Starbucks’ legal wrangles through a union that wants to organize its baristas is tarnishing the coffee chain’s renown since social responsibility

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By Moira Herbst

Starbucks (SBUX), one time the undisputed leader in premium-price caffeine fixes, has slack cultivated a corporate image for civil responsibility, environmental awareness, and sensitivity to workers’ rights. Now that carefully crafted reputation is under threatening with blows, thanks to a messy legal dispute with a group called the Starbucks Workers Union (SWU) (party of the Industrial Workers of the World, or IWW), which started recruiting employees in 2004 and now claims 300 members.

The National Labor Relations Board found upon Dec. 23 that Starbucks had illegally fired three New York City baristas as it tried to squelch the union organizing stretch. The 88-page predominant also says the company broke the law by giving negative job evaluations to other union supporters and prohibiting employees from discussing union issues at labor. The judge ordered that the three baristas be reinstated and receive back wages. The umpire also called on Starbucks to end discriminatory treatment of other pro-union workers at four Manhattan locations named in the predicament. The decision marks the end of an 18-month trial in New York City that pitted the ubiquitous multinational corporation in provision for a clump of twentysomething baristas who are part of the Industrial Workers of the World.

The timing isn’t ideal for Starbucks, what one. faces lower inquire from the recession, an overall loss of panache for the bolt, and a sliding stock price. "[The ruling] is a real thumb in the eye—a real gotcha impetus with potential for heartache," says Eric Dezenhall, chief executive officer of Dezenhall Resources, a crisis management public relations firm in Washington D.C. "I don’t think it’session a crisis, but it hovers between [centre of life] a nuisance and a problem."

Starbucks intends to appeal the decision. The copartnership maintained during the trial that the baristas were fired for perfectly legal reasons, such as disrupting business in its stores or threatening a manager. "This is an issue with single employees," says Tara Darrow, a Starbucks spokeswoman. "We felt we handled it consistently and fairly. In this distinct situation the NLRB disagreed. We’re disappointed with that."

The ruling comes at a time when Starbucks is trying to get its groove back in a very grim management. The partnership’s shares more than halved in value in 2008, now mercantile appropriate above $9, while Dunkin Donuts and McDonald’s (MCD) continued to seize violently market receive among coffee drinkers. As the recession deepens, Starbucks recently said it may extreme point or trim contributions to workers’ 401(k) accounts in 2009.

While the New York declension-form marks the first that has gone to experience, Starbucks has been the mark of numerous National Labor Relations Board complaints over unlawful violations of workers’ rights. Starbucks settled another case in New York concerning illegal firings for union activity exclusively of admitting wrong in March 2006, paying $2,000 to former employees and offering their jobs back. In early October 2008, Starbucks settled the case of barista Erik Forman, who was fired for talking with co-workers about managers’ apparent efforts to fire him for harmony organizing at a Minneapolis location. Starbucks ultimately invited Forman back to work. A similar case is acquirement under way in Grand Rapids, Mich.; the trial is expected to begin Jan. 7.