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

Canada’s Competition Bureau Launches Investigation into Loblaws and Sobeys [Op-Ed]

Sylvain Charlebois says that grocers must recognize that today's market is different, with consumers being less tolerant of practices limiting access to affordable food.

Anatomy of a Leader: Sarah Segal, CEO of DAVIDsTEA

Segal discusses her career and how she got to to where she is today, as well as a family history that includes founding a toy store in Montreal and big banners such as Le Chateau.

Apple Launches Tap to Pay on iPhone in Canada, Revolutionizing Contactless Payments for Businesses

Apple says it will allow businesses to seamlessly and securely accept payments using an iPhone and app, adding competition to the crowded payments space.

Half a Billion Dollar Downtown Ottawa Revitalization Announced to Bring Vibrancy to the Core [Feature/Interviews]

The Ottawa Board of Trade and the Canadian Urban Institute launched the initiative that will create new retail opportunities with the addition of 40,000 new residents and 50,000 jobs over 10 years, creating a more vibrant core that will be a destination.

Bayview Village to Overhaul Property with Marble Flooring and Luxe Interior, New Retailers and Restaurants Being Added [Exclusive Renderings/Interviews]

The Toronto shopping centre at Bayview and Sheppard is being transformed into something unrecognizable, creating a 'European-style' centre unlike competitors in the region.

Food Prices Dropping in Canada, Mainstream Media Fails to Report [Op-Ed]

Sylvain Charlebois says that food prices are declining according to StatCan data, but that media and the public have been focusing elsewhere.

Innovative App ‘Too Good To Go’ Rescues 4.2 Million Meals in Canada Since 2022, Plans for Expansion [Interview]

The innovative platform is looking to expand by adding more retailers, after launching two years ago by offering consumers excess end-of-day edible goods from a wide range of businesses.

New Hockey Legends Training Facility in Markham ON Elevates Player Skills with Cutting-Edge Technology [Interview]

The unique indoor training concept allows players to practice including improving shooting and stickhandling skills.

Arc’teryx Opens First ‘Alpha’ Store Concept on Bloor Street in Toronto [Photos]

The largest Arc'teryx store also focuses heavily on product care, and is located on the Mink Mile in the Holt Renfrew Centre.

Waterworks Food Hall to Open in Downtown Toronto Next Month, Showcasing 20 Gourmet Vendors in Historic Location [Interview/Photos]

The highly anticipated food hall on Richmond Street will span 55,000 square feet and will add more food and beverage competition in the downtown core with a range of hand-picked specialty vendors.

Bluenotes Launches ‘Unplug’ Activewear Shop-in-Shops in Stores Across Canada [Interview/Photos]

It's the first activewear line for the Canadian retailer, with dedicated shop-in-stores being part of a segment that is growing rapidly.

A Grocer Code of Conduct Could have Prevented Canada’s Bread Cartel [Op-Ed]

Sylvain Charlebois says that the grocer code aims to curb illegal activities that would make it tougher to orchestrate such schemes.

From Barbie to Thomas the Tank Engine: How Toy and Entertainment Brands are Adapting to Generation Alpha [Op-Ed]

A new more 'woke' generation means that toys and entertainment deemed acceptable in the past are no longer desirable to a new set of consumers.

Anatomy of a Leader: Dave Minnett, CEO of Edo Japan

Minnett discusses how his education and early years at Molson led him into different business avenues before landing at Edo in 2016, where he's implementing change.

Downtown Banff Welcomes New Mountain Warehouse Store Amidst National Expansion [Photos]

The UK-based outdoor retailer operates 43 stores in Canada, making it the second-largest market outside of the UK. The Banff Mountain Warehouse is next to a former Hudson's Bay that will see Arc'teryx open there next year.

Mandated $20/hour Living Wage Could Drive 600,000 Canadian Small Businesses to Closure, Warns CFIB Report [Interview]

CFIB policy analyst says that governments are setting these wages with no anchor in economic reality, while impacting thousands of small businesses already struggling.

Stokes Inc. Invests in Store Renovations and New Gift Line to Reinforce Market Presence [Interview]

The Canadian retailer of kitchenware, tableware, and homeware is upgrading its operations after a pandemic restructuring, including enhancing the online and in-store experience while launching new products.

How Big Food Companies Can Do More to Create Healthier Food Environments [Op-Ed]

A team of researchers wanted to understand the commitments companies have made to create healthier food environments in Canada, and to see if things had improved since an earlier 2018 study.

Canadian Custom Clothing Brand ‘Surmesur’ Expanding with New Locations, and Partnership with NHL Coaches’ Association [Interview]

The Quebec-based custom suit and clothing brand has grown significantly since the pandemic, with new and relocated showrooms and successful partnerships including making suits for NHL coaches.

Toronto’s Waterfront BIA Releases Comprehensive Report to Boost District’s Vibrancy and Retail Experience [Feature]

The report contains an overview of the planning context and best practices relevant to the area, a built-form review of existing commercial spaces, research summarizing the current retail conditions, and the results of surveys conducted with waterfront business owners, residents, and visitors.

