A U.S. appeals court on Tuesday rejected Starbucks Corp's (SBUX.O) challenge to a ruling requiring the coffee chain to rehire seven employees at a Memphis, Tennessee, store who were allegedly fired for supporting a union.
The decision by the Ohio-based 6th U.S. Circuit Court of Appeals is the first from an appeals court involving a nationwide campaign that has seen workers at more than 300 Starbucks locations vote to unionize.
A three-judge panel said that by firing the workers last year, Starbucks likely discouraged other employees from exercising their rights under U.S. labor law.
"Fear of retaliation will exist unless the Memphis Seven, apparently terminated for their union support, are reinstated," Circuit Judge Danny Boggs wrote for the court.
The decision could embolden the National Labor Relations Board, which enforces U.S. labor law, to use the courts to aggressively police Starbucks' labor practices as they also come under scrutiny from shareholders and the U.S. Congress.
Starbucks and the labor board, which had sought the order reinstating the workers, did not immediately respond to requests for comment. The company last year said it had rehired the seven employees to comply with a judge's order, but still pursued the appeal.
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 600 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 6th Circuit is considering Starbucks' appeal of a February ruling in a separate case barring the company from firing or disciplining employees at an Ann Arbor, Michigan cafe.
Other U.S. appeals courts are considering rulings from the labor board that Starbucks illegally fired union organizers in Philadelphia and has refused to bargain with unionized workers in its home city of Seattle.
The company has broadly denied wrongdoing and said it offers employees competitive wages and benefits and respects their rights under federal labor law.
