Seattle-based coffeehouse behemoth Starbucks Corp has reached an agreement to settle two Californian class action lawsuits filed in 2001.
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The lawsuits, entitled Carr v. Starbucks Corp and Shields v. Starbucks Corp, challenged the status of Starbucks California store managers and assistant store managers as exempt employees under California wage and hour laws. While Starbucks denies all liability in these cases, the company has agreed to the settlement in order to resolve all of the plaintiffs’ claims without engaging in protracted litigation.
The settlement fully resolves all claims brought by the plaintiffs in these California lawsuits. According to the settlement, Starbucks will pay up to US$18m in claims to eligible class members, attorneys’ fees and costs, and costs to a third-party claims administrator, as well applicable employer payroll taxes.
“Given the unique aspects of California wage and hour laws, which differ significantly from federal and other state laws, we believe this settlement was the best solution for all parties involved,” said Jennifer O’Connor, senior VP and deputy general counsel, Starbucks Coffee Company. “Starbucks was one of many companies that has faced this type of class action lawsuit in California in recent years.”
Plaintiffs are represented by the Southern California law firm Spiro Moss Barness Harrison & Barge LLP, the Northern California law firms Hoffman & Lazear and the Law Offices of Randall Crane, and the Thierman Law Firm.
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By GlobalDataSubject to court approval, the settlement agreement will allow eligible current and former California store managers and assistant store managers to submit claims to a third-party claims administrator.
Claims will be paid on a “claims made” basis. The parties hope that the claims process will be completed by 30 September 2002. The parties anticipate that the class members will receive formal notice of their eligibility to participate in the settlement from the third-party claims administrator by June 2002.
As a result of the settlement Starbucks will record a one-time charge of US$0.03 per share in the Q2 of fiscal 2002. Excluding the settlement and a US$0.02 per share capital gain on the sale of Starbucks Japan shares recorded in the Q1, the company’s goal for fiscal year 2002 earnings per share remains unchanged at US$0.52 – US$0.53.
Additionally, as a part of the settlement, plaintiffs and Starbucks are prevented from making any further statements or comments about the lawsuits.
