing pro-union buttons.

The court was asked to decide if allowing Starbucks employees to wear only one pro-union button is an unfair labor practice. The NLRB said it was in 2010.

The case involved a petition for the enforcement of an order by the NLRB and Starbucks' cross-petition for review primarily concern the validity of the company's dress code provision limiting employees to displaying only one pro-union button on their work uniforms. Also at issue was the firing of two employees.

These issues are the result of efforts to unionize employees at several Starbucks coffee shops in Manhattan. The NLRB sought enforcement of its Aug. 26, 2010, order stating Starbucks committed several unfair labor practices, including the three challenged in this case, in violation of subsections 8(a)(1) and 8(a)(3) of the National Labor Relations Act.

Starbucks filed a cross-petition to set aside the challenged portions of the NLRB order.

The Industrial Workers of the World has tried organizing wage employees in four Starbucks stores from 2004 to 2007. None of the Starbucks stores nationwide are unionized. According to the court, IWW "engaged in a highly visible campaign ... among other efforts, union supporters held protests, attempted to recruit 'partners' and made numerous public statements to the media."

Starbucks conducted an anti-union campaign in response which was "aimed at tracking and restricting the growth of pro-union sentiment." Starbucks employed a number of policies with which the Appeals Court concurred with the NLRB to find "restrictive and illegal."

Among these policies the NLRB found illegal and the Appeals Court concurred were the prohibition of employees from discussing the union or the terms and conditions of their employment; prohibiting the posting of union material on bulletin boards in employee areas; preventing off-duty employees from entering the back area of one of the stores; and discriminating against pro-union employees regarding work opportunities.

But during this same period, the NLRB also found that Starbucks committed other labor law violations. The NLRB said that a Starbucks policy prohibiting employees from wearing more than one pro-union button on work clothes was an unfair labor practice; Starbucks used protected activity to justify the discharge of pro-union employee Joseph Agins; the NLRB found that Starbucks' decision to discharge pro-union employee Daniel Gross was primarily motivated by anti-union animus.

The three-judge panel of the Second Circuit issued an opinion that enforced in part, grant the cross-petition for review in part, and remand. It concluded that Starbucks' one-button rule was not an unfair labor practice. The court also ruled that one of the two challenged discharges was also not unfair. It remanded the other discharge.

Regarding the button issue, the Appeals Court noted that Starbucks implements a comprehensive dress code for its employees. The purpose of the dress policy is to ensure that the employees present the image the company believes to be "clean, neat, and professional."

It also said that Starbucks does encourage wearing buttons as part of its employee-reward and product-promotion programs. The NLRB Administrative Law Judge (ALJ) found that many of the adornments worn by employees are not obviously related to employee programs, and that the resulting public image is of a uniformed employee wearing a variety of unrelated pins and buttons on their hats and aprons. The Appeals Court said that the National Labor Relations Act (NLRA) recognizes the employees' rights to wear union insignia.

But the Appeals Court said that "the Board has gone too far in invalidating Starbucks's one button limitation. ... Starbucks is clearly entitled to oblige its employees to wear buttons promoting its products, and the information contained on those buttons is just as much a part of Starbucks's public image as any other aspect of its dress code ... the company is also entitled to avoid the distraction from its messages that a number of union buttons would risk ... Wearing such a large number of union buttons would risk serious dilution of the information contained on Starbucks's buttons, and the company has a "legitimate, recognized managerial interest" in preventing its employees from doing so." The Appeals Court ruled in favor of Starbucks.

Regarding the issue of the discharged employee the Appeals Court said was just, the judges said that while the NLRA protects some "impulsive" activity it does not protect insubordinate or profane comments. They said, "We think the analysis of the ALJ and the (NLRB) improperly disregarded the entirely legitimate concern of an employer not to tolerate employee outbursts containing obscenities in the presence of customers." They found the firing justified.

Regarding the firing they remanded the Appeals Court said, "... it was reasonable for the ALJ to find that Gross's later performance reviews, and in particular the April 29 "Update on Performance," were persuasive evidence of negative animus directed specifically toward Gross for those activities. This sufficed to make out a prima facie case. The ALJ, however, appears to have misapplied the second step of the burden-shifting analysis. As noted, at that step the issue is whether Starbucks would have fired Gross absent his union activity. Here, there was strong evidence that it would have done so."

Vincent Vernuccio, the labor policy counsel for the Competitive Enterprise Institute, observed that the NLRB's actions in this case indicate its pro-union program.

"Once again the courts have smacked down the unelected bureaucrats at the National Labor Relations Board," he said. "The NLRB consistently attempts to put unions before workers and job creators. The courts are the last resort in preventing this rogue agency from giving more favors to one of the Obama Administration's biggest benefactors, labor bosses."

John N. Raudabaugh, the Reed Larson Professor of Labor Law at Ave Maria School of Law, Naples, Florida said that the court reminded certain members of the NLRB the purpose of a business.

"The Second Circuit reasoning is that in a commercial setting open to the public protected activities must be done in moderation," he said. "For liberal board members it is important to keep in mind that in a retail setting you do not want to offend customers.

"They spend the money that keeps the business operating and the employees employed. Yet, the current Democrat majority on the NLRB seems to condone any type of organizing activity, anytime and anywhere."

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