Starbucks Coffee Company

372 NLRB No. 102 NOTICE: This opinion is subject to formal revision before publication in the bound volumes of NLRB decisions. Readers are requested to notify the Ex- ecutive Secretary, National Labor Relations Board, Washington, D.C. 20570, of any typographical or other formal errors so that corrections can be included in the bound volumes. Starbucks Corporation d/b/a Starbucks Coffee Com- pany and Philadelphia Baristas United and Echo Nowakowska and Tristan J. Bussiere. Cases 04– CA–252338, 04–CA-256390, 04–CA–256401, 04– CA–258416, 04–CA–256398, 04–CA–256399, and 04–CA–257024 June 30, 2023 ORDER DENYING MOTION FOR RECONSIDERATION BY CHAIRMAN MCFERRAN AND MEMBERS WILCOX AND PROUTY On February 13, 2023, the National Labor Relations Board issued a Decision and Order in this proceeding, which, among other things, found that the Respondent violated Section 8(a)(3) and 8(a)(1) of the National La- bor Relations Act when it discharged Echo Nowakowska and Tristan J. Bussiere. 372 NLRB No. 50. The Board ordered the Respondent to offer both employees full re- instatement to their former jobs and to make them whole for both any loss of earnings and other benefits, and, in accordance with the Board’s decision in Thryv, Inc., 372 NLRB No. 22 (2022), for any other direct or foreseeable pecuniary harms they suffered as a result of the discrimi- nation against them. Id., slip op. at 1 fn. 3, 7. In order- ing reinstatement and backpay (along with other make- whole relief), the Board rejected the Respondent’s argu- ment that the two employees were not entitled to full relief because, prior to their discharges, they had violated the Respondent’s no-recording policy and Pennsylvania law, a fact that the Respondent claimed it discovered only after it discharged the employees.1 The Board 1 As the Board explained: [U]nder established Board precedent, where an employer claims that an unlawfully discharged employee is not enti- tled to reinstatement, based on alleged misconduct occurring before her discharge, it is the employer’s burden to prove (1) that the employee engaged in that misconduct and (2) that the employer would have disqualified any similarly sit- uated employee from continued employment. Specifically, the employer must “establish that the discrimi- natee’s conduct would have provided grounds for termina- tion based on a preexisting lawfully applied company poli- cy”; moreover, “any ambiguities will be resolved against the employer.” The premise of this analytical framework, of course, is that the employer was not aware of the employee’s alleged mis- conduct before her discharge. 372 NLRB No. 50, slip op at 4–5 (citations and fn. omitted). found to the contrary. Id., slip op. at 5. It further ex- plained that even if the Respondent had discovered the recording activity only belatedly, Nowakowska and Bus- siere still would not be disqualified from reinstatement and make-whole relief. Id., slip op. at 5–6. Their record- ing activity, the Board found, was protected activity un- der Section 7 of the Act, and thus neither the Respond- ent’s no-recording policy, nor the arguably applicable Pennsylvania statute—which was preempted by the Act under San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959)—could form a basis for denying full remedies. Id., slip op. at 6–7. The Respondent has filed a motion for reconsideration, and the General Counsel has filed an opposition to the Respondent’s motion. The Board has delegated its au- thority in this matter to a three-member panel. Having carefully considered the matter, the Board denies the Respondent’s motion. In seeking reconsideration, the Respondent makes sev- eral arguments. It challenges the Board’s primary find- ing that the Respondent knew of the employees’ record- ing activity before it discharged them and thus cannot rely on their asserted misconduct as a basis for denying them full relief. The Respondent also attacks the Board’s conclusion that, even if the Respondent had not been aware of the recording activity, its no-recording policy and the Pennsylvania statute invoked provide no basis for denying relief here, given Federal preemption doctrine. Finally, the Respondent argues against the application of Thryv. We address these contentions in turn. As we will explain, the Respondent has not identified any material error or extraordinary circumstances warranting recon- sideration under Section 102.48(c)(1) of the Board’s Rules and Regulations. 1. The Board’s underlying decision explained the ba- sis for its finding that the Respondent knew of the em- ployees’ recording activity before discharging them, and we reaffirm that finding. 372 NLRB No. 50, slip op. at 5.2 In seeking reconsideration, the Respondent focuses not on the Board’s finding, but on the analysis of the administrative law judge and his conclusion that the Re- spondent “knew or had reason to know” of the recording 2 There, the Board observed that the judge had detailed “several in- stances of Nowakowska and Bussiere using recording devices in inter- actions with Store Manager Vaughan.” 