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Starbucks being sued by shareholders over business dispute

Shareholders for Starbucks have filed a lawsuit for $2.8 billion due to an alleged contract breach with Kraft Foods. According to the lawsuit, the executive officers and board of directors for Starbucks breached their fiduciary duties. In November, it was ordered that Starbucks give Kraft $2.75 billion. This involved how the packaged coffee was distributed in grocery stores, and an arbitrator said that a breach of contract indeed happened.

A breach of contract means that a contract was drafted between two parties and one of the parties did something that went against the contract. Not honoring a contract can result in the party considered to have caused the breach having legal action taken against it.

In this case, Starbucks allegedly breached a contract it had with Kraft and the shareholders for Starbucks have posed legal action against Starbucks. This was as a result of the executives downplaying the negative aspects of that breach.

The business litigation is happening. Starbucks representatives said that they know of the complaint and that they will respond in due course. They state that they are responsible to their shareholders and that they take this very seriously.

The lead plaintiff is demanding almost $3 billion in damages for the shareholders. She also wants Starbucks to make changes to their bylaws so that stockholders have greater input. The attorney representing the lead plaintiff was contacted for a statement, but has yet to respond. The case is ongoing, so it may take some time for the result to become apparent.

Source: Business Insider, “Shareholders Sue Starbucks for $2.8 Billion Over Dispute With Kraft,” Hayley Peterson, Jan. 22, 2014

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