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, economic loss damages are now at issue between the parties.
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.
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. 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.”
UPDATE
Now, the topic of economic loss damages is on the table, with Phillips pursuing them to the tune of more than $3 million and Starbucks opposing them – with each side filing a brief outlining their respective positions on July 28.
“Plaintiff respectfully requests that the Court enter an order awarding her the economic losses she has incurred and will in the future incur as a result of Starbucks’ discriminatory actions as follows: $1,617,203 in past lost earnings and benefits, $1,911,361 in future lost earnings and benefits up through her anticipated retirement age of 70, and $75,757 in tax gross up damages, equaling a total economic loss award of $3,040,251,” plaintiff counsel stated, in part.
“Defendant claims that plaintiff’s economic loss damages are limited to $78,343 for the 14-week period between when she left Starbucks and began her position at Raymour & Flanigan. Defendant argues she should not be awarded any further back pay and no money for front pay because (1) As Defendant’s expert testified, he did not have in his possession an expert opinion that plaintiff lost her job at Starbucks due to race discrimination; and, (2) She should not have taken the job at Raymour because it paid less than she earned at Starbucks. Defendant’s position is ludicrous and contrary to the law. Defendant has wholly failed to meet its burden on mitigation and failed to rebut the expert opinion. Plaintiff is entitled to lost wages and benefits incurred since her termination – back pay – and lost wages and benefits she will incur until her anticipated age of retirement – front pay. Plaintiff should also be awarded economic damages to neutralize the adverse tax consequences associated with the award.”
Meanwhile, the company feels Phillips is entitled to no such million-dollar damages.
“Ms. Phillips cannot claim that her damages continue to accrue given that she has made absolutely no effort to secure new employment. Ms. Phillips also cannot manufacture a loss by claiming she lost earning capacity. She has failed to present any evidence that she could not earn the same (or perhaps even more) in the future and has similarly presented no evidence, beyond her speculation, as to what benefits she may have received had she remained at Starbucks. Further, given that there is no evidence of intentional discrimination, Starbucks requests that this Court award Ms. Phillips no wage loss damages. In the alternative, Starbucks requests that this Court limit Ms. Phillips’ economic loss award to the difference between what she would have made at Starbucks during the interim period between her termination and the beginning of her employment at Raymour & Flanigan – $78,343,” Starbucks’s attorneys said.
“Ms. Phillips requested an award of $3,040,251 in lost wages based on Mr. Scherf’s calculation of her economic loss as the difference between what she would have made at Starbucks, speculating as to the amount she would receive in bonuses, equity awards, and benefits, and what she will make at her new employer (Raymour & Flanigan) through to her expected retirement at age 70. These estimates are flawed because they assume that Ms. Phillips could not and will not make more than she currently makes at Raymour & Flanigan, despite the complete lack of evidence to the contrary. Given that Ms. Phillips withdrew from seeking other employment after securing the position at Raymour & Flanigan, her damages should be, at the very most, the difference between what she would have made at Starbucks during the interim period between her termination and her employment at Raymour & Flanigan – $78,343.”
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