Shares of coffee chain giant Starbucks Corp (NASDAQ:SBUX) are trading higher today.

The U.S. Supreme, in a recent decision, has reportedly sided with Starbucks in a significant ruling related to the reinstatement of seven Memphis employees who were dismissed amid unionization efforts.

The justices unanimously threw out a lower court's approval of an injunction sought by the U.S. National Labor Relations Board (NLRB) ordering Starbucks to reinstate the workers, Reuters reported.

Meanwhile, the agency's in-house administrative case against the company proceeds, the report noted.

This outcome may set a tougher precedent for courts when considering labor practices alleged to be unfair.

These employees were part of a growing movement at Starbucks aiming to unionize, which has seen over 400 locations and more than 10,000 employees pushing for unionization.

The controversy began when a group of workers at a Memphis Starbucks, who had initiated unionizing efforts, were terminated after allowing a TV crew into the café to cover their campaign.

The U.S. National Labor Relations Board (NLRB) sought an injunction for their reinstatement, arguing that the dismissals were an unlawful retaliatory act against the union drive.

Also Read: Starbucks Plagued With Long Wait Times, Staffing Issues: Report

However, the Supreme Court, referencing a stringent four-factor test typically applied in non-labor disputes, ruled against the immediate reinstatement, favoring Starbucks' stance.

The union has challenged the firing as a tactic to intimidate other employees, while Starbucks has consistently denied any wrongdoing, asserting its respect for workers' rights to unionize.

This legal battle reached the Supreme Court after the 6th U.S. Circuit Court of Appeals upheld the initial injunction reinstating the workers, which Starbucks contested.

The Supreme Court's decision reverses this injunction, impacting how similar labor disputes might be handled in the future.

Starbucks stock has lost 19% in the last 12 months. Investors can gain exposure to the stock via Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY).

Price Action: SBUX shares are trading higher by 1.41% at $80.50 at last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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