372 NLRB No. 50, slip op. at 5. The Board pointed out that, in addition “Vaughan reported the re- cording activity to district manager Brian Dragone who, in turn, report- ed the conduct to Partner Resource Manager Gerald Henderson” and that “Operations Coach Melissa Maimon, who assisted Vaughan, also reported recording activity at the Broad and Washington store to Dragone, and he shared that information with several other manage- ment officials, including Regional Director Eckensberger and the part- ner resources director of the mid-Atlantic region.” Id. DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 2 activity. That focus is obviously misplaced. As the un- derlying decision makes clear, the Board did not base its finding of knowledge on the conclusion that the Re- spondent “had reason to know” of the recording. 372 NLRB No. 50, slip op. at 5 & fn. 19. In moving for reconsideration, the Respondent argues that its admitted belief that the employees might have made recordings does not establish that it knew that re- cordings were made.3 Although we need not rely on this admission now, we note that it supports a reasonable inference that Respondent did know of the recording. As our underlying decision explained, the “premise of th[e] analytical framework” that applies here “is that the em- ployer was not aware of the employee’s alleged miscon- duct before her discharge,” and under the framework “any ambiguities will be resolved against the employer.” 372 NLRB No. 50, slip op. at 5 (internal quotation marks omitted). In light of this strict standard, the Respondent offers no persuasive argument to explain why an admit- ted belief that the employee committed misconduct that did not prompt disciplinary action at the time should ex- cuse the employer from the consequences of having sub- sequently unlawfully discharged the employee (i.e., providing full make-whole relief to the employee).4 2. To the extent that the Respondent argues that full relief should be denied to the employees because they lied to the Respondent’s managers about their recording activity, we reject that argument as well. We need not determine whether, as a factual matter, the two employ- ees were truthful in responding to the managers (as the General Counsel, opposing the Respondent’s motion and citing to the record, insists they were). As we have found, the recording activity was itself protected under 3 Starbucks Corporation’s Motion for Reconsideration at 8 (Feb. 20, 2023) (“The fact that Starbucks believed that recordings might exist did not prove the recordings existed or that Starbucks knew the recordings existed.” Emphasis omitted.). 4 The Respondent insists that in any case, it did not know the full scope of the employees’ recording activity and so full relief should be denied, despite what it did know. We reject that argument. As the Board has found, the Respondent knew enough to establish that (by its own standard) its no-recording policy and Pennsylvania law had been violated – but did not discharge the two employees on that basis. The Board decision cited by the Respondent, Frontier Telephone of Roches- ter, Inc., 344 NLRB 1270 (2005), is easily distinguishable on its facts. There, while the employer was aware that the discharged employee “had forwarded work related material to his home computer, there [was] no evidence that the [employer] was aware that the forwarded material included customer credit card information and other sensitive and confidential material that was discovered after his discharge.” Id. at 1277. To be sure, for reasons already explained here and in the underlying decision, the Board would not give effect to the Respondent’s no- recording policy and the Pennsylvania statute even if the Respondent had been entirely unaware of the employees’ recording activity. the Act, and the employees had no cognizable duty to disclose it to the Respondent. In contrast to the employer in Fresenius USA Mfg., Inc., 362 NLRB 1065 (2015), cited by the Respondent, here the Respondent was not “investigating facially valid complaints of employee misconduct.” Id. at 1065. This case, rather, presents the more common situation where “employees have a legit- imate interest in shielding their Sec[tion] 7 activity from employer inquiry, even by lying.” Id. at 1065 fn. 3 (col- lecting cases). See, e.g., Tesla, Inc., 370 NLRB No. 101, slip op. at 47 (2021); Paragon Systems, Inc., 362 NLRB 1561, 1565 (2015). 3. For reasons already explained, we reject the Re- spondent’s related argument that the Board “impermissi- bly expanded the [administrative law judge’s] factual finding regarding whether [the Respondent] knew about the after-acquired evidence before the hearing.” The Board is, of course, entitled to make its own findings in a case. It may adopt, reject, or modify a judge’s findings insofar as the record evidence permits. E.g., Standard Dry Wall Products, Inc. 91 NLRB 544, 544–545 (1950) (citing Section 10(c) of the Act and observing that the “Act commits to the Board itself, not to the Board’s [ad- ministrative law judges], the power and responsibility of determining the facts, as revealed by the preponder- ance of the evidence”) enfd. 188 F.2d 362 (3d Cir. 1951). 