Starbucks to Appeal Tip-Sharing Ruling

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Starbucks to Appeal Tip-Sharing Ruling That It Pay Baristas $100M, Calls Ruling Unfair

SEATTLE (AP) -- Starbucks Corp. plans to appeal
a San Diego Superior Court ruling last week that ordered the coffee
chain to compensate California baristas for tips they shared with shift

"The ruling would take away the right of shift
supervisors to receive the tips they earn for providing superior
customer service," said Chief Executive Howard Schultz, in a voicemail
message to employees Wednesday night. "I want you to know that we
strongly believe that this ruling is extremely unfair and beyond

In the message, a transcript of which was released by
Starbucks, Schultz said the media "grossly mischaracterized" the coffee
chain's standard practice of allowing shift supervisors to share in
tips left for baristas.

"We would never condone any type of
behavior that would lead anyone to conclude that we would take money
from our people," he said.

Schultz vowed that the company would
appeal the ruling and defend itself against two similar lawsuits filed
this week in Minnesota and Massachusetts.

In a separate statement Thursday, Starbucks said there is no money to be "refunded or returned from Starbucks."

California lawsuit was filed in 2004, and was granted class-action
status in 2006. Last week, San Diego Superior Court Judge Patricia
Cowett ordered Starbucks to pay baristas more than $100 million in back
tips and interest, saying state law prohibits managers and supervisors
from taking a cut from the tip jar. A hearing is set for May 1 before
Cowett on how the California tip money should be distributed.

responded in the statement that "shift supervisors are not managers and
have no managerial authority," and customers don't differentiate
between the supervisors and baristas when they tip.

Cowett also
issued an injunction preventing Starbucks' shift supervisors from
sharing in future tips, but Starbucks spokeswoman Valerie O'Neil said
it would not comply with that order while it appeals the court decision.

Shares of Starbucks fell 57 cents, or 3.2 percent, to close at $17.05.