Big Business Pays for Scapegoating Employee
Jury returns verdict of nearly $26 million against Starbucks
When a scandal and crisis hits an organization and leadership is forced to act, sometimes there is displacement of blame and a scapegoat is chosen. A New Jersey jury has found that Starbucks did just that and chose former regional director Shannon Phillips to be the person to sacrifice in a desperate act of mismanagement.
The company just paid dearly for that moral and legal offense.
In short, Phillips “sued the company for wrongfully firing her, claiming she was terminated for being White,” wrote CNN reporters Danielle Wiener-Bronner and Kristina Sgueglia.
Yes, you read that correctly. Before you shake your head in shock or disgust, please stay with me and read on to see the lengths some companies will go to protect their six, as a former Marine and boss I knew liked to say.
Phillips served Starbucks for nearly 13 years and was fired by the coffee retail giant after the arrest of two Black men at a Philadelphia Starbucks in April 2018. I’ll get to the “why” in a moment.
First, the verdict: $25.6 million — $25 million for punitive damages and $600,000 in compensatory damages. Can you say ow? And wow? And Phillips isn’t done yet, her lawyers say, as she will reportedly also be hunting back pay and front pay. Cha-ching.
Brief backstory. “In 2018, the two men were asked to leave the coffee shop after sitting at a table without ordering anything,” CNN reports. “The men, who declined to leave because they were waiting for a business associate, were escorted out of the coffee shop in handcuffs after a store manager called police on them. They later reached settlement agreements with Starbucks and the City of Philadelphia.”
Phillips was let go but why? “Starbucks said in a 2021 court filing that after the incident, ‘senior leaders and members of Partner Resources all observed Ms. Phillips demonstrate a complete absence of leadership during this crisis.”
There’s more: Phillips, Starbucks insisted, “appeared overwhelmed and lacked awareness of how critical the situation had become.” Her boss terminated her “because strong leadership was essential during that time,” inferring she was not exhibiting that caliber of leadership.
Phillips countered and said she was fired because she was White. She came to that conclusion because Starbucks reportedly “took steps to punish White employees who had not been involved in the arrests, but who worked in and around the city of Philadelphia, in an effort to convince the community that it had properly responded to the incident.”
Hmmm. Do you see what I see?
An example, Phillips contended, was “Starbucks had ordered her to place a White employee on administrative leave as part of these efforts, due to alleged discriminatory conduct which Phillips said she knew was inaccurate. After Phillips tried to defend the employee, the company let her go, she said,” CNN reported.
At the risk of being redundant, do you see what I see?
Puzzle pieces.
What to make of this conflict: On Phillips’ end, it seems likely she has the facts and truth on her side, a point the jury too believed.
The verdict might seem outrageous yet the $25 million in punitive damages is intended to send a message. It’s supposed to hurt, the law feels, to discourage such behavior as Starbucks was found to have committed.
Starbucks, like other powerful companies with powerful leaders and attorneys, flexed its muscle on Phillips. Most employees who become former employees don’t make out as well as Phillips — although she suffered greatly I suspect, emotionally, psychologically and possibly financially and physically.
There are employees who become ex-employees and don’t make a penny despite being egregiously scapegoated, lied about and badly wounded for their future career and financial prospects.
Yes, at times, people in positions like the one Phillips held, do fall terribly short of the leadership mark, get terminated, sue companies in rage and entitlement and maybe win. That’s wrong too. This doesn’t appear to be one of those stories.
Bottom Line: Phillips not only won in court, her name and reputation seem to have been rightly restored. That doesn’t always happen, regrettably.
Starbucks’ name and reputation takes another ding but it survived as most big business does despite gross misdeeds. Yet the law will be scrutinizing the company if any similar wrongful behavior ends up in court in the future.
Unethical conduct is common. It doesn’t get caught and punished often but sometimes, like in this case, it does.
Company leadership and attorneys have to morally make sure it doesn’t end up back in court for similar offenses. It could be uglier next time if it’s judged a repeat offender.
Michael Toebe writes “Reputation Notes” and is the founder and specialist at Reputation Quality, a practice that serves and assists successful people and organizations in further building reputation as an asset and responsibly, ethically protecting, restoring or reconstructing it.
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