4. The Respondent also attacks the Board’s secondary rationale here: that even if the Respondent was unaware of the employees’ recording activity, its no-recording policy and Pennsylvania law provide no basis for deny- ing relief to the employees. The Respondent asserts that Board precedent permits employers to enforce no- recording policies if they are based on state law, notwith- standing the federal preemption doctrine. We have no difficulty rejecting the Respondent’s assertion, even as- suming that the employees’ recording activity violated the Pennsylvania statute, a point we do not decide. In Garmon, the Supreme Court held that “[w]hen it is clear or may fairly be assumed that the activities which a State purports to regulate are protected by § 7 of the Na- tional Labor Relations Act, . . . due regard for the federal enactment requires that state jurisdiction must yield.” 359 U.S. at 244.5 The Court observed that it was imma- terial “whether the States have acted through laws of broad general application rather than laws specifically directed towards the governance of industrial relations.” Id. The Court reiterated this principle in Brown v. Hotel & Restaurant Employees International Union, Local 54, 5 The Garmon Court explained that “[t]o leave the States free to regulate conduct so plainly within the central aim of federal regulation involves too great a danger of conflict between power asserted by Con- gress and requirements imposed by state law.” 359 U.S. at 244. STARBUCKS CORP. D/B/A STARBUCKS COFFEE CO. 3 468 U.S. 491 (1984). There, citing its prior decisions, the Court explained that “[i]f employee conduct is pro- tected under § 7, then state law which interferes with the exercise of these federally protected rights creates an actual conflict and is pre-empted by direct operation of the Supremacy Clause.” Id. at 501. The Board’s decisions are in accord. When the Board finds that employee conduct is protected by Section 7 of the Act, it applies federal preemption doctrine and rejects the argument that state law can somehow privilege an employer to take action against the employee for protect- ed activity. See, e.g., St. Francis Regional Medical Cen- ter, 363 NLRB 608, 608 & 627 (2015) (adopting admin- istrative law judge’s rejection of employer’s defense that discharged employees lost protection of the Act by dis- closing confidential medical information in violation of state law); E.R. Carpenter Co., 284 NLRB 273, 273 fn. 1 (1987) (rejecting employer’s argument that state criminal statute made employee’s leafleting conduct unprotected); Hennepin Broadcasting Associates, 225 NLRB 486, 486 & 497 (1976) (adopting judge’s rejection of employer defense that employees’ protected, strike-related conduct violated state statute), enfd. 96 LRRM 2585 (8th Cir. 1977). Accord Holiday Inn on the Bay, 317 NLRB 479, 479 & 483 (1995) (adopting judge’s conclusion that em- ployer could not rely on state constitutional provision protecting employee privacy to refuse to provide request- ed information to union for collective-bargaining purpos- es). The Respondent fails to acknowledge this precedent. None of the Board decisions relied on by the Respond- ent involving employers’ no-recording policies are to the contrary. The Respondent first cites ADT, LLC, 369 NLRB No. 23 (2020), and Hawaii Tribune Herald, 356 NLRB 661 (2011), enfd. 677 F.3d 1241 (D.C. Cir. 2012), which were both addressed in the underlying decision here. 372 NLRB No. 50, slip op. at 6 & fn. 20. In nei- ther case did the Board hold that the employer had law- fully enforced its no-recording policy. In ADT, the employer suspended and discharged two employees for recording the employer’s captive-audience meetings. The administrative law judge found that the recording conduct was protected by the Act. 369 NLRB No. 23, slip op. at 8. He rejected the employer’s argu- ment that the employees had lost the protection of the Act because the recording violated Washington state law. Id. Instead, he found that the employees did not, in fact, violate the state statute and thus did not violate the em- ployer’s no-recording policy, which effectively incorpo- rated state law. Id. at 8-9. Accordingly, the suspension and discharge of the two employees violated the Act. Id. at 9. In the course of his analysis, the judge stated that “if the State of Washington prohibited such recordings, [the employees’] conduct would be both illegal and in violation of [the employer’s] policy; in these circum- stances they both would lose the Act’s protections.” Id. at 8. As authority for this statement, the judge cited the Board’s decision in Hawaii Tribune, supra. The judge did not address the issue of federal preemption. The Board, in