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Well folks, it’s another day, and with it comes another lawsuit. In this episode of “Ridiculous Lawsuits”, we will be taking a look at a class-action lawsuit that has been filed against Starbuck’s, seeking financial reparations for dissatisfactions with the company’s cold beverages. By now, this trend should not be surprising to anyone, however, it provides excellent context for a lesson in free market incentives.
On April 27th, 2016, an individual named Stacy Pincus, filed a class-action lawsuit against Starbucks. According to the Washington Post, Pincus (plaintiff of the suit) is arguing that “those who purchase cold beverages at Starbucks receive far less coffee than advertised”. While it is true that certain people are boorish without their coffee (myself included), I think it’s safe to say that this is another unfortunate example of our lawsuit-happy society.
Let’s examine the case. According to Ms. Pincus’ allegations, Starbucks has been using too much ice when preparing its iced-coffee beverages (ironic, I know). Pincus complains that this excessive use of ice has led customers to receive less coffee than expected. The lawsuit states: “In essence, Starbucks is advertising the size of its Cold Drink cups on its menu, rather than the amount of fluid that a customer will receive when they purchase a Cold Drink – and deceiving its customers in the process”.
Now, I will not judge Ms. Pincus on how she wishes to spend her time and her money. If the allegations are true, it would certainly illustrate poor business practices on behalf of Starbucks. However, the problem lies in the precedent that lawsuits like this create.
For example, let’s take a look at a product that most people can related to. Let’s say that I’m in the market for an iPhone and, upon doing my research, I determine that the 16 GB model will be perfect for me. I proceed to pay Apple $600 for the iPhone with the expectation that the phone will have 16 GB of available memory. Upon starting up my new phone, I realize that only 12 of the 16 GB are available for use. The reason for this being Apple has used some of the space to install its OS and default applications. Although the phone technically has 16 GB of data, am I entitled to sue Apple for false advertising?
While that example may sound ridiculous, it is a valid example of how this lawsuit could potentially be imitated in the future. Now, the purpose of this post isn’t to say that Starbucks is right and Ms. Pincus is wrong. Instead, the purpose of this post is to examine the simple, free-market approach to this situation.
In short, no one is forcing Ms. Pincus to buy coffee at Starbucks. It is safe to assume that she previously purchased coffee at Starbucks because she liked the product. Free Market principles would suggest the following solution to her current dilemma: if you are unhappy with Starbuck’s service, don’t continue to buy their product. Instead, find another coffee shop that provides the product or service you desire.
Now, I know that this mind-blowing approach will inevitably attract criticism from those who hold complete disdain for capitalism and business. Such individuals are inclined to start a lawsuit against a paper company for getting a paper cut. Nonetheless, it is true that a respectable company should stick to their word and ensure that the customer leaves happy. The question is, should we resort to lawsuits over matters like this? Or should we let the free market run its course?
If Ms. Pincus feels that she has been wronged by Starbucks, she could choose to never set foot inside a Starbucks again. She could spread the word about her dissatisfaction with Starbucks’ service which would, inevitably, result in Starbucks losing business. If the complaint against Starbucks was felt by a majority of Starbucks’ consumer base, the company would have to choose either to change their strategy or face losing profits.
As simplistic as this approach may seem, it is highly effective. Businesses in the service industry, such as Starbucks, have the goal of maximizing profit. Profit maximization is reached by selling goods and service to consumers who find value in what you have to offer. Therefore, the goal of any business should be to maximize the consumer value of their product or service. This is often done by engaging in honest business practice, being attentive to consumer needs and, above all, offering a stellar product.
While there are certainly valid claims concerning fraudulent business practices in our day in age, this lawsuit against Starbucks is not one of them. Starbucks is more than willing to remake any beverage that doesn’t meet customer expectations, as is any restaurant. Remember, the goal is to keep the customer happy and ensure that they return.
Unfortunately, our legal system has gotten out-of-hand when it comes to consumer protection. There are certainly legitimate scenarios in which consumers have been fraudulently taken or physically harmed by the actions of a company. The purpose of this post is not say their is no place for consumer protection lawsuits. I simply maintain that our current system of loose lawsuits is a waste of time and money that could be used in a more productive manner that would benefit the economy.
While I am certain that Ms. Pincus is simply a coffee enthusiast who wants to get the most for her money, it is completely ridiculous that she is dedicating time and money towards suing Starbucks over this matter. If the product doesn’t meet her expectations she can certainly choose to bring her business somewhere else. While false advertising isn’t an acceptable business practice, the snoody attitudes of the self-entitled class aren’t much better.