Cadillac Fairview Sues Starbucks Over Teavana Closures

Date:

Share post:

On Friday September 15, landlord Cadillac Fairview filed a lawsuit against Starbucks for breach of contract in the Ontario Superior Court of Justice. The lawsuit claims that Starbucks is in breach of contract by taking steps to shutter its Teavana concept locations in 10 of Cadillac Fairview’s shopping centre properties. 

Starbucks announced on July 27 of this year that it would shutter its tea concept Teavana stores, which has 379 locations globally, including 56 stores in Canada. Starbucks said that it would close its Canadian locations first, all by the end of September.  

Cadillac Fairview is seeking several remedies as part of its claim, including $15 million in damages for breach of contract, as well as a further $5 million in punitive damages for Starbucks’ “improper”, “in bad faith” and “high handed” conduct. In addition, Cadillac Fairview is seeking costs of the proceeding on a full indemnity basis. 

A Cadillac Fairview spokesperson stated: “We can confirm that we have filed a statement of claim against Starbucks, owners of Teavana, for failure to comply with operating covenants within our lease agreements (Starbucks publicly announced their intention to close all Teavana stores and have depleted their inventories)”, going on to say, “We have filed this claim as we want our tenant to honour the operating covenants in their lease agreement and if they do not, we will exercise the lawful remedies outlined in the lease to address these defaults.” 

In the Statement of Claim, Cadillac Fairview alleges that Starbucks’ closure of Teavana is “in direct and flagrant breach of its express lease obligations governing the stores,” going on to say that “the express terms of the store leases to which Starbucks agreed required it, at all times throughout the term of the leases, to continuously and actively operate the stores, fully fixtured, stocked and staffed”. 

The Statement of Claim alleges that in the Teavana leases, Starbucks agreed that it “would at no time during the term of the leases close any of the stores”. The Statement of Claim, filed by law firm Torys LLP, notes that Starbucks had previously announced that it was investing in the growth of the Teavana brand, and that it was a “well recognized, super-premium global brand” and that tea had become a core focus for Starbucks, which is particularly known for its coffee beverages. 

The lawsuit further states that prior to Starbucks’ July 27 announcement, Cadillac Fairview was given no advance warning of the Teavana store closures, nor did Starbucks seek consent or agreement for the closures. Post-announcement, Cadillac Fairview even warned Starbucks of its duty to keep Teavana’s stores open, says the Statement of Claim. 

Starbucks Canada acquired Teavana Canada in January of 2013, and merged Teavana into Starbucks in March of 2016. Starbucks assumed the rights and obligations of the Teavana leases, including those at 10 Cadillac Fairview properties — five are in Ontario (Toronto: CF Toronto Eaton Centre, CF Shops at Don Mills, CF Markville, CF Fairview Mall, and Kitchener: CF Fairview Park), two are in Calgary (CF Chinook Centre and CF Market Mall), one is in suburban Vancouver (CF Richmond Centre), one is in Winnipeg (CF Polo Park) and one is in suburban Montreal (CF Carrefour Laval). 

Of these 10 Teavana locations, leases expire between December 31, 2019 to September 30, 2024. Starbucks is now in the process of liquidating its Teavana locations in Canada, despite warnings from Cadillac Fairview of its continued lease obligations.

The lawsuit speaks to the importance of having a diverse tenant mix in shopping centres, and how losing Teavana will lead to negative consequences. “Retail shopping centres… depend for their success on having a certain synergistic mix of retail tenants operating in them, and on the tenants complying with their obligations to properly operate their stores throughout the term of their leases. If a tenant fails to do so, it has negative consequences for the shopping centre owners/operators and other tenants, as well as the public who shop at the centres,” states the Statement of Claim. 

The lawsuit points out that there is evidence that Starbucks plans to continue retailing Teavana tea in its Starbucks-branded locations and other sales channels. The lawsuit also alleges that Starbucks hid its intention to shutter Teavana from Cadillac Fairview, which found out about the news through a public media announcement.  

Starbucks has 20 days from the date of Cadillac Fairview’s Statement of Claim to file a Statement of Defence, and it will be interesting to see on what grounds Starbucks might claim that it has justification to terminate its Teavana leases in Canada. Cadillac Fairview’s argument is extremely convincing, clearly setting out aspects of Starbucks’ alleged breach of contract. 

Such a lawsuit also isn’t unprecedented — in the United States, landlord Simon Property Group filed a lawsuit against Starbucks on August 21 of this year. Simon’s malls house 78 Teavana locations and in the Simon lawsuit, the landlord states that Starbucks “put its stock price above its contractual obligations, the viability of Simon and its shopping centres, other retailers, and consumers who count on the Teavana stores”. Simon is seeking damages, as well as an injunction, to stop Starbucks from closing its Teavana stores early. 

2 COMMENTS

  1. CF really shouldn’t be all that surprised. Teavana seemed doomed from the start. The stores looked like relics from the 80’s – poorly lit and uninviting. How Starbucks got this so wrong is anyone’s guess – all they had to do was copy David’s Tea.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

More From Retail Insider

Bloor Street Luxury Run in Toronto Adds Saint Laurent Flagship as Area Transforms 

Saint Laurent’s substantial Toronto flagship features a brutalist concrete facade, and is the latest luxury brand to open a large storefront on the former ‘Mink Mile’. 

