High Stakes Legal Battle Following Starbucks Arrests: Former Manager Wins Over $25M, Seeks Additional Compensation
In the aftermath of the 2018 arrests of two Black men at a Philadelphia Starbucks store, a former regional manager, Shannon Phillips, who alleged unfair treatment of white employees, initially won over $25 million in damages. Now, a judge has ruled that Starbucks must pay an additional $2.7 million for lost wages and tax damages.
In June, Phillips was awarded $600,000 in compensatory damages and $25 million in punitive damages. The jury found that her firing was influenced by race, violating anti-discrimination laws.
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However, the situation leading to these legal battles unfolded when a Philadelphia Starbucks employee called the police on two Black men who were sitting in the store without purchasing anything. Rashon Nelson and Donte Robinson were later released without charges.
Despite Phillips not being directly involved in the arrests, she claimed she was wrongly instructed to place a non-involved white manager on administrative leave. Consequently, she was terminated less than a month later after voicing objections.
The judge’s order mandates Starbucks to pay Phillips an extra $2.73 million. This covers past and future lost earnings, benefits, and tax disadvantages linked to the lump-sum payment. Starbucks contested this payment, suggesting that Phillips could have earned the same or more in the future.
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Starbucks is seeking a new trial, alleging juror bias, incorrect witness testimony, and improper “double damages” on state and federal claims. On the other hand, Phillips’ lawyers are advocating for Starbucks to cover $1.4 million in legal fees from 2018 to 2023.
The incident sparked nationwide outrage when video footage of the arrests emerged. Starbucks subsequently settled with the two men for an undisclosed sum and offered free college education. The men also reached a symbolic settlement of $1 each with the city of Philadelphia, along with a commitment to establish a $200,000 program for young entrepreneurs. In response, the Philadelphia Police Department updated its policies concerning how to address trespassing on private property, cautioning businesses against misusing police authority.
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The incident garnered national attention, revealing a perceived excessive and racially biased response. Despite the employee’s assertion that she asked the men to leave, they declined.
Following the arrests and the ensuing attention, the employee was relocated. However, allowing entry and use of Starbucks facilities without purchase was viewed as unjust to paying customers and added to the workload of employees tasked with maintaining bathrooms frequently used by homeless individuals, especially during the COVID-19 pandemic.
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As a result of the decision, employees were confronted with mentally ill homeless individuals causing disruptions, bringing bags and suitcases, and even napping during store hours or utilizing outlets to charge devices.
To address safety concerns, Starbucks had to close several stores where such incidents occurred frequently as well as low foot traffic (perhaps as a result). This included the closure of six Los Angeles stores and ten others in major cities. In 2022, Starbucks closed 424 stores while opening 449 new locations.
In response, Starbucks has started to prioritize drive-thru models and limited access to outlets for device charging. While certain stores require codes to use the bathroom, others do not. This strategy is likely aimed at boosting foot traffic while minimizing individuals who linger in the store for extended periods.
Though Starbucks might not openly acknowledge it, this approach is likely intended to strike a balance between increasing foot traffic and limiting extended stays within the store.
