Starbucks to fight tip-sharing ruling

Starbucks Corp. will not pay back its California baristas for tips they shared with shift supervisors, defying a San Diego Superior Court ruling last week.

"The ruling would take away the right of shift supervisors to receive the tips they earn for providing superior customer service," said Chief Executive Howard Schultz, in a voicemail message to employees Wednesday night. "I want you to know that we strongly believe that this ruling is extremely unfair and beyond reason."

In the voicemail, a transcript of which was released by Starbucks (SBUX, Fortune 500), Schultz said the media "grossly mischaracterized" the coffee chain's standard practice of allowing shift supervisors to share in tips left for baristas.

"We would never condone any type of behavior that would lead anyone to conclude that we would take money from our people," he said.

The company said in a separate statement Wednesday that there is no money to be "refunded or returned from Starbucks."

The California lawsuit was filed in 2004, and was granted class-action status in 2006. Last week, San Diego Superior Court Judge Patricia Cowett ordered Starbucks to pay baristas more than $100 million in back tips and interest, saying state law prohibits managers and supervisors from taking a cut from the tip jar. A hearing is set for May 1 before Cowett on how the California tip money should be distributed.

Starbucks responded in the statement that "shift supervisors are not managers and have no managerial authority," and customers don't differentiate between the supervisors and baristas when they tip.

Cowett also issued an injunction preventing Starbucks' shift supervisors from sharing in future tips, but Starbucks said it would not comply with the order while it appeals the court decision.

Since the ruling, two similar lawsuits against Starbucks have been filed, one in Minnesota and one in Massachusetts. Both seek-class action status. In his message to employees, Schultz vowed to "vigorously defend" the company.

Shares of Starbucks dipped 45 cents, or 2.6%, to $17.17 in afternoon trading.