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Starbucks to fight tip-sharing court ruling

/ Source: The Associated Press

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 supervisors.

"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 reason."

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."

The 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.

Starbucks 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.