Judge bars Starbucks from closing 77 failing Teavana stores
No fan of Starbucks, but a private business being told by government it can't prevent its losses? WTF??
"In a 55-page order, found that the very profitable Starbucks could absorb the financial hit — estimated by Starbucks to be $15 million over five months — better than Simon could. The mall operator did not provide an estimate of how much the closings of the Teavana stores would hurt them."
Atlas has Shrugged.
"In a 55-page order, found that the very profitable Starbucks could absorb the financial hit — estimated by Starbucks to be $15 million over five months — better than Simon could. The mall operator did not provide an estimate of how much the closings of the Teavana stores would hurt them."
Atlas has Shrugged.
(Judge) Welch admitted that “no court has ever entered preliminary or permanent injunctive relief to specifically enforce a continuous operations covenant against a non-anchor tenant” — but she did so anyway.
If there was a "continuous operations covenant" in the lease, that puts a somewhat different light on the issue. "Absorbing the financial hit" should have had nothing to do with the Judge's decision, but enforcing a lease covenant might be a legitimate exercise of judicial power.
An interventionist progressivist judge tells Starbucks how to run their business
since they can afford it, and presumably 'for the common good'.
Gross, but there is another view.
View 2:
A court rules that a contract agreed between two parties must be complied with
even if compliance is unexpectedly unprofitable for one party.
I go for View 2.
The observance of freely agreed contracts is crucial for all business and private relations.
I thank CBJ for mentioning that possibility.
It is too easy to jump on a bandwagon.
How about a "karma is a bitch" view 3?
View 3:
In the past Starbucks management has championed progressive left wing causes "for the common good" and is now getting a lesson in what they were really supporting.
Starbucks is a very "progressive" company. Simon is a toilet stain of a company. There is no telling what they agreed to and no way of knowing if the reporting in this article is complete or fully accurate.
http://www.businessinsider.com/judge-...
NY Post as well https://nypost.com/2017/12/01/judge-b...
"“I’m somewhat shocked by the ruling,” said real estate lawyer Joshua Stein. Welch “catalogues every possible detriment to Simon as a result of having vacant space,” Stein said, adding, “That’s part of a job description of owning real estate. You deal with it and don’t get injunctions to have your tenant continuing to operate.”
Starbucks declined to say what its obligations, or any possible penalties, would be for pulling out of its leases early. A company spokesperson said only that “we are responding to the lawsuit and are working to resolve this dispute.”
Source:
https://www.seattletimes.com/business...
Without anyone directly referencing the contract both parties agreed to, I cannot agree that it is a bad judgement.
On the surface with the limited info I have; it is a bad judgement and fouls the court the judgement was given in. I am quite certain that I don't have all the information needed for me to actually hold that as my opinion yet. I cannot know fact from fiction when I don't know who agreed to what.
We are so close to directive 10-289 in many ways already; I would not be surprised if it were here.
Now, as for the "voluntary contract", I would be surprised if there wasn't an escape clause for these extenuating circumstances.
I am not a fan of Starbucks, their coffee, their politics nor their cultural views but if I were them, I'd figure out, real quick, a new business model that would make me a profit. But maybe, they have lost that ability due to their leftest views.
“Starbucks made a business decision to acquire Teavana in 2013,” the judge wrote. “Starbucks voluntarily entered into and assumed lease agreements — regardless of the financial success of Teavana — with Simon for each of the stores at issue and agreed to continuous operation covenants.”
The judge also determined that Starbucks “unilaterally” decided to announce the closing of Teavana stores in 2017 and winding down operations without communicating with Simon.
http://www.nrn.com/operations/court-b...
Now me dino be waiting for some judge here or there to tell the public where it is mandatory shop so stores can stay open. Hey, even what restaurants we must eat at to support.
Oh, and landlords, wait for some judge here or there to tell you that you can't have vacant space. Not ever. Or else!
Sorry, your honor, we're not closed... see, we even have product here to sell, a operating till, an employee, even a counter.
Too bad they can't use a coleman lantern for their light, and shut off the other lights and power in the store... tho I think the bare and abandoned looking store would look uglier, er, more stark, er, less attractive" er, well... Leave the lights on.
Tell ME how I'm going to run MY private business? Think not.
http://www.nrn.com/operations/court-b...
The profit or loss of the parties is not relevant and if the statement is true, the judge's reasoning is flawed.
If this statement is true and it is the basis for the decision, the ruling should be overturned. However, if the covenant exists as described, then the landlord should prevail under the contract assuming the judge cites the contract terms as the reason for the decision. Profit of the parties to the contract should not be relevant unless the contract covenant is stated in those terms.
Agreeing to such a covenant was unwise.
“Starbucks made a business decision to acquire Teavana in 2013,” the judge wrote. “Starbucks voluntarily entered into and assumed lease agreements — regardless of the financial success of Teavana — with Simon for each of the stores at issue and agreed to continuous operation covenants.”
The judge also determined that Starbucks “unilaterally” decided to announce the closing of Teavana stores in 2017 and winding down operations without communicating with Simon.
http://www.nrn.com/operations/court-b...
I wonder if Starbucks could have come to an agreement with Simon if they communicated, or if they tried and Simon decided it was time to get a ruling on this type of clause to shore up their position for the future. Could be Simon is in confidential talks to sell the company and this issue is crucial to valuation. Wonder how the trial venue was selected. I suspect it wasn't accidental.
We live in interesting times.
I'd say ridiculously unreasonable.
Why have bankruptcy laws if people can be forced to remain in business while hemorrhaging money?
But closing a store that is losing money is something all retailers do, and it often involves breaking a lease. I see no major or unusual wrong here unless it's by the judge.
David Friedman, in Law's Order, discusses breach of contract (and why it should often be allowed) at great depth.
if starbucks is in any other malls owned by this company they should close them.
I can't even express how angry this makes me (unless there is something really weird in the lease contract and the media has misrepresented the ruling.)
Simon argues that if Starbucks is allowed to “prematurely” break its lease, it could be forced to fill the vacancies with “less creditworthy tenant(s)” or less desirable tenants “who will only agree to less desirable lease terms, and/or a shorter-term lease,” according to the court filings.
We can not trust media to give us unbiased fact. We never should have in the first place.
If Starbucks has signed an agreement that states it keeps up the locations for it's tea stores by keeping those stores open and operational for the duration of the lease; then the ruling was appropriate and the media is electing to leave out that fact.
If the lease agreement only states that it will pay the lease throughout the contract, AND the judge ordered them to keep the stores open; then the judge has overreached significantly, and the media has mostly fairly reported the situation.
I would imagine the language of the contract falls somewhere in the middle of these. Unfortunately we cannot know what is going on without the lease, the ruling and probably all other associated paperwork in the case.
Even my local reporters are being called out nearly daily for twisting facts to create sensational headlines or misleading articles.
Anyway, if I HAVE to stay open, well... I'm sure we could do that. I put my solution below.
I wonder if the same judge will order Studebaker back in business, because I want to buy a Stude Pick-up, and it's my RIGHT to force someone to sell me something I want, because I'm just that entitled and special. No money? Not my problem. No factory? Not my problem.. I'm sure the judge will force -someone- to sink billions into it so I can have my pickup truck.
When the NFL offered 100 million to the black players (who make millions each) to help their "cause"- all I thought of was how much my ticket prices would go up as a result. It made me upset and even less likely to go to an NFL game