By Daniel Wiessner
(Reuters) - U.S. appeals court judges on Thursday expressed skepticism that Starbucks Corp (NASDAQ:SBUX) hurt a union organizing effort when it fired seven leaders, and appeared open to the coffee chain's argument that doing so did not violate federal labor law.
The case involving a Starbucks cafe in Memphis, Tennessee is one of many legal disputes stemming from a nationwide union campaign at the world's biggest coffee chain whose labor practices are under scrutiny from shareholders and the U.S. Congress. But it is among the first to reach an appeals court.
Judges on a 6th U.S. Circuit Court of Appeals panel in Cincinnati, Ohio took issue with claims by Laurie Duggan, a lawyer for the U.S. National Labor Relations Board, that "union support inevitably dies" when organizers are fired.
"It was the opposite of 'died,' it came to life," Circuit Judge Chad Readler said, noting that the Memphis store unionized months after the workers were fired.
Starbucks is appealing a judge's ruling from August that said the firings were unlawful because they were motivated by anti-union animus. The judge ordered Starbucks to reinstate the workers while a related case plays out at the labor board.
A loss for Starbucks could ratchet up scrutiny of its labor practices after a recent U.S. Senate hearing and a shareholder proposal directing the company to conduct an independent assessment of its response to the union campaign.
The Memphis store is one of nearly 300 Starbucks cafes in the United States to unionize since late 2021. The company was union-free for decades.
More than 540 complaints have been filed with the labor board accusing Starbucks of illegal labor practices such as firing union supporters, spying on workers and closing stores during labor campaigns.
The company has broadly denied wrongdoing and said it offers employees competitive wages and benefits and respects their rights under federal labor law.
Arthur Carter, a lawyer for Starbucks, argued on Thursday that the Memphis workers were fired for violating a company safety policy by opening the store without consent and allowing members of the media inside. Starbucks has said it reinstated the workers despite disagreeing with the judge's ruling.
Carter told the 6th Circuit that there was no evidence of anti-union bias, and the successful union campaign undermined the labor board's claim that a court order was necessary to protect workers.
Readler and the other two judges on the panel pressed Duggan on that point, repeatedly asking how the judge's order was warranted if the union had retained enough support to win the election by a wide margin.
Duggan said that despite the union's victory, at least one employee at the store testified that he was reluctant to show support for the union or engage in organizing after his coworkers were fired.
Starbucks is also appealing a February ruling in a separate case ordering the company to cease and desist from firing or disciplining employees at an Ann Arbor, Michigan cafe. The judge in that case rejected the labor board's claim that Starbucks has implemented a company-wide anti-union policy.
At the Senate hearing in late March, former Starbucks CEO Howard Schultz defended himself and the coffee chain against allegations by Democrats of "union busting" and said the company is ready and willing to bargain with unions that win elections.
Republicans at the hearing defended Schultz, praising the company's competitive wages, health benefits, employee stock purchase program and other benefits.