Tag: Styx

Of Styx, Starbucks and A Drink Is Not A Beverage (??)

I remember being frantic one weeknight in the Fall of 1978. In a good way. My dad had picked me up from grade school (St. Thomas Aquinas – East Wichita, KS) in his Ice Blue Monte Carlo and together we trekked to David’s, the long shuttered department store in Wichita’s Parklane shopping mall. (I still recall the store’s ultra-catchy “D! A-V-I-D! Apostrophe S! – Come on into David’s!” ad jingle saturating local radio and television at the time.)

Nearing David’s and nearly hyperventilating with excitement, I was on the verge of buying my very first record album. Over the next few decades, I would accumulate well over a thousand records, cassettes, CDs and .mp3 singles. But Styx’s Pieces of Eight – the “Blue Collar Man” album, was my first record buy. And I do remember the event (to me it was an event given my life-long love of rock music and its history) like it was yesterday: the album’s plastic packaging, its glossy texture, the lemony smells of the store. All of it.

I had been on a mission to buy PoE ever since I heard “Renegade” on a Fourth Grade classmate’s K-Tel 8-track tape (showing my age alert!) a few weeks prior. The song was sandwiched between Amy Stewart’s “Knock on Wood” cover and Kansas’ “Point of No Return.” (That’s how much I listened to “Renegade” on my friend’s 8-track machine – I still remember – almost forty years later – the songs that both preceded and followed it with the same vividness as the song itself.)

PoE did not disappoint. Besides the mighty “Renegade,” some other choice PoE cuts include “Queen of Spades”, “Great White Hope,” and the title track. The aforementioned “Blue Collar Man,” still a rock radio staple and one of the most prominent in the Styx catalog, is yet another of PoE’s high-octane offerings. And so Styx became my favorite band. And I wore PoE out; listening to it on all days and at all hours.

Fast forward to the early 1980s and I was introduced to heavier fare like Maiden, Priest and Dio. My interest in Styx waned. I suspected, and peer pressure confirmed, that the band just wasn’t metal enough. A year or two later a classmate’s older brother played Into the Void’s  menacing, atonal intro and I was hooked. Black Sabbath would become my all-time metal gods. Styx and bands like it were relegated to afterthought status.

But not before 1981’s Paradise Theater and one of its top tracks, “Too Much Time on My Hands” burst into the pop music consciousness. An FM stalwart and iconic Early MTV offering, the song’s vaguely disco-tinged beat and electro-hand claps still trigger nostalgia pangs. I remember roller skating (!!) to the song at Skate East and Traxx – two venerable Wichita roller skating venues that long ago succumbed to the wrecking ball and internal detonations.

In the song, Tommy Shaw, the diminutive lead guitarist and Alabaman (I think), laments the perils of idle time and fair-weather compadres (“I got! dozens of friends and the fun never ends, that is as long as I’m buying…”) and even sprinkles in an incongruous Commander-in-Chief aspiration. (“Is it any wonder I’m not the President?“) So memorable is Too Much‘s video that even Jimmy Fallon, erstwhile SNL castmember and current Tonight Show host, gushed over it and did a verbatim sendup of the song with actor Paul “I Love You Man” Rudd.

I mention all this because today’s featured case – Forouzesh v. Starbucks Corp., (unfairly or not) reminds me of someone who clearly had…..tick tick tick (you guessed it)…. too much time on his hands.

The plaintiff, on his own and on behalf of all California residents who purchased a Starbucks cold drink in the past decade, sued the Seattle coffee titan for systemic fraud. He claimed Starbucks misrepresented the amount of fluid ounces in its cold drink offerings. Specifically, he claimed the coffee giant lied on its on-line menu about the amount of liquid in its drinks by underfilling its cups and adding ice to make the cups appear full. The plaintiff brought various common law and statutory fraud and breach of warranty claims in his lawsuit.

The California District Court dismissed the suit on Starbucks’ Rule 12(b)(6) motion. The Court noted that under Rule 8(a), a complaint must give a defendant fair notice of what a claim is and its basis. The complaint must meet a “plausibility standard” in which a complaint’s factual allegations are enough to raise a right to relief above the speculative level. A plaintiff must do more than simply allege labels, conclusions and a “formulaic recitation” of the elements of a given cause of action.

An action for fraud is subject to a more exacting pleading standard. Rule 9(b) requires a fraud plaintiff to allege underlying fraud facts with sharper specificity, including the time, place, persons involved, and content of the false statement.

Rejecting the plaintiff’s statutory consumer fraud and unfair competition claims, the Court found that a “reasonable consumer” would not likely be deceived by Starbucks’ website description of its cold drink measurements. Indeed, the Court held “but as young children learn, they can increase the amount of beverage they receive if they order “no ice.” Ouch?

