A lawsuit filed by a man who alleges Starbucks Corp. in 2019 wrongfully denied him a $1.70 cash redemption for the balance on his gift card at one of its West Hollywood stores was put on hold by a judge Wednesday due to a dispute over whether the matter should be resolved in arbitration.
Robert Paskey brought the suit in Los Angeles Superior Court lawsuit on March 12, 2020, seeking compensatory and punitive damages as well as a court order that Starbucks provide cash redemptions for gift cards having a balance of less than $10.
Paskey, 36, also sought class-action status for his suit. His court papers state that the number of Starbucks gift cards in circulation with balances less than $10 is “quite large.”
Starbucks attorneys on Oct. 30 filed a motion to compel arbitration, saying he agreed to resolve any disputes in that manner when he used the gift card. Judge Yvette M. Palazuelos heard arguments, briefly took the case under submission and then put a stay on Paskey’s case.
“The arbitrator must decide whether the arbitration agreement is enforceable and whether this dispute is covered by the arbitration agreement,” according to a minute order by the judge.
Paskey went to the Starbucks on Santa Monica Boulevard at Robertson Boulevard on Dec. 26, 2019, and a clerk denied him his request for the $1.70 cash redemption on his gift card, telling him the sales software system did not provide for cash redemptions on card balances of less than $10, the suit states.
Other Starbucks stores in California have the same practice and the writing on the back of the company’s cards states that gift cards are not redeemable for cash “unless otherwise required by law,” the suit states.
“But no relevant laws are identified informing consumers that gift cards with balances of less than $10 are, in fact, redeemable for cash in California,” according to the plaintiff.
The Starbucks website states that cash redemptions for cards with less than a $10 balance can be obtained online, but a request must be made and a wait of seven to 10 days is required, according to the suit, which alleges the policy is not posted in stores or on the back of gift cards so as to better inform patrons.
In a sworn declaration, Paskey says the gift card was given to him as a present by a third party. He further says he did not read the information on the back of the card or visit the Starbucks website.
“I was not aware of any arbitration agreement … in connection with my receipt and use of the gift card,” Paskey says.
Consumers should not have to undertake “independent online research projects” to determine their rights regarding Starbucks gift cards, according to his suit.
The online cash redemption policy was implemented by Starbucks last September, a month after the expiration of a 2009 injunction issued by a Shasta County judge mandating that customers be permitted to obtain card cash balances of less than $10 in stores and that a notice of their rights be conspicuously posted at the locations, the suit says.
“It therefore appears that Starbucks will not comply with (the state Civil Code) unless explicitly required to do so by court order…,” the suit states.