[image from Salon]

Well, it was bound to happen. Starbucks is finally getting sued for unfair competition — the kind that unnecessarily drives out local businesses.

Penny Stafford of Belvi Coffee and Tea Exchange in the Seattle area is suing Starbucks for its “insatiable and unchecked ambition” that amounts to being a monopoly, reports The Seattle Times.

Why? Penny sez she was locked out of the best office space in Bellevue and Seattle by Starbucks’ exclusive leasing agreements with landlords. She finally rented space to sell espresso inside a deli, but says her customers were inundated with free samples from Starbucks employees who worked nearby (ST). For ex, 1 hour last summer, Starbucks baristas came by 4 times with samples for deli customers, Penny sez.

Now, I’m not against exclusive leasing agreements for single buildings. Even Jason of Cafe Evoke in Bozeman, Montana, tried to get an exclusive leasing agreement for his cafe.

The prob, however, is that Starbucks is serious becoming like a monopoly over these leasing agreements. Beyond just being super big, with more than 12,000 stores worldwide, Starbucks has “first dibs” on 78 percent of downtown Bellevue’s Class A office buildings, according to the lawsuit. AND the lawsuit sez property owner Equity Office Properties said it entered into exclusive lease agreements with Starbucks for all its office buildings nationwide. That would be 35% of the country’s high-rises. (ST)

Furthermore, the lawsuit alleges that Starbucks frequently offers to pay leases above market value, if the building owner agrees to an exclusivity contract (CNNmoney). Clearly, indie coffee shops just can’t compete with the deep pockets that Starbucks has.

And we know Starbucks has been buying out competitors like crazy — at below-market prices, the lawsuit alleges, and threatening to open nearby stores if the offer is rejected (CNNmoney). We already know Starbucks bought out Seattle’s Best Coffee and Torrefazione Italia in 2003. More recently, the mermaid bought out Diedrich Coffee.

Which explains why we have so damn many Starbucks. The plaintiff’s press release sez Starbucks controls 73% of the specialty coffeehouse market — a figure that I’ll need further proof on. Last time I researched this, I found out Starbucks owns 1 in 3 coffee shops in the US. Here’s a breakdown of how many coffee shops are owned by who in the US.

All of this stuff retells what many’ve been saying for years. The lawsuit seeks class-action status. Starbucks hasn’t commented, as of yet.

Update, 12/24/06: USA Today provides a surprisingly in-depth look at the legal issues surrounding this case, even giving us concrete examples of at least 3 cases in which indie coffee shops were forced out by Starbucks due to predatory practices. We also get an update on what Stafford’s up to: She’s “leasing a small spot in a Bellevue office building. So far, she has poured $130,000 into her coffee business.”

Update, 6/8/08: Starbucks quietly settles with Penny Stafford of Belvi Coffee and TEa Exchange in Bellevue.

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