The judicial battle over DEI initiation: Missouri instigates a lawsuit against Starbucks over its diversity-related initiatives
In a recent move, Missouri Attorney General Andrew Bailey, a Republican, has kicked off a fresh legal battle against the core of diversity and inclusion in corporate America. The lawsuit targets popular DEI programs, such as those used by Starbucks, to expand opportunities for underrepresented groups, including minorities and women.
Legal professionals view this lawsuit as the leading edge of an aggressive campaign to roll back DEI initiatives. They attribute this to the emboldened stance of GOP-led states, private employees, and federal agencies under Trump's administration.
Jason Schwartz, an attorney at Gibson Dunn, highlighted that this case marks one of the first "broadside attacks" against DEI programs in corporations. Starbucks, for its part, has dismissed the allegations, stating that its policies are "designed to ensure the strongest candidate for every job every time."
Missouri's suit comes amidst the dismantling of DEI efforts conducted by the Trump administration and the mounting pressure on businesses to alter or abandon their policies. Notably, Trump signed an executive order threatening federal investigations for "illegal DEI," while Attorney General Pam Bondi last week issued a memorandum promising to enforce such efforts, including criminally.
Many companies view DEI as a valuable asset for their operations, but they navigate a fine line between pursuing these initiatives and avoiding any potential conservative legal backlash. Many businesses grapple with figuring out which of their DEI programs could fall under the category of "illegal DEI," causing them to reassess their policies swiftly.
Aaron Goldstein, an attorney at Dorsey & Whitney, states that this situation is a clear reflection of the "litigation risks" that companies now face due to the Trump administration's stance against DEI. He further notes that Bondi has indicated her support for lawsuits similar to the one brought against Starbucks by Missouri.
The Suit's Argument
At the heart of Missouri's suit is the assertion that Starbucks' mentorship programs, diversity goals, and inclusion programs are mere "pretexts" for discrimination. The lawsuit alleges that Starbucks "incentivizes discriminatory quotas" by tying executive bonuses to diversity and inclusion goals and that the company has "discriminatory" programs, including employee resource groups and diversity disclosures.
Missouri also claims that Starbucks makes hiring decisions based on race rather than merit, which leads to more mistakes and higher costs for consumers. The lawsuit maintains that Missouri's residents require higher prices and longer wait times due to Starbucks' discriminatory policies.
DEI Programs on the Chopping Block
Legal experts express varying levels of skepticism regarding the lawsuit, but they anticipate companies will modify many of their DEI programs in response. Programs that fail to meet the standards of inclusivity, have numerical goals or targets, and utilize executive compensation tied to diversity targets are considered the most vulnerable, according to these experts.
However, Missouri's case is considered a stretch and may overreach its boundaries, as the lawsuit assumes that all DEI policies automatically discriminate, even if they strive to widen traditional hiring pools and are open to all employees.
As the legal landscape surrounding DEI initiatives in corporate America evolves, companies will need to revisit and potentially revise their programs to maintain compliance and avoid potential conflicts. This process will involve a balancing act between promoting diversity and inclusion while steering clear of any perceived discriminatory practices.
In response to the lawsuit, Starbucks executive bonuses could potentially be affected, as they are tied to diversity and inclusion goals. This case could set a precedent for other GOP-led states to challenge DEI programs in business, potentially leading to a significant shift in equity efforts by 2023. The lawsuit alleges that Starbucks' employee resource groups and diversity disclosures are discriminatory, accusations that the company has yet to address publicly.