turn, adopted the judge’s finding. Id. at 1 fn. 3.6 The ADT Board did not specifically address the judge’s statement that violation of Washington law would have meant loss of the Act’s protection. That statement was dicta in light of the judge’s finding that state law was not violated. In any case, it simply cannot be reconciled with well-established principles of federal preemption and with the earlier Board decisions applying them, which the judge did not cite. We do not interpret the Board’s failure to affirmatively disavow the judge’s incorrect statement of the law as, in effect, reversing pri- or precedent and taking a position that would be untena- ble in light of the Supreme Court’s preemption decisions in Garmon and Brown. As noted, the ADT judge instead cited Hawaii Tribune, but that decision provides no support for the Respond- ent’s position here either. There, the Board found that an employer had unlawfully suspended and discharged an employee who recorded a meeting with a supervisor, which the Board described as the “culmination of . . . protected concerted activities.” 356 NLRB at 661. The Board observed that the “pertinent question is whether the conduct is sufficiently egregious to remove it from the protection of the Act” and that “where the [employer] had no rule barring such recording and where it was not unlawful in the State of Hawaii, there was no such show- ing.” Id. (footnoted omitted). Here, too, we do not in- terpret the Board’s observation as, in effect, a holding that if the employer had maintained a no-recording rule and if the recording had violated state law, then the em- ployer would have been free to take action against the employee. As in ADT, the Board’s decision makes no reference to federal preemption doctrine or to prior deci- sions applying that doctrine in similar cases. We do not believe that the Board intended to overrule those deci- sions silently and without the required explanation (the 6 The ADT Board observed: We adopt the judge’s finding that the suspension and dis- charge of [the employees] violated Sec. 8(a)(3) and (1) be- cause we find that they engaged in protected union activity during the captive audience meetings and did not lose the protection of the Act. We emphasize, however, that we do so in light of the unique facts and circumstances presented in this case. 369 NLRB No. 23, slip op. at 1 fn. 3. DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 4 practice that the Respondent incorrectly accuses the Board of engaging in here with respect to ADT and Ha- waii Tribune).7 In addition to invoking ADT and Hawaii Tribune— decisions that will not bear the weight the Respondent places on them—the Respondent cites Board decisions rejecting facial challenges to employer no-recording rules. See, e.g., BMW Mfg. Co., 370 NLRB No. 56, slip op. at 3-4 (2020). Those decisions, however, do not hold that employers are free to apply such rules to recording that amounts to protected concerted activity under Sec- tion 7 of the Act. Indeed, the Board has found that no- recording rules that are lawful to maintain may neverthe- less be unlawful to apply. See AT&T Mobility, LLC, supra, 370 NLRB No. 121, slip op. at 2–4. 5. The Respondent next argues that federal preemption cannot apply here in any case because of an exception to the doctrine designed to protect certain local interests. This argument misunderstands preemption doctrine. As we have explained, the recording activity of the two discharged employees here was protected activity under the National Labor Relations Act. The Supreme Court’s decisions in Garmon and Brown, in turn, make clear that when a state law regulates actually protected activity, it is always preempted, regardless of the local interests involved. Garmon, supra, 359 U.S. at 244; Brown, supra, 468 U.S. at 501. Like the party arguing against federal preemption in Brown, the Respondent “confuses pre-emption which is based on actual federal 7 To the extent that ADT and Hawaii Tribune could be read to im- plicitly support the Respondent’s position here, we reject that interpre- tation of our precedent. Apart from whether such recording activity can be protected activity under the Act—as the Board has clearly held, see, e.g., AT&T Mobility, LLC, 370 NLRB No. 121, slip op. at 4 (2021)—the Board has noted that recording is not “malum in se,” wrong in itself. Opryland Hotel, 323 NLRB 723, 723 fn. 3 (1997) (rejecting employer’s argument that unlawfully discharged employee should be denied reinstatement and backpay, based on employer’s discovery that employee had tape rec- orded work conversations). Stripping employees of the Act’s protection for engaging in record- ing activity would harm the effective administration of the statute, particularly where (as here) the recording itself amounted to protected activity and was then invoked as a basis for denying remedies to em- ployees discharged or disciplined in violation of federal law. As one scholar has noted, employee recording at work has become increasingly common. See Robert Sprague, The Piper Lecture: Survey of (Mostly Outdated and Often Ineffective) Laws Affecting Work-Related Monitor- ing, 93 Chi.