Starbucks To Pay $106 Million, Cannot Pool Tips

San Diego Superior Court Judge Patricia Yim Cowett has ordered Starbucks to pay more than $100 million in tip pool money to employees because she said the coffee chain used tip money to pay shift supervisors, a practice that violates California law. The chain is being ordered to pay more than 100,000 current and former baristas who worked from Oct. 8, 2000 through Feb. 28, 2008. Judge Cowett also ordered Starbucks to discontinue its tip-pooling policy.

On Feb. 28, 2008, the Court ruled that shift supervisors are “agents” under California law because they “supervise and direct” the work of baristas, and therefore cannot share in the same tip pool as the baristas.

The lawsuit Chou v. Starbucks was filed in October 2004 by Jou Chou, a former barista in La Jolla, Calif., who believed that because shift supervisors should receive higher wages, they should not be taking money from the tip pool.

The court granted the case class action status on April 19, 2006, allowing the suit to go forward for as many as 100,000 former and current baristas in the coffee chain’s California stores.

While Judge Cowett agreed with Chou’s claim, Starbucks said it planned to appeal the ruling and to seek a stay of the Court’s ruling prohibiting shift supervisors from receiving tips in the future while the appeal is pending.

“Starbucks believes that our shift supervisors deserve their fair share of the tips that they receive from the tip jars in our California stores. We are disappointed with the decision by California Superior Court Judge Patricia Cowett to take away that right and order that shift supervisors be prohibited from receiving tip,” the chain said in a statement.

“We also disagree with the Court’s ruling to award damages under which the baristas will receive the tips that shift supervisors have earned in the past,” Starbucks continued. The judge ordered Starbucks to pay $87 million in back tips, plus interest of $19 million, bringing the total judgement to about $106 million. “We are particularly disappointed that the Court’s decision, which is a mere four paragraphs issued after a lengthy trial, did not even address the obvious unfairness to our shift supervisors in denying them tips,” Starbucks said.

“This case was filed by a single former barista and, despite Starbucks request, the interests of the shift supervisors were not represented in this litigation. As a result, Starbucks believes that the Court’s decision is not only contrary to law, it is fundamentally unfair and beyond all common sense and reason,” the chain added.

Starbucks said it believed the case “represents an extreme example of an abuse of the class action procedures in California’s courts.”

But attorney Laura Ho, who tried the baristas case, said the court’s verdict follows state law. “Starbucks illegaly took a huge amount of money from the tip pool to pay shift supervisors, rather than paying them out of its own pocket. The court’s verdict rightfully restores that money to the baristas,” she said.

The law firms serving as lead class counsel for the plaintiffs are Goldstein, Demchak, Baller, Borgen & Dardarian and Rudy, Exelrod and Zieff. Bohm, Matsen, Kegel & Aguilera and the Law Offices of Terry Chapko are also class counsel on the case.

Starbucks employs more than 135,000 baristas in the United states.

The Associated Press contributed to this article.

Sources: Goldstein, Demchak, Baller, Borgen & Dardarian, Starbucks