A proposed class action lawsuit filed against leading coffee retailer Starbucks on Monday by an independent coffee house owner claims that that the company abuses its monopoly position in the specialty coffee market to eliminate smaller competitors by using various means, including cluster bombing store tactics.
The suit filed in US District Court in Seattle, alleges that Starbucks eliminates its competition using methods such as signing exclusive lease agreements with property managers, cluster bombing, or opening many unsustainable stores in one area, and by buying out its smaller competitors. The suit is asking the court to end what the plaintiff Penny Stafford claims are Starbuck's anti-competitive activities. It also seeks to represent coffee shop owners who look to occupy retail space in commercial office buildings in Seattle or Bellevue, Wash.
According to the complaint, Starbucks frequently offers to make lease payments higher than fair market value in exchange for a property owner's agreement to prevent competitors from leasing space in the same building.
In 2003, Starbucks purchased Seattle Coffee Company, acquiring Seattle's Best Coffee and Torrefazione Italia for $72 million. There were a total of 22 Seattle's Best Coffee and five Torrefazione Italia stores in the greater Seattle area, which the suit claimed as evidence of part of Starbuck's aim to buy out competition.
According to published reports, Starbucks controls 73 percent of the specialty coffeehouse market. Starbucks currently sells approximately four million coffee drinks daily in the U.S. alone. With more than 1,200 stores expected to open this year, the company continues to grow into a global empire. Its long-term goal is to have over 15,000 U.S. stores and 30,000 stores worldwide.
The suit was filed by the law firm of Hagens Berman Sobol Shapiro in Seattle on behalf of Stafford.