Montreal’s Le Groupe Brande Thrives with Lightspeed Capital: A Case Study in Expansion and Efficiency

Le Groupe Brande is leveraging Lightspeed Capital and its merchant cash advance system to fuel expansion plans, while also allowing the retailer to streamline operations, cut costs and experience significant efficiency gains.

Disposable Income Spent on Food by Canadians Varies by Provincial Tax Rates [Op-Ed]

Sylvain Charlebois says that there's a noteworthy correlation to food spending in Canada and the tax rates levied upon their earnings.

Royalmount in Montreal Announces Major Retail Tenants and Food Hall Ahead of August 2024 Grand Opening [Interview]

The highly anticipated development will include a mix of luxury brands and other retailers, foodservice businesses, and entertainment unlike anything that Montreal has seen.

Home Société Group Expands Ontario Footprint with Opening of 1st Standalone MUST Stores in Toronto and Mississauga [Interview/Photos]

The Quebec-based home furnishings retailer says it plans to open stores across the country after launching its MUST nameplate in Ontario this month.

Lower Income Households in Canada Struggling to Afford Groceries Despite Increased Trudeau Government Spending [Op-ed]

Sylvain Charlebois discusses a concerning trend showing lower-income Canadians are going hungry as food prices rise.

Apple and Alo Yoga to Open Flagship Stores at Ste-Catherine and De la Montagne Intersection in Montreal 

The brands will anchor a key corner in the downtown core that is also anchored by Holt Renfrew Ogilvy, spelling confidence in downtown ahead of the opening of Royalmount in August. 

Anatomy of a Leader: Shashi Behl, Founder of Joydrop

She discusses her career as an entrepreneur over the years, and how she founded the unique jewellery brand Joydrop which has seen commercial success.

Canadian Consumer Report by Adyen Reveals Key Insights on Shopping Trends, Payment Preferences, and Technological Advancements [Interview/Feature]

With trends like buy now, pay later options, demand for faster checkouts, and the influence of social media on purchasing, retailers must adapt to meet evolving consumer expectations says the study.

SUKOSHI MART Opens Its Largest Store Yet, Elevating the Asian Beauty and Lifestyle Shopping Experience

The Asian beauty and lifestyle retailer has been expanding across Ontario, and has entered the Ottawa market with its first store.

Toronto-Based Brasa Peruvian Kitchen Targets New York City as it Plans Canadian and US Expansion

The concept began in 2021 as a ghost kitchen, followed by physical locations. The now popular chain is planning to open about 100 locations on the continent.

Yorkdale Shopping Centre in Toronto Blows Other Canadian Malls Out of the Water in ICSC Productivity Rankings 

The centre is nearly $1,000 higher than the next shopping centre ranked in terms of sales per square foot, with a VP attributing it to the mall’s location, tenant mix and overall operations. 

Calgary Retail Leasing Market Thrives Amid High Demand and Diminishing Supply: JLL Report

Population growth and a positive outlook for the oil industry are supporting long-term prospects, according to the report.

Spanish Luxury Brand Loewe Enters Canada with 1st Standalone Store at Toronto’s Yorkdale Shopping Centre [Photos] 

The brand entered Canada through Nordstrom several years ago, and is now expanding in a big way with its first flagship storefront carrying Loewe’s entire product assortment. 

Upscale Vancouver-Based Sushi Restaurant Chain ‘Hello Nori’ Unveils Ambitious Global Expansion Plans [Interview]

The company has plans on expanding throughout Canada and into global markets with its popular hand-rolled sushi in elevated dining spaces.

Peavey Mart Spearheads Retail Revamp of Stores Across Canada while Launching Media Network 2nd Phase [Interview]

The Canadian farm and ranch retailer is focusing on updating stores across the country this year, while expanding its first-in-Canada retail media platform which includes digital radio and ads.

Innovative Direct-to-Consumer Furniture Startup CouchHaus Opens 1st Physical Retail Space in Vancouver [Interview]

The husband-wife team's modular furniture became so popular online that they are opening their own physical store, allowing customers to see the product-in person.

Canadians Look to Make Major Purchases in 2024 Despite Economic Uncertainty: Survey

Economic uncertainty isn't stopping Canadians from planning major purchases in 2024 according to a study, potentially giving retail a boost depending on the demographic.

Canada’s Agri-Food Sector Lacks Vision as Consumers Struggle with Grocery Prices [Op-Ed]

Canada's lack of cohesive vision and strategy for its agri-food sector, despite significant budget allocations, is stark contrast to the decisive approach evident in U.S. agricultural policy says Sylvain Charlebois.

Flexible Work Company ‘LAUFT’ Discusses Expansion Plans and New Government Collaboration [Interview]

Founder Graham Wong discusses the Canadian company's plans for new locations, enhanced spaces for events and content creation, and a future in places such as airports and hotels.

