Too much caffeine? N.S. businessman loses court case against Starbucks

A case pitting a Nova Scotia man against an international coffee giant has been grounded.

A New Glasgow, N.S., businessman has lost a small claims court case against Starbucks Coffee Canada after an unsuccessful bid to open a Starbucks location.

"Coffee is a stimulant. When one has the prospect of opening a Starbucks location, it may be especially so," begins the April 2 decision by a small claims adjudicator who heard the case last month in Pictou.

Greg Burrows "is no stranger to the fast food service industry. He and his family are long-time Subway franchisees in the Pictou County area" and "also have other food-service endeavours, both current and in negotiation," Raffi A. Balmanoukian noted.

Burrows alleged Starbucks was guilty of bad-faith dealings during negotiations involving a possible coffee shop in New Glasgow.

He sought $25,000 in damages.

Burrows testified that in August 2017, he approached the international coffee giant about opening a shop and was contacted by Brendan Hardee, Starbucks' regional business development manager.

Some preliminary paperwork was exchanged, including confidentiality and non-disclosure agreements, and an intake checklist used by Starbucks to determine whether discussions are worth pursuing.

Burrows wanted to attach a Starbucks location to his Subway restaurant on East River Road. "Starbucks was less enthusiastic about that venue," Balmanoukian noted.

By late February 2018, the Burrows Group had completed legal and accounting work as part of the preparations. A land survey also took place.

More paperwork was exchanged between the two parties including a new non-disclosure agreement and application.

Burrows testified that by March 1, 2018, his company "thought they were part of the Starbucks family."

Burrows stated: "I felt that if Starbucks felt insecure, in good faith they should have told us 'you're not part of the Starbucks family yet.'"

On May 23, 2018, Burrows and Hardee exchanged messages regarding signage and to make arrangements for a site visit.

"The bottom fell out quickly," Balmanoukian commented in his decision.

"On May 24, 2018, Mr. Hardee called Gregory Burrows to say that "corporate said no," meaning that they were not pursuing negotiations with the Burrows Group."

Before the case ended up in court, Burrows and Starbucks unsuccessfully tried to reach a settlement.

'Heard what they wanted to hear'

The small claims court refusal to order Starbucks to pay damages in the case hinged on two points.

"The Burrows Group was never presented with a draft master license agreement, and never paid the license fee (apparently, in these circumstances, $30,000)," Balmanoukian wrote.

"... the best I can say in favour of the Claimants is that they "heard what they wanted to hear" and proceeded in that fashion. Mr. Hardee admitted he could have been clearer – but he did not lie, or hold himself out as having authority that he didn't.

"At the end of the day, the Claimants knew that despite his position with Starbucks, the final say was not his, and those who did have that say had not yet signed off either figuratively or literally."