By Jonathan Stempel
(Reuters) - A federal appeals court on Friday largely rejected Starbucks' appeal of a National Labor Relations Board finding the coffee chain illegally fired two Philadelphia baristas because they wanted to organize a union.
The 3rd U.S. Circuit Court of Appeals said Starbucks lacked standing to challenge the constitutionality of NLRB administrative law judges, in a possible setback for companies such as Amazon.com (NASDAQ:AMZN), Trader Joe's and Elon Musk's SpaceX that have sought to limit the agency's enforcement powers.
Circuit Judge Thomas Ambro wrote for a three-judge panel that substantial evidence supported the NLRB's conclusion that Starbucks engaged in unfair labor practices by firing Echo Nowakowska and Tristan Bussiere from their South Philadelphia store, and reducing Nowakowska's hours.
The court also found substantial evidence that Starbucks knew before the firings that the baristas had recorded meetings with supervisors without their consent, and rejected Starbucks' claim it need not rehire the baristas with back pay because it discovered the improper recordings only later.
But the Philadelphia-based court said the NLRB exceeded its authority by ordering Starbucks to pay the baristas' foreseeable expenses stemming from their firings. These might have included costs of finding new jobs and out-of-pocket medical expenses.
Starbucks said it fired Nowakowska in January 2020 because she performed poorly and mistreated customers and fired Bussiere the next month because he spread a false rumor that another barista would be fired.
Neither Starbucks nor its lawyers immediately responded to requests for comment. An NLRB spokesperson declined to comment.
Many Starbucks workers have accused the Seattle-based company of unfair labor practices, which it has denied, amid a campaign by workers to unionize stores nationwide.
That campaign included strikes this month at more than 300 stores, according to Starbucks Workers United.
The case was the first time a federal appeals court considered broader challenges to NLRB enforcement powers, including whether its administrative law judges were unconstitutionally shielded from presidential removal.
Ambro said Starbucks lacked standing to challenge the removal protections because it could not demonstrate harm.
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.