Starbucks settles with coffee shop owner after judge says CEO Schultz would have to testify

Penny Stafford was set to go to trial in October and tell a jury that Starbucks illegally blocked her from opening competing stores in Bellevue and Seattle. The Seattle Weekly reports: "Starbucks apparently blinked [and settled out of court] when federal judge John Coughenour ruled that Howard Schultz himself would have to answer questions in the case; he had resisted giving a deposition, claiming he didn't have the time and had no 'personal and direct involvement in growth and marketing strategy.'" (Read the Seattle Weekly story)
> Earlier: Independent coffee shop owner says Starbucks tried to steal her customers

Comments

[Melody]

Well I really do NOT trust the Seattle Weekly in their reporting of law-related stories.

The Weekly followed the story of Rabbi schwartz, and in their reporting seemed not to understand the unusual legal framework around the hotly contested Seattle Municipal Code that he was prosecuted under. I personally sat watched a large junk of that trial in Courtroom 1103 of SMC.

The Weekly's reporting of Robert Castle was highly sensationalized, imho.

I'm sure there has to be more to the story than what we're getting in that snippet.

Unless there's another news story on this out there, I simply reserve judgment entirely. The jury is out.

[Pat Nerr]

Melody... What if "I" told you that the story has credibility and although a bit skewed... has key elements of truth in it as to why the sudden action to settle...

There's a reason Perkins-Coie and SBUX are good buddies... this one was over the internal legal depts. heads...

[ASM23]

All I can say is that she needs to get over it. If you arent ready for competition, then you arent ready to own your own shop.

[artgurl84]

ASM23:

there is a difference between healthy competition and being "illegally blocked from opening competing stores." your comment that she needs to "get over it" is absurd.

[truth]

Merits aside, it's a CEOs worst nightmare to have to testify. The oppo counsel can ask anything/everything and the last thing sbux wants is to have a bunch of probing questions about the company released to the public regarding Peltz and the Sonics.

Good lawyering.

[bah]

stare decisis!

[P.R.I.D.E.]

I wonder if Meg Ryan and Tom Hanks will reprise their roles for "You Got Coffee"...

[StLouieDrip]

That's such an interesting story. And reading the older article along with this newer one gives more perspective to the whole story. Penny Stafford may be small potatoes, but she is no slouch, and neither is her lawyer, Steve Berman. And if the details in the articles really point to the truth, sbux is also not a "benevolent" angel as Howard likes us to believe. And they are actually lucky this one didn't go class-action as it could have been much worse in many ways.

http://www.seattleweekly.com/2007-11-28/news/bellevue-barista-s-antitrust-suit-against-starbucks-heading-to-court.php

@Truth, how in the world are Peltz and the Sonics relevant to this particular case?

[inopethflames]

one thing starbucks oughta look into is that their stores in target & places like that are almost always worse than a standalone starbucks. i got an iced american today & it seemed too watered down. i had that problem before with an iced caramel macchiato, it was waay too weak. its just hardly ever as good as at a normal starbucks store.

[inopethflames]

iced americano, i mean ;)

[JavaLicious]

Starbucks rules! How about others simply find management jobs within the beloved company?

[truth]

@stl: Didn't think they ARE relevant, but any good lawyer would know that these are the hot button issues for sbux, and as such, probably let oppo counsel know that it might come up.

Depositions can be more of a problem than courtroom testimony. EVERYTHING is allowed in a deposition, and the questioning can go on for days.

For sure, Peltz and Sonics would have come up, and they don't want his testimony public, especially in light of his pending personal lawsuit vs the Sonics current owners. The City of Seattle vs Sonics case starts later this month and Schultz has a parallel lawsuit against the OKC group, should the city win this month.

(He's dug himself a hella big hole, hasn't he?)

[StLouieDrip]

Truth, you seem to be reaching. I'm no lawyer, but I can't see how the Sonics or Peltz have any legal relevance whatsoever to this antitrust case. I admittedly don't know enough about depositions and law to intelligently discuss them, but I can't see how every single off-topic item would be allowed at the whim of sbux's opponents. Besides, Steve Berman is a smart lawyer, and sbux shot its own self in the foot by bullying and overstepping antitrust laws, so Berman wouldn't have needed to resort to that type of useless manipulation of the system. And I'm guessing those 50,000 pages of internal documents were acquired by Berman in order to legally challenge sbux's antitrust behaviors, not to discuss Peltz's takeover maneuvers. Howard was only being asked to appear because there was enough evidence to suggest that he may have had some direct and personal involvement regarding the illegal antitrust behavior of his employees.

