An old-school union-busting gambit is to threaten employees that if they vote for a union, management will shut the business down and they will be out of work. What good is a union going to do for you if you have no jobs, they would argue. And this was an unfair labor practice under the Wagner Act, which protects the rights of workers to unionize without retaliation.
But Starbucks didn’t threaten to close three stores in Ithaca, New York. It closed three stores. Shut the doors. Took out its barista machines. Locked the doors. It claimed it was because the stores were unprofitable and had high management turnover. But an NLRB Administrative Law Judge found that it was just to bust the union in violation of Section 7.
National Labor Relations Board Administrative Law Judge Geoffrey Carter ordered Starbucks to reopen “within a reasonable period of time” two Ithaca locations that closed after employees formed a union, stating that its move to “chill unionism” violated the National Labor Relations Act.
Carter ruled on Friday that the May 2023 permanent closures of the Ithaca Commons and Meadow Street Starbucks locations and failure to bargain with the union were unlawful, as the board found the stores were closed for “antiunion reasons” and in an effort to quell unionizations elsewhere.
The NLRB similarly ordered on July 6, 2023, that the third Ithaca Starbucks location on College Avenue — which closed on June 10, 2022 — must reopen “immediately.” The store remains closed.
It’s one thing to award the workers back pay and damages for violations of the NLRA. It’s another thing entirely to order the company to re-open stores it closed. At its core, there is a parity to the mechanism of labor-management relations. When workers call a strike, they don’t get paid when they walk the picket line and management makes no money when there is no one working. It puts pressure on both sides to cooperate and reach an agreement so workers get a paycheck and management makes a profit.
There is a similar parity when workers vote to unionize and management refuses to accept their decision. The deal is that management either negotiations in good faith with the union or can’t do business. There is no option to continue to enjoy the fruits of a business while violating the law. And so the only option if management doesn’t want a union is to close the doors.
That’s what Starbucks did. It closed its doors.
There is a sound argument from the union perspective to force a company to re-open stores closed primarily to thwart the exercise of Section 7 rights. The law cannot, and should not, excuse the violator from ignoring or circumventing its mandates. If a violation occurs, there needs to be a remedy that not only addresses past economic loss, but provides meaningful future compliance with the law. How can Starbucks be allowed to undermine the NLRA by closing its stores and eliminating the collective bargaining unit? What sort of incentive does this provide to compel management to fulfill their duty to employees, past, present and future?
But can anyone, any business, be forced to open a store it chooses not to open? Can a business be forced to rent the space, put in the equipment needed and put its sign over the door when it doesn’t want to, for any reason including a bad one like denying workers’ Section 7 rights? Must Starbucks hire a manager to run the store? What if Starbucks doesn’t want to hire a manager, and throws the doors open and tells union workers, you’re on your own? Can a manager be forced to work there? Is the manager now a slave?
It may well be that the Ithaca stores weren’t sufficiently profitable before, and are almost certain to be unprofitable after the union negotiates a contract. Can Starbucks be ordered to re-open stores that lose money? Where does the Wagner Act require employers to operate failed businesses, or authorize an ALJ to compel businesses to re-open unprofitable stores?
Unlike small businesses, Starbucks remains an ongoing, profitable world-wide corporation, meaning there is an entity against which an award can be leveled. If these three stores were owned and run by the Ithaca Hipster Coffee House Corporation, and when they were closed, the corp ceased to exist, there would be no entity to force to do anything. But Starbucks still exists, and is available to be the target of the ALJ’s award.
It could be an award of monetary damages or, as here, include the injunction to re-open its three closed stores. But if such an order is permitted against Starbucks, it’s as viable an order against IHCHC or any other entity that decides, in the aftermath of a union certification vote, that it’s just not interested in conducting the business anymore. That’s the price management was meant to pay for not playing the game, and it was never conceived that zombie business would be forced into operation so union workers had someplace to go on Monday mornings.
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So I suspect Starbucks will appeal, but what happens if they just say we are not opening the stores or open them for one day then close them again?
There’s a great Mel Brooks musical in this premise. Well maybe not great. But Ithaca…perfect.
IANAL so I’m curious. Some Starbucks are now franchise operations now. If those were the ALJ ordered reopened stores were franchise operations, how would that effect things?
The idiot ALJ should be required to operate these three stores.
I hate Starbucks with a burning passion, as do most of us who are old enough to remember the days when a multitude of coffee shops offered a wide variety of coffees and atmospheres, while supporting local owners who spent their profits in the community. I hate Starbucks because they are a perfect example of how giant corporations come into a market and drive out all of the good locally owned businesses, and then make massive profits selling a mediocre, overpriced product to consumers who no longer have a choice, and part of me would love to see this decision motivate Starbucks employees everywhere to unionize, and then Starbucks forced to lose more and more money, until they go bankrupt.
I understand that the law doesn’t always make sense to laymen, for example when the Supreme Court rules that a fish is not a tangible object.
That being said, it seems obvious to me that this decision is wrong because it goes beyond punishing bad behavior into usurping property rights. I’ll be astonished if it isn’t overturned on appeal.
I tend to agree, but many people choose to go to Starbucks instead of the independent places. Just like many people when travelling choose to go to a chain restaurant that has virtually the same menu as the place back home, instead of an independent place. Trading freedom for security?
I’m not a coffee drinker (I’ll have tea or something), but when I’ve been with a group, any suggestion to go to an independent place, that looks interesting, whatever, is typically rejected in favour of going to Starbucks (or if not Starbucks, another known chain even if not known for the quality of its coffee).
Re the original topic, yeah, seems like monetary damages should be sufficient (and if they’re not, the solution is to award more money until the damages are sufficient…).
Certain businesses have decided it’s cheaper to engage in continuous and blatant illegal anti-union behavior than to follow the law. (E.g., Walmart, Starbucks.) The penalties being levied by the NLRB are insufficient to convince those corporations to follow the law. However, there are obvious problems in trying to *force* a company to run a store it does not want to run.
So if it’s not forcing the companies to re-open the store, what penalty would be enough to convince these habitual corporate lawbreakers to obey the law? Should they be forced to pay the wages of the workers in perpetuity until they get new jobs? Should there be significant liquidated damages, so that this kind of serious violation of the NLRA gives an immediate payday for workers affected, even at the potential cost of unjust enrichment? I don’t practice labor law, so I’m so I’m certainly no expert in the current remedies in use, but it is obvious that the penalties need to be increased as their deterrent effect is currently clearly insufficient.
I ask this question purely out of curiosity based in ignorance: The order to reopen the Starbucks stores is effectively equitable/injunctive relief. My guess would be that in other contexts an NLRB ALJ would have the jurisdiction to enjoin some types of actions, e.g. an order to employees to end a strike or to an employer to stop interfering with union activities. Does the NLR Act authorize such broad equitable powers to the ALJ/NLRB to order such a (relatively) drastic remedy as in this case? (Yes, I realize that this is an issue that the appeals court will have to take up. I’m just trying to get the take of the “brain trust” on the topic.)
That’s the question raised by this post. It would seem the obvious answer is that this order was ultra vires, if for no other reason than it’s unmanageable. But it’s now up to the court on appeal to decide.