RECENT RETAIL INSIDER VIDEOS

Advertisment

Subscribe to the Newsletter

Subscribe

* indicates required

RECENT articles

Bloor Street Luxury Run in Toronto Adds Saint Laurent Flagship as Area Transforms 

Saint Laurent’s substantial Toronto flagship features a brutalist concrete facade, and is the latest luxury brand to open a large storefront on the former ‘Mink Mile’. 

Montreal’s Le Groupe Brande Thrives with Lightspeed Capital: A Case Study in Expansion and Efficiency

Le Groupe Brande is leveraging Lightspeed Capital and its merchant cash advance system to fuel expansion plans, while also allowing the retailer to streamline operations, cut costs and experience significant efficiency gains.

Disposable Income Spent on Food by Canadians Varies by Provincial Tax Rates [Op-Ed]

Sylvain Charlebois says that there's a noteworthy correlation to food spending in Canada and the tax rates levied upon their earnings.

Royalmount in Montreal Announces Major Retail Tenants and Food Hall Ahead of August 2024 Grand Opening [Interview]

The highly anticipated development will include a mix of luxury brands and other retailers, foodservice businesses, and entertainment unlike anything that Montreal has seen.

Home Société Group Expands Ontario Footprint with Opening of 1st Standalone MUST Stores in Toronto and Mississauga [Interview/Photos]

The Quebec-based home furnishings retailer says it plans to open stores across the country after launching its MUST nameplate in Ontario this month.

Lower Income Households in Canada Struggling to Afford Groceries Despite Increased Trudeau Government Spending [Op-ed]

Sylvain Charlebois discusses a concerning trend showing lower-income Canadians are going hungry as food prices rise.

Apple and Alo Yoga to Open Flagship Stores at Ste-Catherine and De la Montagne Intersection in Montreal 

The brands will anchor a key corner in the downtown core that is also anchored by Holt Renfrew Ogilvy, spelling confidence in downtown ahead of the opening of Royalmount in August. 

Anatomy of a Leader: Shashi Behl, Founder of Joydrop

She discusses her career as an entrepreneur over the years, and how she founded the unique jewellery brand Joydrop which has seen commercial success.

Canadian Consumer Report by Adyen Reveals Key Insights on Shopping Trends, Payment Preferences, and Technological Advancements [Interview/Feature]

With trends like buy now, pay later options, demand for faster checkouts, and the influence of social media on purchasing, retailers must adapt to meet evolving consumer expectations says the study.

SUKOSHI MART Opens Its Largest Store Yet, Elevating the Asian Beauty and Lifestyle Shopping Experience

The Asian beauty and lifestyle retailer has been expanding across Ontario, and has entered the Ottawa market with its first store.

Toronto-Based Brasa Peruvian Kitchen Targets New York City as it Plans Canadian and US Expansion

The concept began in 2021 as a ghost kitchen, followed by physical locations. The now popular chain is planning to open about 100 locations on the continent.

Yorkdale Shopping Centre in Toronto Blows Other Canadian Malls Out of the Water in ICSC Productivity Rankings 

The centre is nearly $1,000 higher than the next shopping centre ranked in terms of sales per square foot, with a VP attributing it to the mall’s location, tenant mix and overall operations. 

Calgary Retail Leasing Market Thrives Amid High Demand and Diminishing Supply: JLL Report

Population growth and a positive outlook for the oil industry are supporting long-term prospects, according to the report.

Spanish Luxury Brand Loewe Enters Canada with 1st Standalone Store at Toronto’s Yorkdale Shopping Centre [Photos] 

The brand entered Canada through Nordstrom several years ago, and is now expanding in a big way with its first flagship storefront carrying Loewe’s entire product assortment. 

Upscale Vancouver-Based Sushi Restaurant Chain ‘Hello Nori’ Unveils Ambitious Global Expansion Plans [Interview]

The company has plans on expanding throughout Canada and into global markets with its popular hand-rolled sushi in elevated dining spaces.

Peavey Mart Spearheads Retail Revamp of Stores Across Canada while Launching Media Network 2nd Phase [Interview]

The Canadian farm and ranch retailer is focusing on updating stores across the country this year, while expanding its first-in-Canada retail media platform which includes digital radio and ads.

Innovative Direct-to-Consumer Furniture Startup CouchHaus Opens 1st Physical Retail Space in Vancouver [Interview]

The husband-wife team's modular furniture became so popular online that they are opening their own physical store, allowing customers to see the product-in person.

Canadians Look to Make Major Purchases in 2024 Despite Economic Uncertainty: Survey

Economic uncertainty isn't stopping Canadians from planning major purchases in 2024 according to a study, potentially giving retail a boost depending on the demographic.

Canada’s Agri-Food Sector Lacks Vision as Consumers Struggle with Grocery Prices [Op-Ed]

Canada's lack of cohesive vision and strategy for its agri-food sector, despite significant budget allocations, is stark contrast to the decisive approach evident in U.S. agricultural policy says Sylvain Charlebois.

Flexible Work Company ‘LAUFT’ Discusses Expansion Plans and New Government Collaboration [Interview]

Founder Graham Wong discusses the Canadian company's plans for new locations, enhanced spaces for events and content creation, and a future in places such as airports and hotels.