Starbucks to pay $25.6 million to a former manager

June 14, 2023: A jury has ordered Starbucks to pay $25.6 million to a former manager named Shannon Phillips, who claimed she was fired because she is White. Phillips worked for Starbucks for 13 years and managed a group of stores there. Her termination followed the arrest of two Black men at a Starbucks in Philadelphia in April 2018.

After a six-day trial, the jury reached a unanimous verdict, awarding Phillips $25 million in punitive damages and $600,000 in compensatory damages. In addition, Phillips intends to seek back and front pay. Starbucks expressed disappointment in the decision and stated that it is currently evaluating its options.

This verdict is the latest development in an incident that caused widespread protest and outrage. In 2018, the two men were asked to leave the coffee shop to sit at a table without ordering anything. When they refused to leave because they were waiting for a business associate, the store manager called the police, resulting in their arrest. Subsequently, the two men reached settlement agreements with Starbucks and the City of Philadelphia.

In her lawsuit filed in 2019, Phillips alleged that Starbucks discriminated against her based on her race when she was let go. According to the complaint, Starbucks penalized White employees who were not involved in the arrests but worked in and around Philadelphia to show the community that they had appropriately responded to the incident.

Phillips, who oversaw areas including Philadelphia at the time, claimed that Starbucks instructed her to place a White employee on administrative leave due to alleged discriminatory behavior, which she believed to be false. When Phillips defended the employee, she was terminated by the company.

Starbucks disputed these allegations and stated in a court filing in 2021 that Phillips exhibited a lack of leadership during the crisis. The company argued that Phillips appeared overwhelmed and unaware of the seriousness of the situation, leading her manager to dismiss her since strong leadership was crucial at that time.

The 2018 incident posed a significant public relations challenge for Starbucks. In response to the arrests, the company took several measures to address the situation. Former CEO Kevin Johnson apologized, describing the events as “reprehensible” and vowing to implement any necessary changes to prevent such incidents.

Starbucks revised its policy to allow individuals to use their restrooms and spend time in stores, even if they didn’t make any purchases. Additionally, the company temporarily closed approximately 8,000 company-owned stores to conduct mandatory anti-bias training for around 175,000 employees.