The National Consumers League has filed a lawsuit against the global Starbucks for deceptive advertising, calling its claim of 100-percent ethical sourcing of coffee and tea products a well-circulated lie.
The complaint filed by NCL in January takes issue with Starbucks' ethical sourcing statement in light of labor abuse reports. NCL is accusing Starbucks of sourcing its coffee beans and tea leaves from “cooperatives and farms that have committed documented, severe human rights and labor abuses, including the use of child labor and forced labor as well as rampant and egregious sexual harassment and assault.” Starbucks has filed for summary judgment, which is tantamount to a dismissal, and NCL is fighting to move the case back to state court to take advantage of tougher consumer laws.
This follows a string of litigation involving Starbucks, covering everything from contract disputes to trade secrets.
Just last year, Starbucks was in Seattle federal court with Balmuccino LLC accused of misusing trade secrets to create "S'Mores Frappuccino" lip gloss, Reuters reported. Balmuccino lost the case on procedural grounds in July of 2023, according to Reuters.
Yet another legal challenge resulted in Starbucks having to pay $2.76 billion in a breach of contract dispute with Kraft Foods and Mondelez International, one of the world's largest snack companies as Zacks Equity Research reported on Yahoo! Finance in 2013. Starbucks also contended with litigation by Simon Property Group, which fought to preserve 379 of Teavana stores slated for closure, arguing the coffee company's decision to close some of its own stores violated its lease. According to Fox Business in 2018, Starbucks and Simon reached a settlement over the stores, which included 77 in Simon malls.
Since NCL filed its lawsuit in January under the District of Columbia’s Consumer Protection Procedures Act, the case has changed jurisdictions, and is now before Senior Judge Reggie Walton of U.S. District Court in Washington. If allowed to remain in federal court, NCL will lose the might of consumer laws designed to keep Washington free of unlawful trade practices tied to fraud or misrepresentation. Washington's particularly tough Consumer Protection Procedures Act comes into play in the state jurisdiction, not the federal.
In an interview with Globe Banner, CEO Sally Greenberg said, “It’s important to note that it’s being brought under special consumer protection statues in the District of Columbia, which doesn’t allow companies to make claims that are unsubstantiated. We do business and we are a nonprofit in the District of Columbia, so it gives us jurisdiction.”
Conversely, she noted that Starbucks, as a national company, likely feels more comfortable in federal court “especially since the state court in the District of Columbia administers a very tough consumer protection act.”
The NCL complaint goes on to say that Starbucks is seeking to “capitalize on the growing consumer demand” for ethically sourced goods, which often command a higher price, promoting this on social media and adding to annual profits exceeding $21 billion. Contrary to ethical sourcing, NCL’s complaint cites last year’s complaint by the Brazilian labor prosecutor against Starbucks’ largest supplier in that nation, as it details “abusive and unsafe working conditions analogous to slavery.” Despite this complaint, Starbucks is still working with this supplier, according to NCL.
Additionally, at a tea plantation in Kenya, which also supplies Starbucks, BBC investigative reporters revealed gender-related violence and sexual harassment, the complaint said.
Among the labor abuses committed by suppliers, Greenberg said, are excessive hours for children, 17-hour days for average workers with inadequate compensation, and working conditions that included dead bats in drinking water and a lack of sanitary facilities.
“We want Starbucks to stop sourcing from plantations and farms that exploit workers and violate child labor and other labor laws and to investigate their supply chains and stop doing business with farms who are mistreating workers or violating labor laws and or stop claiming that their products are ethically sourced,” Greenberg said.
Starbucks’ attorney, Karl Racine of the global law firm Hogan Lovells, also based in D.C., did not respond to a request for comment. But a Starbucks spokesperson told CNN the company “plans to aggressively defend against the asserted claims that Starbucks has misrepresented its ethical sourcing commitments to customers."
“We take allegations like these extremely seriously and are actively engaged with farms to ensure they adhere to our standards,” as per the statement to CNN. “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.”
The National Consumers League is a nonprofit that works with a board of directors and members from every state to tackle five priorities that deal with fraud, child labor, LifeSmarts, healthcare, food safety and nutrition. Since joining NCL in 2007, Greenberg has testified before Congress many times on consumer issues and is NCL's primary spokeswoman. Her experience includes work on product liability and food safety issues for Consumers Union, at the U.S. Department of Justice Foreign Claims Settlement Commission and the Eastern States Civil Rights Counsel for the Anti-Defamation League.