RECENT RETAIL INSIDER VIDEOS

Advertisment

Subscribe to the Newsletter

Subscribe

* indicates required

RECENT articles

Canada’s Competition Bureau Launches Investigation into Loblaws and Sobeys [Op-Ed]

Sylvain Charlebois says that grocers must recognize that today's market is different, with consumers being less tolerant of practices limiting access to affordable food.

Anatomy of a Leader: Sarah Segal, CEO of DAVIDsTEA

Segal discusses her career and how she got to to where she is today, as well as a family history that includes founding a toy store in Montreal and big banners such as Le Chateau.

Apple Launches Tap to Pay on iPhone in Canada, Revolutionizing Contactless Payments for Businesses

Apple says it will allow businesses to seamlessly and securely accept payments using an iPhone and app, adding competition to the crowded payments space.

Half a Billion Dollar Downtown Ottawa Revitalization Announced to Bring Vibrancy to the Core [Feature/Interviews]

The Ottawa Board of Trade and the Canadian Urban Institute launched the initiative that will create new retail opportunities with the addition of 40,000 new residents and 50,000 jobs over 10 years, creating a more vibrant core that will be a destination.

Bayview Village to Overhaul Property with Marble Flooring and Luxe Interior, New Retailers and Restaurants Being Added [Exclusive Renderings/Interviews]

The Toronto shopping centre at Bayview and Sheppard is being transformed into something unrecognizable, creating a 'European-style' centre unlike competitors in the region.

Food Prices Dropping in Canada, Mainstream Media Fails to Report [Op-Ed]

Sylvain Charlebois says that food prices are declining according to StatCan data, but that media and the public have been focusing elsewhere.

Innovative App ‘Too Good To Go’ Rescues 4.2 Million Meals in Canada Since 2022, Plans for Expansion [Interview]

The innovative platform is looking to expand by adding more retailers, after launching two years ago by offering consumers excess end-of-day edible goods from a wide range of businesses.

New Hockey Legends Training Facility in Markham ON Elevates Player Skills with Cutting-Edge Technology [Interview]

The unique indoor training concept allows players to practice including improving shooting and stickhandling skills.

Arc’teryx Opens First ‘Alpha’ Store Concept on Bloor Street in Toronto [Photos]

The largest Arc'teryx store also focuses heavily on product care, and is located on the Mink Mile in the Holt Renfrew Centre.

Waterworks Food Hall to Open in Downtown Toronto Next Month, Showcasing 20 Gourmet Vendors in Historic Location [Interview/Photos]

The highly anticipated food hall on Richmond Street will span 55,000 square feet and will add more food and beverage competition in the downtown core with a range of hand-picked specialty vendors.

Bluenotes Launches ‘Unplug’ Activewear Shop-in-Shops in Stores Across Canada [Interview/Photos]

It's the first activewear line for the Canadian retailer, with dedicated shop-in-stores being part of a segment that is growing rapidly.

A Grocer Code of Conduct Could have Prevented Canada’s Bread Cartel [Op-Ed]

Sylvain Charlebois says that the grocer code aims to curb illegal activities that would make it tougher to orchestrate such schemes.

From Barbie to Thomas the Tank Engine: How Toy and Entertainment Brands are Adapting to Generation Alpha [Op-Ed]

A new more 'woke' generation means that toys and entertainment deemed acceptable in the past are no longer desirable to a new set of consumers.

Anatomy of a Leader: Dave Minnett, CEO of Edo Japan

Minnett discusses how his education and early years at Molson led him into different business avenues before landing at Edo in 2016, where he's implementing change.

Downtown Banff Welcomes New Mountain Warehouse Store Amidst National Expansion [Photos]

The UK-based outdoor retailer operates 43 stores in Canada, making it the second-largest market outside of the UK. The Banff Mountain Warehouse is next to a former Hudson's Bay that will see Arc'teryx open there next year.

Mandated $20/hour Living Wage Could Drive 600,000 Canadian Small Businesses to Closure, Warns CFIB Report [Interview]

CFIB policy analyst says that governments are setting these wages with no anchor in economic reality, while impacting thousands of small businesses already struggling.

Stokes Inc. Invests in Store Renovations and New Gift Line to Reinforce Market Presence [Interview]

The Canadian retailer of kitchenware, tableware, and homeware is upgrading its operations after a pandemic restructuring, including enhancing the online and in-store experience while launching new products.

How Big Food Companies Can Do More to Create Healthier Food Environments [Op-Ed]

A team of researchers wanted to understand the commitments companies have made to create healthier food environments in Canada, and to see if things had improved since an earlier 2018 study.

Canadian Custom Clothing Brand ‘Surmesur’ Expanding with New Locations, and Partnership with NHL Coaches’ Association [Interview]

The Quebec-based custom suit and clothing brand has grown significantly since the pandemic, with new and relocated showrooms and successful partnerships including making suits for NHL coaches.

Toronto’s Waterfront BIA Releases Comprehensive Report to Boost District’s Vibrancy and Retail Experience [Feature]

The report contains an overview of the planning context and best practices relevant to the area, a built-form review of existing commercial spaces, research summarizing the current retail conditions, and the results of surveys conducted with waterfront business owners, residents, and visitors.