And since young children could figure out that more ice means less liquid, the Court concluded that a reasonable consumer would not be deceived by Starbucks’ stated fluid ounce stats. Added support for the Court’s holding lay in the fact that Starbucks’ cold drink containers are clear. A consumer can clearly see that a given drink consists of both ice and liquid. If a consumer wants more liquid, he can simply order with “no ice.”

The Court’s finding of no deception also doomed the plaintiff’s common law fraud claims. It held that since a reasonable consumer would comprehend that Starbucks’ cold drinks contain both ice and liquid, the plaintiff could not establish either a misrepresentation by Starbucks or plaintiff’s justifiable reliance on it – two required fraud elements.

Lastly, the Court rejected the plaintiff’s state law breach of warranty claims. The Court found that Starbucks did not specifically state that its cold drinks contained a specific amount of liquid. All the coffee maker said – via its web page – was that it offered cold drinks for sale in various cup sizes (12 oz – Tall; 16 oz. – Grande, 24 oz. – Venti). Absent any specific allegations that Starbucks expressly or impliedly warranted that its cold drinks contained a specific amount of liquid, the plaintiff couldn’t make out a valid breach of warranty claim.

Afterwords: The plaintiffs’ failed fraud suit against Starbucks illustrates that while Federal pleading standards normally more relaxed than their State court counterparts, this isn’t so with fraud claims.

The plaintiff’s failure to pin a specific misstatement concerning Starbucks’ cold drink contents doomed his claims. The court also gives teeth to the reasonable consumer standard that applies to state law consumer protection statutes. Since the plaintiff was unable to show a reasonable consumer would have been deceived by Starbucks’ published cold drink measurements, the plaintiff’s unfair competition and consumer fraud actions failed.

Oh, and to bring things full-circle, I suppose I should report that neither Renegade norBlue Collar Man nor Too Much Time on My Hands is my favorite Styx tune. That honor goes to “Castle Walls” – the second or third song on Side 2 of 1977’s Grand Illusion album. Give it a listen. It’ll definitely cure what ails ya.

Partnership’s Incorporation Insulates Partners From Personal Contractual Liability

Today’s post features the case law equivalent of a Deep Cut.  The Deep Cut – as musical buzz-phrase and phenomenon – appears to be gaining traction in the FM radio realm.

The moniker denotes an obscure song from a well-known artist that’s not normally associated with the artist.

For example, a Styx fan likely connects that band with radio staples “Babe” or “Renegade”; instead of their lesser-known cuts “Queen of Spades” or “Castle Walls.”

“Hair metal” fans might associate Guns N’ Roses with its FM stalwarts like “Welcome to the Jungle” or “Sweet Child O’ Mine” instead of its more remote offerings, “One in a Million” or “Coma.”

Jensen Sound Laboratories v. Long, 113 Ill.App.3d 331 (4th Dist. 1983)  is “deep” in the sense that it’s both dated (1983) and geographically remote (4th District).  But the case is still post-worthy because its salient issue  – corporate vs. personal contractual liability – continues to recur in my practice.

The plaintiff creditor sued the defendants – a husband and wife who were also officers of a defunct corporation – for breach of contract after the corporation dissolved.  The defendants had previously operated a partnership before incorporating under a similar sounding name.

The plaintiff had done business with the partnership under an open-end credit agreement where the plaintiff would provide services to the partnership and then submit invoices to it.  After the defendants dissolved the partnership and began operating as a corporation, they continued ordering services from the plaintiff and would pay with checks bearing the corporate name.

Defendants never formally notified plaintiff of the incorporation and plaintiff never asked why a corporate entity was paying plaintiff’s invoices.

When the corporation dissolved, plaintiff sued the individual defendants for past-due invoices.  After a bench trial, the court ruled in favor of the defendants and found that plaintiff’s remedy was against the defunct corporation; not the individual defendants.

Held: Affirmed.

Why?

Normally, a partnership must give creditors notice of the partnership’s dissolution in order to relieve the partners of personal liability for debts incurred in the partnership’s name.

But where a partnership morphs into a corporation, the (former) partnership is no longer liable for partnership debts unless the partnership continues to deal with third parties in the same manner as before and fails to give notice of the partnership’s dissolution or change in form.

The critical fact relied on by the court was that the plaintiff received corporate checks for almost two years before it sued the individual defendants.

Since there was no evidence that the defendants continued to deal with the plaintiff as a partnership once the defendants incorporated, the trial court correctly found that the plaintiff was (or should have been) on notice of the change in business form.

Take-aways:

1/ where a business entity changes forms (e.g. partnership to a corporation), the members of that entity should notify creditors to possible personal liability to those creditors.

2/ Where someone fails to notify creditors of a change in business form, he can still avoid personal liability if the parties’ course of conduct demonstrates that the creditor was objectively put on notice of the structural change.

3/  A lengthy time span of receiving payment via corporate checks without objection can be viewed as constructive notice of a business entity change.