A federal appeals court ruled that coffee chain Starbucks (SBUX) broke the law when it fired two Philadelphia baristas, Echo Nowakowska and Tristan Bussiere, for trying to unionize their store. The court found solid evidence that Starbucks unfairly reduced Nowakowska’s hours and terminated both employees because of their union efforts.
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While the court ordered Starbucks to rehire the baristas with back pay, it rejected an additional National Labor Relations Board (NLRB) demand for Starbucks to cover expenses like job searches or medical costs tied to the firings. Starbucks claimed the firings were for poor performance and misconduct, but the court didn’t buy it. The company also argued the firings were justified by later-discovered meeting recordings, but the court disagreed.
Starbucks’ Attempt to Challenge the NLRB
This case also tested Starbucks’ attempt to challenge the NLRB’s authority, particularly the constitutionality of its administrative law judges. Starbucks argued that these judges are improperly shielded from presidential removal, which could potentially undermine their accountability. Interestingly, similar challenges have been raised by other major companies like Amazon (AMZN) and SpaceX.
However, the appeals court ruled that Starbucks could not proceed with its challenge because it could not show that these removal protections caused the company any harm. As a result, this decision sets a precedent that could complicate efforts by other companies to question the NLRB’s structure and authority in the future.
Is Starbucks a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 14 Buys, six Holds, and four Sells assigned in the past three months, as indicated by the graphic below. After a 1% decline in its share price over the past year, the average SBUX price target of $103.52 per share implies 12.2% upside potential.
