Friday, April 19, 2024
Friday, April 19, 2024
Friday, April 19, 2024

Starbucks Faces Fears of Increasing Lawsuits as Manager Receives $25M Verdict




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In the wake of a $25.6 million lawsuit payout to a former Starbucks employee, concerns are mounting among corporate executives that more staff may come forward with similar legal actions, Your Content has exclusively learned.

An aide who works closely with Starbucks’ executives says Laxman Narasimhan, the company’s new CEO, exclusively told Your Content worried about a potential storm of similar lawsuits. “He expressed concerns about how this verdict can compromise the progress made since the racist encounter at our Philadelphia location,” the aide close to the situation told Your Content under the condition of anonymity to protect her employment. “From my understanding we received countless similar accusations that have gone under the radar—until now.”

Narasimhan assumed the role of interim CEO at Starbucks in October 2022. Later, in April 2023, he succeeded Howard Schultz as the official CEO of the company.

In 2018, an incident unfolded at a downtown Philadelphia Starbucks when two men requested access to the restroom but were denied by an employee due to not making a purchase. Subsequently, they were asked to leave, but they chose to remain seated. The situation escalated to the point where an employee contacted the police. Following this event, Starbucks acknowledged that the employee who called the authorities is no longer employed there. The CEO of Starbucks at the time expressed apologies for the incident, deeming it “reprehensible.”

Laxman Narasimhan, the CEO of Starbucks, reportedly expressed worries about the potential impact on the progress made since the racially charged incident at a Philadelphia location in the past.

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Narasimhan took on the role of interim CEO at Starbucks in October 2022 and officially succeeded Howard Schultz as CEO in April 2023.

Earlier today a former Starbucks regional manager has been awarded $25.6 million by jurors in a federal court. Shannon Phillips, the plaintiff, claimed that she and other white employees were unfairly punished following the arrests of two Black men at a Philadelphia Starbucks in 2018.

The jury in New Jersey found that race played a decisive role in Phillips’ termination, violating federal and state anti-discrimination laws. Phillips received $600,000 in compensatory damages and $25 million in punitive damages, according to CNBC.

The incident occurred in April 2018 when a Philadelphia store manager called the police on two Black men who were sitting in the coffee shop without making a purchase. Although Phillips, the regional manager of operations at the time, was not involved in the arrests, she alleged that she was instructed to place a white manager, who also had no involvement, on administrative leave based on false reasons.

According to Phillips’ lawsuit, she was fired less than a month later after objecting to the suspension of the manager during the public outcry. The lawsuit claimed that Starbucks falsely accused Black store managers of being paid less than their white counterparts, a claim that Phillips found illogical since district managers had no authority over employee salaries, according to CNBC.

During the trial, Phillips’ lawyer argued that Starbucks was seeking a “sacrificial lamb” to appease public outrage and demonstrate action. The company, however, denied the allegations and stated that they replaced Phillips with a regional manager who had a history of handling crises, including the aftermath of the Boston Marathon bombings in 2013.

The jury’s award includes compensatory and punitive damages, and the judge will also consider back pay, future pay, and attorney’s fees. Phillips’ attorney plans to seek approximately $3 million for lost pay and around $1 million for legal fees. Starbucks declined to comment on the matter.

In response to the 2018 incident, Starbucks’ CEO personally apologized to the two men, Rashon Nelson and Donte Robinson, and the company reached a settlement with them. The terms of the settlement were undisclosed, but it included an offer of free college education. Starbucks also implemented policy changes and conducted racial-bias training across its locations.

Additionally, Nelson and Robinson reached an agreement with the city of Philadelphia, receiving a symbolic $1 each and the establishment of a $200,000 program to support young entrepreneurs. The Philadelphia Police Department revised its trespassing policy, cautioning businesses against misusing police authority in similar situations.

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