CAMDEN, N.J. – After a federal court jury awarded $25.6 million to a white former Starbucks store manager who claimed she faced racial discrimination and firing from the coffee company, after two Black men were controversially arrested at a Philadelphia store location, Starbucks wants a new trial and the award nullified.
Plaintiff Shannon Phillips of Woolwich Township, N.J. first filed suit in the U.S. District Court for the District of New Jersey on Oct. 28, 2019 versus Starbucks Corporation, of Seattle, Wash.
Phillips claimed the coffee giant discriminated against her and other Caucasian employees in the aftermath of the controversial arrests of two Black men at a Philadelphia store location.
In April 2018, store customers Donte Robinson and Rashon Nelson were asked to leave a Starbucks coffee shop in Philadelphia after sitting at a table without ordering anything. The men, who did not leave because they were waiting for a business associate, were escorted out of the coffee shop in handcuffs after a store manager called police on them.
Robinson and Nelson later reached settlement agreements with both Starbucks and the City of Philadelphia. The terms included Starbucks undergoing company-wide racial sensitivity training.
Prior to her being let go, Phillips was charged with overseeing Starbucks stores in southern New Jersey, the Philadelphia area, Delaware and parts of Maryland. Two of her subordinates included district managers who oversaw stores in Philadelphia, one of whom included the district manager responsible for the store where Robinson and Nelson were arrested.
In the aftermath of the incident, Phillips claimed she worked to repair community relations after the arrests, but that “Starbucks took steps to punish white employees who weren’t involved in the incident.”
After Starbucks settled with Robinson and Nelson in early May 2018, Phillips alleged she was asked to put one of her district managers, a Caucasian male, on suspension for allegedly paying non-white employees less than their white counterparts.
Phillips’ lawsuit said that was “factually impossible” because district managers did not have the power to set salaried employee compensation, due to Starbucks’ own internal company policies and procedures.
Phillips’ lawsuit stated that the Caucasian male district manager in question had worked for Starbucks for 15 years, and that she had never observed any racially discriminatory comments or conduct from him.
In the lawsuit, Phillips said that same district manager was not responsible for the store where Robinson and Nelson were arrested and had no connection to that incident, but that an African-American district manager who did oversee that store was neither fired nor placed on suspension.
On May 8, 2018, Phillips said she was told she would be fired due to her “situation not being recoverable,” according to her lawsuit. She alleged she was replaced by “substantially less-qualified employees who had not complained of race discrimination.”
A spokesperson for Starbucks had initially denied the claims of Phillips’ lawsuit and said the company is prepared to defend against them in court.
“Starbucks exercised reasonable care to prevent and promptly correct any discriminatory or retaliatory behavior, if any such conduct occurred, and Phillips unreasonably failed to take advantage of any preventative or corrective opportunities provided by Starbucks or to avoid harm otherwise,” the company later added in a March 5, 2020 answer to the complaint.
According to the company, all actions the company took with respect to Phillips were for legitimate, non-discriminatory, non-retaliatory reasons and Starbucks would have taken the same actions regarding Phillips in the absence of any unlawful motivating factor, if such a factor existed.
Starbucks filed a motion for summary judgment on Nov. 11, 2021, which argued the Court should dismiss Phillips’ case for multiple reasons, chief among which was her failure to lead during a moment of decision.
The company said Phillips “appeared overwhelmed, ‘completely paralyzed,’ driven by ‘panic,’ and lacked awareness of how critical the situation was for Starbucks and its partners; did not attend scheduled meetings or showed up late; was physically and mentally absent from meetings; was sometimes unreachable by her team; appeared disengaged and stood in the corner at meetings where she was expected to lead or where Starbucks’ executive leadership was present; was unable to respond to questions and did not lead the discussion during partner roundtable sessions and lacked awareness with respect to pay disparities in her market.”
Additionally, the company pointed to the fact that Phillips’ successor was of the same racial background as her.
“Starbucks did not discriminate against Phillips because of her race nor did it retaliate against Phillips because she objected to Benjamin Trinsey’s suspension. Starbucks had legitimate reasons to terminate Phillips – her complete failure to lead her team during a key moment in Starbucks history. Indeed, there is no evidence that creates an inference of discrimination. Camille Hymes [Regional Vice-President for Mid-Atlantic Retail Operations], on whom Phillips pegs the discriminatory animus, hired someone who is the same race as Phillips to replace her, and even recommended Phillips for the TLA position,” the motion stated.
“Moreover, Starbucks did not hire Phillips for the TLA position because it decided to abandon the position and not hire anyone for the position. Because Phillips cannot meet her burden to prove that Starbucks’ decisions related to her employment were a pretext for discrimination, Starbucks is entitled to summary judgment. Accordingly, Starbucks respectfully requests that the Court enter judgment in its favor and against Phillips and dismiss her case with prejudice.”
In an Aug. 31, 2022 memorandum opinion, U.S. District Court for the Eastern District of Pennsylvania Judge Joel H. Slomsky (presiding in an assist to the New Jersey federal bench) ruled that Phillips had in fact put forth a prima facie case that she and other Starbucks employees were discriminated against for being white.
The judge pointed to the contrast between manager Paul Sykes, who is Black and was not disciplined after the arrests, and a white manager, Trinsey, who was suspended over a race-related wage equity dispute during the same period, as supporting evidence for Phillips’ claims.
