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June 14, 2023

Ex-Starbucks manager awarded $25 million in discrimination lawsuit filed in aftermath of incident at Philly store

Shannon Phillips alleged the company punished white employees in its response to the 2018 arrests of two Black men in a Rittenhouse Square store

Lawsuits Starbucks
Starbucks Manager Lawsuit Thom Carroll/For PhillyVoice

Shannon Phillips, the ex-Starbucks regional manager who oversaw the Philadelphia store where two Black men were arrested in 2018 for not ordering anything, was awarded $25.6 million in a wrongful termination lawsuit. Phillips alleged Starbucks fired her in the aftermath because she was white. The photo above is a file shot.

Five years ago, Starbucks came under heavy scrutiny after an employee at one of its Center City coffeeshops called police on two Black men for sitting in the store without buying anything. In the aftermaths of their arrests, Starbucks fired the regional director who oversaw that location, prompting an unlawful termination lawsuit from the woman, who claimed she was let go because she was white. 

On Monday, Starbucks was ordered to pay that regional manager, Shannon Phillips, $25.6 million, after a federal jury in New Jersey found that the company had violated Phillips' federal civil rights and a New Jersey law prohibiting discrimination based on race. Phillips was awarded $600,000 in compensatory damages and $25 million in punitive damages.

Phillips was a 13-year employee of Starbucks, according to court documents. At the time of the incident in Philadelphia, which drew national media attention, she oversaw Starbucks operations in the Philadelphia region, South Jersey, Delaware and parts of Maryland.

In the aftermath, Phillips' lawsuit alleged that she "worked tirelessly" on Starbucks' behalf to "repair community relations while ensuring employee and customer safety." She claimed that Starbucks sought to "punish white employees" in the Philly region – even those that had not been involved in the incident – following the media coverage of the arrests.  

As part of Starbucks' damage control, Phillips claimed that one of her superiors, a Black woman, told her to place a white employee who oversaw Philadelphia stores on administrative leave because of allegations of discriminatory conduct. Phillips said those accusations were untrue, and that she was ignored when she presented information to clear the employee's name, according to court documents.

Phillips also claimed that Starbucks did not take steps to punish the Black district manager who was responsible for the Philly store at 1801 Spruce St., where the arrests occurred. Phillips was fired May 9, 2018 – less than one month after the incident. 

Phillips filed suit on Oct. 28, 2019, but the trial only began last week. On Monday, the jury deliberated for about six hours before reaching its unanimous verdict. 

Laura Carlin Mattiacci, a lawyer for Phillips, said she and her client were "very pleased" with the verdict, the New York Times reported.

Starbucks has denied Phillips' claims. 

"All actions taken by Starbucks with respect to Ms. Phillips were for legitimate, non-discriminatory, non-retaliatory reasons," the company said in court filings responding to Phillips' lawsuit. "Any damages suffered by Ms. Phillips were proximately caused by her own conduct and not by any unlawful policy, custom, conduct, practice, or procedure promulgated or tolerated by Starbucks."

On April 12, 2018, Rashon Nelson and Donte Robinson, both 23-year-old Black men, went to the Starbucks for a Thursday afternoon business meeting with a potential business partner. The entrepreneurs arrived early.

Nelson asked to use the restroom, but was told he could not because he wasn't a paying customer. After Nelson sat back down with Robinson, the store manager asked whether the men wanted to order anything. They declined, saying they were waiting for someone.

At 4:37 p.m., two minutes after the men arrived in the store, an employee called police. Officers arrived by 4:41 p.m. 

"I was thinking, 'They can't be here for us,'" Robinson said during a "Good Morning America" appearance in the days that followed. "We have meetings at Starbucks all the time."

Police told Nelson and Robinson to leave if they weren't going to buy anything. They eventually arrested Nelson and Robinson and held the men in police custody for about nine hours before releasing them.

After a video of the arrests went viral online, Starbucks was met with protests and widespread public outcry, with people calling the incident an example of racial profiling. Kevin Johnson, the Starbucks CEO at the time, issued an apology and traveled to Philadelphia to discuss racial bias with Mayor Jim Kenney and former Philadelphia Police Commissioner Richard Ross.

Nelson and Robinson reached a settlement with Philadelphia on May 2, 2018. The men each received $1 in addition to a pledge for a $200,000 contribution from the city to create a youth entrepreneur program. Starbucks also closed its 8,000 stores for a day later that spring to put its employees through racial bias training.

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