Shopping center operator Simon Property Group scored a victory in a lawsuit to prevent Starbucks from breaking its Teavana leases.
Unlike the coffee chain itself, Starbucks’ tea-focused sister brand, Teavana, which the Seattle coffee giant aquired back in 2013, hasn’t been particularly popular. And so, this past July, Starbucks announced plans to close all 379 Teavana stores this coming year, citing underperformance as the reason. However, if you’re part of the minority of diehard Teavana fans, here’s some unlikely news that might cheer you up: An Indiana judge has reportedly sided with shopping center operator Simon Property Group in a lawsuit that will prevent Starbucks from closing its 77 Teavana locations located in Simon-owned malls.
According to the Indianapolis Business Journal, the Indianapolis-based Simon, the country’s largest mall operator, filed the lawsuit in Marion Superior Court back on August 21, less than a month after the closures were announced, alleging that by terminating its Teavana leases, Starbucks was “shirking its contractual obligations at the expense of Simon’s shopping centers and the dozens of communities they serve and support.” According to Simon, only two of its current Teavana leases expire prior to the announced closing plans of this coming spring; meanwhile, some of the Teavana leases were locked in as far out as 2027.
In the suit, Simon alleged that Starbucks has no immediate need to close these locations at the expense of breaking their leases. “Those retailers, at least, claimed closure was necessary to avoid bankruptcy, and that staying open and fulfilling their leases would cause them financial ruin,” the suit reportedly stated. “That obviously is not the case with Starbucks, which is one of the largest and most recognized companies in the world.” Instead, Simon argues that the closings are simply meant to boost the coffee giant’s bottom line. “Starbucks does not contend that Simon breached any lease or that Starbucks cannot remain viable if it continues to honor its promises in its leases for stores in Simon’s shopping centers,” the suit continues. “Instead, Starbucks simply believes it can make more money if it violates the leases than if it honored its contractual promises and obligations.”
Apparently, Judge Heather Welch found these and other arguments convincing enough, because the New York Post reports that she ruled in favor of the plaintiff, thus preventing – at least for now – Starbucks from terminating these leases as planned, a decision that left one real estate lawyer the paper spoke with “shocked.” Meanwhile, in a statement, Starbucks contended, “We are disappointed in the judge’s ruling and will continue to focus on finding a resolution.” It’s certainly not every day when someone forces you to make tea against your will.