WASHINGTON (CN) — Starbucks, the largest coffee chain in the world, has found itself at the center of multiple controversies in recent months, from backlash over alleged anti-union activities and union walkouts on Red Cup Day to a new lawsuit accusing the coffee chain of sourcing coffee and tea from farms with slave-like working conditions.
That lawsuit, filed by a consumer group on Wednesday, accuses the company of falsely advertising its coffee beans and tea leaves as “100% ethically sourced” despite working with foreign farms that have committed severe human and labor rights abuses.
Brought by the National Consumers League in the D.C. Superior Court, the suit argues Starbucks has misled customers to take advantage of their desire to shop responsibly.
Daniel Rosenthal, an attorney of firm James Hoffman representing the consumer group, described horrific conditions at the James Finlay & Co. tea plantation in Kenya. The company was a supplier for Starbucks until reports emerged of women being forced to engage in sexual acts in exchange for work.
James Finlay & Co. was soon targeted in a major class action. In additional to the allegations of sexual misconduct, workers also described grueling working conditions in general — including years of pulling heavy tea-plucking machines weighing over 26 pounds that caused debilitating musculoskeletal injuries.
When workers reported these injuries, the suit claims, the company would simply fire them or require them to seek care from company clinics, which provided painkillers and sent them back to work.
In interviews with Courthouse News, Starbucks customers offered a range of reactions to these Starbucks controversies. John, a 19-year-old Navy medic who had just purchased a hot chocolate, said he had been actively thinking about poor working conditions at the company and only chose Starbucks because it was the closest option.
“I prefer to cheap coffee from a gas station anyway,” John said, stressing he doesn’t support Starbucks and would try to avoid it in the future.
David, a 39-year-old visiting D.C. from Boston with a group of friends, said the lawsuit was unsurprising but would not impact his decision much when looking for coffee.
Besides, “I’m more of a Dunkin’ [Donuts] fan myself,” David said.
Starbucks plans to aggressively defend itself against the consumer group's lawsuit, a company spokesperson said in an email when asked about the new accusations.
"We take allegations like these extremely seriously and are actively engaged with farms to ensure they adhere to our standards," the spokesperson said. "Each supply chain is required to undergo reverification regularly, and we remain committed to working with our business partners to meet the expectations detailed in our Global Human Rights Statement."
In 2004, the company launched "Coffee and Farmer Equity Practices" (C.A.F.E.), a set of standards it uses to verify its sourcing partners comply with human and labor rights requirements. Starbucks indicated it has taken action against farms in Kenya and Guatemala in response to human and labor rights violations.
But according to Rosenthal, the consumer lawyer, many problematic farms nonetheless received a C.A.F.E. certification. Among them was a Brazilian supplier, Mesas Farm, where 17 workers — including three minors — were rescued from slavery-like conditions in August 2022. The coffee plantation had received the certification just one month prior.
Beyond potential civil penalties and corrective ad campaigns requested by the National Consumers League, Starbucks may also face backlash from a consumer base that increasingly holds corporate responsibility in high regard.
Rosenthal cited a 2019 Aflac survey showing that 77% of consumers are motivated to purchase from companies they view as committed to “making the world a better place.” He also noted a 2020 Enterra Solutions study, which found that 60% of consumers would stop using a product upon learning it had been made with forced labor.
According to the survey, 79% of customers and investor respondents consider it very important that companies should pay employees a fair wage.
While Starbucks has moved slowly in that regard — the average wage for baristas are $14 an hour — workers have taken the effort into their own hands, pushing to unionize at more than 360 of Starbucks 9,300 U.S. stores since 2021.
Workers at more than 200 Starbucks locations recently staged a walkout in November on Red Cup Day — one of the busiest days of the year for the coffee chain — to demand better staffing and pay.
In December, the National Labor Relations Board filed a complaint against Starbucks for closing 23 locations in an effort to discourage unionization. Of those stores, eight had unionized before they were closed. The complaint seeks to force Starbucks to reopen and rehire the workers affected.
Back at a Starbucks location in Washington, David, the Dunkin' fan, said he was confused by the efforts to unionize as he believed Starbucks to be a good employment opportunity.
“I think people are just bored and riding the wave,” he said.
John, on the other hand, said he thought Starbucks efforts to crush unions were inhumane. He explained that he'd previously worked as a mechanic and was part of a union.
“Unions protect the rights of workers and the working class,” he said. “I think Starbucks and any company’s workers should be part of a union.”
It is unclear whether Starbucks has suffered financially as a direct result of such controversies. While the company recently saw its share price fall 9% in early December — reflecting a $11 billion loss in value — the decline has been attributed to foot traffic and sales rather than controversy.
As for Wednesday’s lawsuit, it's too soon to tell what impact it will have. The answer might become clearer in February, when the company releases its next earnings report.
Follow @Ryan_Knappy
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
