Simon Property Group in unusual legal move against Starbucks

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Simon Property Group in unusual legal move against Starbucks

08/29/2017

The nation's largest shopping center operator is suing Starbucks Corp. over its plan to shutter the retailer's 78 Teavana stores in Simon malls.



In a lawsuit filed Aug. 21, Simon Property Group said that Starbucks is breaching its leases by closing the Teavana stores and “shirking its contractual obligations at the expense of Simon’s shopping centers and the dozens of communities they serve and support,” reported the Indianapolis Business Journal.



Simon is seeking temporary and permanent injunctions preventing Starbucks from closing the stores, the report said. The coffee giant announced in July that it planned to shutter all of its 379 Teavana stores during the next 12 months amid declining mall traffic.



Similar to other mall operators, Simon has experienced its fair share of store closings in recent years. But in its lawsuit, Simon noted those shutterings were due to "financial distress."



“Those retailers, at least, claimed closure was necessary to avoid bankruptcy, and that staying open and fulfilling their leases would cause them financial ruin,” Simon said in the suit, according to the report. “That obviously is not the case with Starbucks, which is one of the largest and most recognized companies in the world.”



Teavana is not losing money, Simon claims in its suit. Rather, it is not growing fast enough to fit into Starbucks’ business strategy.



“Starbucks’ decision to close its Teavana stores is simply an effort to further increase its economic gains at the expense of others,” Simon said. “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. Instead, Starbucks simply believes it can make more money if it violates the leases than if it honored its contractual promises and obligations.”



In the suit, Simon said Teavana stores are “a valuable contribution to the synergistic mix of tenants” in Simon malls.

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To read the full Indianapolis Business Journal story, click here.