-Kent L. Rev. 221, 237 & fn. 106 (2018). State law, in turn, varies widely in how it regulates (or fails to regulate) employee record- ing. See id. at 237-238 (noting that in many states, an employee may lawfully record a conversation to which she is a party). Thus, to deny relief under the Act to employees, depending on whether a particular state had prohibited their recording activity, would necessarily defeat Congress’ intent to create a uniform federal labor law administered by the Board. See Garmon, supra, 359 U.S. at 242–244. protection of the conduct at issue from that which is based on the primary jurisdiction of the [Board].” Id. at 502. “If the state law regulates conduct that is actually protected by federal law, . . . pre-emption follows not as a matter of protecting primary jurisdiction, but as a mat- ter of substantive right.” Id. at 503. That is the case here. 6. According to the Respondent, employee Bussiere’s recording activity could not be protected under the Act because persons other than managers—fellow employees and shift supervisors, as well as customers—were also recorded in connection with the recording of managers. We reject this argument as well.8 As explained in the underlying decision, the burden here is on the Respondent—which unlawfully discharged the two employees—to prove that they engaged in mis- conduct, and all ambiguities are to be resolved against the Respondent. 372 NLRB No. 50, slip op at 5. The Respondent has failed to carry this heavy burden. The Respondent argues that because Bussiere de- stroyed some of his recordings – engaged in spoliation of evidence, as the Respondent characterizes his conduct – we should draw an adverse inference against him, i.e., conclude that he engaged in misconduct by recording persons other than managers.9 We decline to do so, con- sistent both with the Board’s observation in Opryland Hotel, 323 NLRB 723, 723 fn. 3 (1997), that recording is not malum in se, and with the allocation of the burden of proof in cases like this one. It is the Respondent, of course, who is the adjudicated wrongdoer (not Bussiere), having unlawfully discharged Bussiere. In any case, we are unwilling to find that Bussiere lost the protection of the Act because he incidentally record- ed persons other than managers. It is hard to imagine how that result could have been avoided in the circum- stances of this case, involving workplace recordings of interactions with managers where other persons were present—i.e., near enough to be captured on a recording. Adopting the Respondent’s position, then, would effec- tively mean placing severe limitations on statutorily pro- tected activity, for no compelling reason. 7. The Respondent argues that in granting full relief to the discharged employees, the Board failed to consider— and to give controlling weight to—the Respondent’s as- serted legitimate interests in maintaining its no-recording policy. The issue here, however, is not whether the Re- spondent may lawfully maintain the policy, but whether 8 The Respondent makes no reference to Nowakowska’s recording activity in this connection. 9 Bussiere testified without contradiction that he deleted recordings that were not relevant to protection from retaliation for his Sec. 7 ac- tivity, and that he did this out of concern for other people’s privacy. STARBUCKS CORP. D/B/A STARBUCKS COFFEE CO. 5 the policy can provide a basis for denying relief to the employees that the Respondent unlawfully discharged. We have explained here, and in the underlying decision, why it cannot. Notably, several of the interests asserted by the Respondent are predicated on the Pennsylvania statute that we have found to be preempted insofar as it might be applied to protected activity under the Act. Any balancing of Section 7 rights and employer interests in this case, then, tips sharply in favor of fully remedying the Respondent’s violations of the Act. 8. Finally, the Respondent argues the Board should not apply its recent decision in Thryv, Inc., 372 NLRB No. 22 (2022), which requires a make-whole remedy to cover direct or foreseeable pecuniary harm suffered because of an unfair labor practice. The Respondent embraces the view of the dissenting Board members in Thryv and makes no argument not already considered and rejected by the Board there. It is appropriate to apply Thryv here. The Respondent having failed to identify any material error in the underlying decision or to otherwise demon- strate extraordinary circumstances warranting reconsid- eration of that decision, its motion for reconsideration is denied. Dated, Washington, D.C. June 30, 2023 ______________________________________ Lauren McFerran, Chairman ________________________________________ Gwynne A. Wilcox, Member ________________________________________ David M. Prouty, Member (SEAL) NATIONAL LABOR RELATIONS BOARD