A judge in Washington state has ruled against a conservative group that sued Starbucks over the coffee chain's race-based hiring practices that allegedly "flagrantly" violate various state and federal laws.
Chief U.S. District Judge Stanley Bastian on Friday ruled against the National Center for Public Policy Research (NCPPR), dismissing a lawsuit the conservative nonprofit brought against Starbucks over so-called "affirmative action" policies that included awarding contracts to "diverse" suppliers and advertisers and tying executive pay to allegedly racist hiring quotas.
In a complaint (pdf) that was filed on Aug. 30, 2022, at the State of Washington Spokane County Superior Court, the nonprofit accused Starbucks of adopting a total of seven policies that between them required Starbucks to actively discriminate based on race in its compensation and employment decisions (including hiring, firing, and promotions), and in its contracting processes with vendors.
"Starbucks, acting through its officers and directors, crafted and publicized these policies with fanfare, preening over the supposed moral virtue their adoption signaled," NCPPR wrote in the complaint.
"The individual Defendants took these actions despite knowing of a glaring, inconvenient fact: the policies they so trumpeted flagrantly violate a wide array of state and federal civil rights laws," the group continued.
The Starbucks policies that are the subject of the lawsuit include the goal of at least 30 percent of its U.S. corporate workforce being black, indigenous, or people of color by 2025 while pegging executive pay to workforce diversity quotas.
Before filing its lawsuit, the group, which holds around $6,000 worth of Starbucks shares, warned Starbucks that its race-based policies were illegal and that their adoption posed a litigation risk for other Starbucks shareholders. NCPPR asked Starbucks to take action to address these risks and publicly retract the policies.
Starbucks responded in July 2022 that it would "take no relevant action to correct course and reduce the exposure they had created for it and its shareholders," per the NCPPR complaint, prompting the group to sue.
In its complaint, NCPPR alleged that, by failing to rescind the policies in question, Starbucks endangered the interests of all its shareholders and violated their fiduciary obligations.
"Why do they do so? Because it benefits them personally to pose as virtuous advocates of 'Inclusion, Diversity, and Equity,' even if it harms the company and its owners—a classic example of (admittedly non-pecuniary) self-dealing," the group alleged in the complaint.
However, Judge Bastian rejected these allegations and on Aug. 11 dismissed the case with prejudice, according to a court filing (pdf), meaning that NCPPR is barred from refiling the lawsuit.
The judge said that the lawsuit centered on public policy questions that are for lawmakers and corporations to decide, not the courts.
"If the plaintiff doesn't want to be invested in 'woke' corporate America, perhaps it should seek other investment opportunities rather than wasting this court's time," the judge said.
Starbucks said it was pleased with the decision and said it remains committed to "creating a culture of warmth and belonging."
NCPPR spokesperson Scott Shepard called the judge's comments "surprising and disappointing."
"We will continue to pursue relief from illegal discrimination on behalf of shareholders and employees," he said.
In a statement one day before the unfavorable ruling, NCPPR expressed hope that, in light of the recent landmark Supreme Court ruling that barred race-based recruitment policies at colleges, it might prevail in its lawsuit, which would have the "potential to influence change in companies that have trumpeted Diversity, Equity, and Inclusion (DEI) programs that are both racist and illegal."
Supreme Court Bans Race-Based Admissions
In a 6–3 decision on July 29, the Supreme Court struck down the use of racially discriminatory admissions policies and American colleges, ending the use of so-called affirmative action programs in higher education.
Chief Justice John Roberts wrote (pdf) for the court that, for too long, universities have “concluded, wrongly, that the touchstone of an individual’s identity is not challenges bested, skills built, or lessons learned but the color of their skin."
"Our constitutional history does not tolerate that choice," he wrote.
Justice Sonia Sotomayor dissented, writing that the majority decision “rolls back decades of precedent and momentous progress.”
“It holds that race can no longer be used in a limited way in college admissions to achieve such critical benefits,” the justice wrote.
“In so holding, the Court cements a superficial rule of colorblindness as a constitutional principle in an endemically segregated society where race has always mattered and continues to matter,” she wrote.
Following the Supreme Court ruling, state attorneys general from Tennessee, Kansas, and 11 other states put 100 of America’s largest corporations on notice "of the illegality of racial quotas and race-based preferences in employment and contracting practices" and urged the firms to put an immediate halt to such policies.
In a July 13 letter to CEOs of Fortune 100 companies, the AGs wrote that the Supreme Court ruling "definitively" ends the legal use of race-based hiring and contracting practices.
“If your company previously resorted to racial preferences or naked quotas to offset its bigotry, that discriminatory path is now definitively closed,” the letter reads.
“Your company must overcome its underlying bias and treat all employees, all applicants, and all contractors equally, without regard for race.”
According to a Harvard Business Review 2022 survey, more than 60 percent of U.S. companies had a race or gender-based diversity, equity, and inclusion program.