Dady & Gardner law firm, representing Amit Patel and his company Devesh, Inc., claims in its latest court filing that Seattle's Best, Starbucks, its officers and directors violated the Racketeering Influenced Corrupt Organization Act. They state that the franchise system under Seattle’s Best and Starbucks is an association-in-fact “enterprise,” which conducted its affairs through a pattern of racketeering activity. They explain that the license agreement under Devesh, Inc. imposes the “hierarchical” structure of that enterprise.
To further prove racketeering claims, documents detail that Starbucks has had control over the revenue earned from its sale of products to Seattle’s Best Coffee licensees since 2004. Starbucks requires franchisees to purchase supplies from its chain at higher prices than what they agreed to pay. Without the legal existence of Seattle’s Best licensees, Starbucks would not have been able to “effectuate its scheme of operating” the enterprise in a manner to defraud Patel’s company.
Lead franchisee counsel John D. Holland said, “We think it’s peculiar that Seattle’s Best Coffee is supplied by Starbucks. We have material questions about how that relationship has functioned and if that disadvantaged our client in this case.”
The Dady attorneys also assert that Starbucks and Seattle’s Best used acts of extortion, mail and wire fraud, required under RICO violations. Among them, Starbucks fraudulently induced licensees to sign agreements by making misrepresentations and omitting facts that were vital to the success of their business.