John Coughenour ruled that Schultz himself would have to answer questions in the case - he had resisted giving a deposition, claiming he didn't have the time and had no "personal and direct involvement in growth and marketing strategy" (honest!). Coughenour agreed Schultz was a busy man and limited the deposition to four hours, but said there was at least "some evidence" the Starbucks CEO "is a person with unique personal knowledge about Starbucks store siting decisions..." [bold emphasis is mine]

And do you see that part where the judge intended to limit the deposition to four hours? If it really got heated and went on for days (as you surmise), I really doubt they would be using all that time to discuss blatantly off-topic issues. It was an ANTITRUST deposition, not a Sonics or Peltz deposition.

[truth]

Stl: All due respect, but you aren't understanding the process.

Depositions can become 'fishing expeditions'. For example, Bill Clinton is deposed for a couple of hours on Whitewater, and they start asking about a blue dress.

The political climate in Seattle is such for Howard that he simply cannot allow himself to be deposed right now. Too volatile.

Plus, with all the so-called secret initiatives and 'transformation' in the works right now, they couldn't afford to divulge those. (For example, 5 mins of Qs about Clover could KILL months of work and millions in 'investment'.)

The timing was perfect for a settlement.

[truth]

Also, Stl, you don't request 50k pages of docs without already starting a fishing expedition.

And you don't get 50k pages of docs without getting some juicy bits.

They had to settle.

[StLouieDrip]

Truth, with all due respect, are you a lawyer? But oh, even if you were, I still wouldn't automatically defer to you. Yes, I know I don't understand the process, and I appreciate your input and perspective, because you add to my knowledge. But sorry, I still disagree with you on some points. The judge seemed sympathetic to Howard's limited schedule, and that's why I think he wouldn't let it go on for days on unrelated topics.

Or is the judge able to limit the process to certain topics? Or is it his duty and obligation to let all unrelated issues be addressed? Or do you know for sure that the judge would allow the discussion of blatantly off-topic items for days and days? And can you guarantee that? Have you personally discussed it with him? IOW you're only guessing too. (BTW the Clinton example, although interesting, is not the evidence to convince me, for many various reasons, sorry.)

And from one of those articles the reporter interviewed a few different lawyers, getting different opinions about the antitrust case. Those different lawyers also did not all agree with each other. I think the reporter was wise in that way, realizing that there are many different takes on the issue. So yeah, you and I are like that too, just have different opinions about it.

As to 50,000 pages, Berman was originally shooting for class-action, a big pay-off for him if he won. And while I really don't know if that's the whole reason for 50,000 pages I'm just saying that a thorough antitrust class-action lawyer, who was really doing his homework, who found blatant and relevant violation of antitrust laws, who seriously meant to win the antitrust case, would likely dig up 50,000 pages. I really expected Berman was ready to stomp on sbux, (i.e. in an antitrust kind of way). And sbux lawyers, on more than one occasion, seem comparatively incompetent, misinformed, ill-prepared, and petty.

BTW, the other difference between you and me, is you seem very happy to see Howard in hot water, a bit too glad that he almost got his comeuppance, while I have neither affection nor ill will towards him. While I'm mildly curious about all of this, I'm still mostly neutral. And that also makes your take on it more biased and less credible to me. Peltz and Sonics topics still seem like a bit of stretch. But again, I do appreciate your input, because it adds to my knowledge, so thanks.

Now, what do you know about sbux's violation of antitrust laws? I read so many interesting tidbits about antitrust violations in the articles, strong-arm bullying tactics used by sbux to thwart healthy competition, like over-saturation of the market as a way to completely lock out other coffee vendors (aka "cluster bombs"), and pre-arranged agreements with leasers that they would not lease to any other coffee tenants (but it really sounded more like sbux threatened the leasers). Ya see, I'd really be interested in hearing more on that angle of this discussion. And I also wonder if Stafford had already been in a long difficult battle with sbux on leasing issues when she finally sub-leased that little corner of the deli, and settled in, only to look up and see the green apron parade marching directly outside her window? Was it a bold slap in the face after a long hard fight? The last straw? Or was the antitrust case already fully in the works by then?

BTW here's another relevant article...
http://seattlepi.nwsource.com/business/260037_retail18.html

[Ra]

To Melody: Not sure how much you have to sensationalize a story about a guy with 16 DUIs (Castle). And the Starbucks story is taken directly from the court record. As Casey Stengel used to say, you can look it up.