Starbucks to pay US$2.7m more for firing manager because she was white

18 Aug 2023 03:02pm
Image for illustrative purposes only. – FILE PIX
Image for illustrative purposes only. – FILE PIX

NEW YORK - Starbucks must pay a former Philadelphia-area manager - who was awarded a US$25.6 million verdict after a jury determined she was fired in 2018 for being white - an additional US$2.7 million, a federal judge has ruled.

In addition to the US$25.6 million in damages awarded in June by a federal jury, Starbucks must also pay Shannon Phillips US$2,736,755 in pay and tax damages, US District Judge Joel H. Slomsky ordered Wednesday, reported German news agency (dpa).

Phillips was fired soon after the arrests of two Black men at a Philadelphia store was caught on a video that went viral. The arrests prompted national uproar; protests at the Centre City location; policy changes; apologies from Starbucks; and questions over racism, policing, and public safety.

Phillips, argued that as a regional operations director, she had nothing to do with the arrests of the men at the store at 18th and Spruce Streets, and was fired less than a month later for refusing to place a white district manager at another store on leave over claims of racism in pay that Phillips said she knew to be untrue.

Her lawyer, Laura C. Mattiacci, later said Phillips was a "scapegoat” to "show action being taken” following the furor over the episode. Starbucks’ lawyers, meanwhile, argued that Phillips was not let go because of her race, but because she "failed to lead” her team in the aftermath of the arrests.

Mattiacci declined to comment on the order Wednesday. A Starbucks spokesperson did not immediately return a request for comment.

During a July hearing, Phillips - a Starbucks employee for nearly 13 years who oversaw retail operations in South Jersey, Philadelphia, Delaware, and parts of Maryland - told the judge she once planned to work at the coffee company until she was 70.

But when she was fired in May 2018, Phillips, then 46, said she immediately began looking for new work, taking resume improvement and interviewing classes, attending job fairs, and talking with recruiters.

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"I knew I needed a job,” she testified, adding that without a college degree, her options for finding a job comparable to her $289,000 yearly Starbucks salary were limited. And, she said, she supported her two teenage children on her own.

By August 2018, Phillips, of Woolwich Township, began working in a regional position with Raymour & Flanigan. But, she said, salary and benefits were not as robust at the smaller, privately owned furniture retailer.

In 2022, while battling breast cancer, Phillips, 52, said she took unpaid time off for surgery, and worked at Raymour & Flanigan while receiving chemotherapy and radiation. If she were at Starbucks, she told the judge, she believed she would have been allowed paid leave.

Her lawyers said she was owed more than US$3 million - money an economist said equaled Phillips’ past and future lost earnings and benefits, as well as money she lost moving from one tax bracket to another.

Lawyers for Starbucks called that number "speculative” and an attempt "to manufacture a loss”, arguing that Phillips was not owed continued damages from the coffee company since she hadn’t made efforts to find a job outside of Raymour & Flanigan or seek higher pay. Instead, they fought to cap her payout, if any, at US$78,343 - the salary lost during the 14-week period between when Phillips was fired from Starbucks and when she started her new job.

On Wednesday, the judge granted Phillips’ request in part, noting that following her firing, she "actively took steps to improve her chances of finding a new position,” but capped damages for her lost future pay at age 65.

In all, Slomsky ordered Starbucks to pay Phillips US$1,053,133 in back pay, US$1,617,203 in front pay, and US$66,419 toward tax gross-up damages, which are intended to compensate "for the negative tax consequences of receiving a lump sum award in employment discrimination actions”.

Starbucks has filed a motion for a new trial, arguing that jurors who expressed negative opinions about the coffee goliath were allowed to remain on the panel, that witnesses were permitted to give incorrect information in their testimony that "poisoned the well”, and that the jury erred by awarding Phillips "double damages” on both state and federal allegations.

Meanwhile, Phillips’ lawyers have also requested Starbucks pay US$1.4 million in legal fees from 2018 through 2023.

Following the six-day trial, jurors determined that Starbucks had violated Phillips’ federal civil rights and New Jersey laws prohibiting racial discrimination.

The arrests that sparked outrage occurred in April 2018, when Rashon Nelson and Donte Robinson sat in a Starbucks in downtown Philadelphia waiting to meet with a business associate. When Nelson asked to use the restroom without making a purchase, he said, he was refused because he wasn’t a customer, and a manager asked both men to leave the store. When they didn’t, an employee called police.

A now-private viral Twitter video showing police leading the men out of the store in handcuffs was viewed millions of times and sparked nationwide outrage.

No charges were filed against Nelson and Robinson, and a month after the arrests, the men reached an undisclosed financial settlement with Starbucks, which included free college tuition. The two also settled with the City of Philadelphia for a symbolic US$1 each, and a promise from the city to dedicate US$$200,000 to a programme teaching public school students about financial literacy, entrepreneurship, and the community impact of small businesses. - BERNAMA-dpa