MOSCOW, January 23 (RAPSI) - Starbucks shareholders filed a $2.8 billion class action suit alleging that the coffee giant’s board of directors and executive officers breached their fiduciary duties and grossly understated a contract breach with Kraft in SEC filings, the Courthouse News reported Wednesday.
The claims arose from an arbitration award Kraft obtained against Starbucks in November.
"On November 12, 2013, in a crushing blow which severely harmed the company, the arbitrator found in favor of Kraft and against Starbucks, awarding Kraft damages of nearly $2.8 billion ($2.23 billion in damages for terminating the Agreement, plus $527 million in prejudgment interest and attorneys ' fees). Significantly, this award represented more than the $2.6 billion in cash and cash equivalents defendants had reported on Starbucks' balance sheet on September 29, 2013," the claim states, as quoted by Court House News.
In what was referred to by the claim as a “crushing blow which severely harmed the company,” Starbucks lost a $2.75 million breach of contract case brought by Kraft in November, according to the report.
The lead plaintiff reportedly seeks $2.8 billion in damages from Starbucks’ officers and directors, as well as an amendment in the company’s bylaws creating stronger oversight and providing for greater input from shareholders.