Starbucks Corp. was sued by T-Mobile USA Inc. for allegedly breaching a contract by allowing AT&T Inc. to supply in-store customers with free wireless fidelity Internet access using T-Mobile's lines and equipment.
T-Mobile, which said it agreed to provide Wi-Fi service at Starbucks in 2002, accused the largest U.S. coffee chain of "secretly" developing a plan to let AT&T to provide free Internet service at more than 7,000 U.S. Starbucks stores.
T-Mobile said it's bearing the cost and burden of the "free" Wi-Fi service offer, because it provided equipment and technology at "thousands" of Starbucks stores in the U.S.
"The conduct of Starbucks has caused T-Mobile monetary damages and such damages will continue should Starbucks continue its breaching conduct," T-Mobile said in its complaint. The company alleges breach of contract, interference and unfair competition.
Starbucks's deal with AT&T violates a transition agreement that gave T-Mobile exclusive rights to market and sell Wi-Fi Internet access at Starbucks stores until Jan. 4, 2009, T-Mobile said in the lawsuit, filed June 5 in New York State Supreme Court in Manhattan.
The agreement gave AT&T and Starbucks "limited rights" to promote the transition of Wi-Fi service providers. T-Mobile said only two markets, San Antonio and Bakersfield, California, have fully converted from T-Mobile to AT&T, the biggest U.S. phone company.
T-Mobile said Starbucks gives free Wi-Fi service using T-Mobile's equipment and lines to anyone with a Starbucks Internet Card, which causes "risks of spikes in usage, drains on that network and T-Mobile's resources and therefore causes delays, frustrations and other harm to all users of T-Mobile's network."
The provider seeks unspecified damages, legal fees and an order preventing Starbucks from breaching the transition agreement.
"Our goal is to ensure Wi-Fi access at all Starbucks locations, a benefit offered to our Starbucks Card Rewards members as well as AT&T subscribers, and steps are being taken to ensure that this access continues," Valerie O'Neil, a spokeswoman for Starbucks, said in a telephone interview.
Sarah Illingworth, a spokeswoman for AT&T said, "We don't comment on litigation involving other companies."
Bradley Ruskin, of Proskauer Rose law firm, who is representing T-Mobile, didn't return a voice-mail message seeking comment.
The case is T-Mobile USA, Inc. v. Starbucks Corporation, 601702/2008, New York State Supreme Court (Manhattan).