However, Slomsky also found that Starbucks presented a legitimate, non-discriminatory reason for firing her – her perceived lack of leadership after the arrest incident, her physical and mental absence from meetings and appearing to be overwhelmed by the events surrounding her – and dismissed her retaliation claims.
After a six-day trial in June, the federal court jury in Camden, N.J. found in Phillips’ favor, to the tune of $25.6 million and in agreement with her argument that Starbucks fired her because she is white, and not due to any failures of management or leadership on her part.
$25 million of the award was comprised of punitive damages, while $600,000 was tied to compensatory damages.
Specifically, the jury decided that Starbucks viewed the color of Phillips’ skin as a key factor in firing her, which it believed violated anti-discrimination laws both on the federal level and on the state level in New Jersey.
“The jury unanimously found that Ms. Phillips’ race was a determinative factor in her termination. We are very grateful for their attentiveness and work in this case,” lead trial counsel for the plaintiff, Laura C. Mattiacci, said.
Counsel for Starbucks did not respond to an inquiry from the Pennsylvania Record for comment on the verdict.
UPDATE
On July 13, the company moved for a new trial and that the jury award be thrown out, in its view, due to the evidence not supporting such a massive verdict.
“This trial was devoid of any evidence demonstrating that plaintiff Shannon Phillips was discriminated against on the basis of her race. To the contrary, she lost her job at Starbucks because she failed to demonstrate the strategic leadership skills necessary to lead her team through a crisis. When questioned about her leadership gap, Ms. Phillips stated, ‘I’m not built for this. I can’t do this. This is too complicated for me.’ Ms. Phillips was replaced by a White Regional Director because of his ‘experience in crisis situations.’ Ms. Phillips’ entire theory of her case was that she was a ‘scapegoat…sacrificial lamb…fall guy’ following the arrests of Rashon Nelson and Donte Robinson at Starbucks’ 18th Street and Spruce Street Store,” per the company’s motion.
“At trial, this theory collapsed when Ms. Phillips admitted on the stand that her termination was not publicized and no one knew who Ms. Phillips was. As Ms. Phillips testified, ‘Initially, there was support for [the Store Manager], and then the riots and protests start, and people were screaming: Fire the manager, fire the manager, fire the manager.’ referring to the store manager who called the police. The public was not calling for the termination of Ms. Phillips. That is because the public did not even know who she was, but was well aware of the identity of the store manager who called the police, which led to the public’s outrage. The store manager exited the company shortly thereafter and was replaced by a White store manager.”
Nonetheless, Starbucks contended that the jury “incorrectly awarded Ms. Phillips an astronomical and legally unjustified award, which…went against the clear weight of the evidence, contradicted legal precedent, and resulted in a miscarriage of justice.”
Starbucks credited the award to “a number of reversible errors occurred that contaminated the case, obstructed the jury from reaching a reasonable outcome and prevented Starbucks from having a fair trial.”
“The jury incorrectly received a punitive damages instruction. Punitive damages were not warranted in this matter, Starbucks supporting an award of punitive damages. The instruction constitutes a basis for a new trial. Or, in the alternative, the award of punitive should be vacated because an award of punitive damages 41 times the compensatory damages award is unconstitutional,” the motion continued.
“Paul Sykes, plaintiff’s subordinate and star witness admitted he had no personal knowledge surrounding the decision to terminate Ms. Phillips’ employment: ‘I was never contacted for any feedback or asked my opinion about [Ms. Phillips’] performance.’ However, at trial, the Court allowed him to provide speculative and unfounded opinion testimony concerning the reasons that Starbucks terminated Ms. Phillips’ employment. This was an error of law which misled the jury to believe that Mr. Sykes’ unsupported opinion testimony constituted direct (or any other) evidence of discrimination. It does not.”
According to Starbucks, “Given Mr. Sykes’ role as a subordinate, the Court erred by failing to instruct the jury on comparator evidence even though Ms. Phillips sought to draw a comparison to prove discrimination. Given these manifest errors of law, Starbucks did not receive a fair trial. The bell cannot be un-rung and these errors continue to taint the June 5, 2023 trial. Each individual error alone poisoned the well. However, the cumulative effect of all of these errors came to a head when the jury improperly awarded Ms. Phillips $25,600,000. At this juncture, a new trial is needed.”
Separately, Phillips, as the prevailing plaintiff, motioned for an award of attorney’s fees and costs totaling $1,455,978.05.
“The issues litigated and the result achieved in this case are significant and of broad public interest…and it is important for large corporations like Starbucks to know that they cannot violate the NJLAD to prop up their own brand and bottom line.”
“It is also important for the everyday citizens of New Jersey to know that when their civil rights are violated, they can hold large corporations accountable and those rights will be valued over the monetary interests of their discriminators. When the jury rendered its verdict, the public was listening, and the lessons taught and learned in this case reach far beyond Shannon Phillips and Starbucks,” her motion stated, in part.
The plaintiff is represented by Stephen G. Console, Laura C. Mattiacci and Katherine Charbonnier Oeltjen of Console Mattiacci Law in Moorestown, N.J.
The defendant is represented by Hannah Lindgren of Littler Mendelson, plus Richard R. Harris, Tara Param and Kathleen M. Princivalle of Holland & Knight, all in Philadelphia.
U.S. District Court for the District of New Jersey case 1:19-cv-19432
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com