Starbucks Sued After Implementing Eric Holder’s Diversity Recommendations

The Seattle-based coffee powerhouse Starbucks hired former Biden administration Attorney General Eric Holder to conduct a civil rights audit after the death of George Floyd.

The decision occurred years before the widespread implementation of diversity, equity and inclusion (DEI) initiatives in the workplace. It was deemed necessary after a Starbucks manager called the police on two Black men who allegedly refused to leave a Philadelphia store after not buying anything.

Amid an intense public relations backlash, the fast-food chain announced a “multiphase effort” to promote diversity, equity and inclusion.

The effort included a so-called civil rights audit conducted by Washington, D.C. law firm Covington & Burling and led by Holder, a senior counsel at the firm.

But the expensive consultation lead to an unexpected backlash, as The Washington Free Beacon reports:

Holder—who has charged as much as $2,295 an hour for such work—issued a final report in 2021 that outlined the steps Starbucks had taken to promote “equity.” They included tying executive pay to diversity targets, setting spending goals for “diverse suppliers,” and launching a mentorship program for “BIPOC” employees, which Holder pressed the company to expand. Each initiative, he wrote, demonstrated the coffee maker's “commitment to civil rights and equal treatment.”

But one year later, Starbucks was fending off a civil rights lawsuit over precisely the programs Holder had blessed. The lawsuit, which is still ongoing and was filed last August by the National Center for Public Policy Research, a conservative nonprofit that is also a Starbucks shareholder, argued that the programs violate non-discrimination laws as well as the company's fiduciary duties. Such claims may have come as a surprise to Starbucks executives: At no point did Holder's report address the legality of the policies at issue.

When a law firm's “civil rights” advice gets its client sued for race discrimination, one might expect the firm to dispense less of that advice, or at least to warn other clients about the risk of taking it. But Covington, which represents some of the largest companies in the world, did neither.

Through its “racial equity audit” practice, the firm continued rubber stamping race-based initiatives for its clients, including BlackRock, Citigroup, and Verizon. Such practices have become common in recent years as c-suites, often under shareholder pressure, seek third-party validation of their diversity efforts, something top law firms have been more than happy to provide.

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