Penny Stafford is trying to brew up some trouble for the world’s most powerful coffeehouse chain. And antitrust experts are watching. Stafford filed a lawsuit against Starbucks Corp. in September 2006 alleging that the company exploits its power and engages in predatory practices — such as exclusive lease agreements and “cluster bombing” of stores — to eliminate competitors.

Stafford, the owner of Belvi Coffee and Tea Exchange in Bellevue, Wash., claims the java giant forced her to close a second location inside a delicatessan after opening nearby and sending baristas to stand outside her door with free samples.

Preparing for litigation became a part-time job. Stafford worked seven days a week, sometimes for 20 hours straight. “There almost aren’t words to describe what my lifestyle was like,” she says as she rings up an early-morning latte at her original store. “It was like going through the nastiest divorce you can ever imagine, and it lasted two years.”

The lawsuit prompted anonymous phone calls and e-mails warning her to drop the case, but she waited them out. In October, the U.S. District Court in Seattle denied Starbuck’s motion for summary judgment, allowing the lawsuit to move ahead.

“It was the best thing that could have happened,” Stafford says. “We just want the right to compete — that’s all.” She can’t say much else because she signed a confidentiality agreement.

While Starbucks declined to comment on Stafford’s suit, what is clear from talking to her and others is that the company has had a global impact on coffee culture — selling a lifestyle to go with its caffe mochas and iced caramel macchiatos — since its first store, the former Starbucks Coffee, Tea and Spices, opened in Seattle’s Pike Place Market in 1971.

Named after the coffee-loving first mate in Herman Melville’s classic novel Moby Dick, Starbucks is the world’s largest coffeeshop chain. Take a look at these figures: Starbucks serves more than 40 million customers a week in 43 countries. The $9.4 billion company opened 2,571 new stores in fiscal 2007 alone — 30 percent of them in international markets — and now has more than 15,000 worldwide.

Except for a lapse in 2001, Starbucks has been consistently ranked over the past decade as one of the best companies to work for in the United States. In its most recent standings, Fortune Magazine gave it a 16th-place finish for adding 28,000 jobs globally in 2006 and paying benefits to part-time workers as long as they clock 240 hours per quarter.

The company has also won numerous awards for social responsibility, what it defines as a daily commitment to work with “partners (employees), suppliers and farmers to help create a more sustainable approach to high-quality coffee production, to help build stronger local communities, to minimize our environmental footprint and to be responsive to our customers’ health and wellness needs.”

Nevertheless, Starbucks’ stock price dropped over the last year and the company is facing increasingly stiff competition from Dunkin’ Donuts and McDonald’s, prompting Corp. Chairman Howard Schultz to announce his sudden return as chief executive Jan. 7. In an e-mail memo addressed to top executives and leaked to media insider Jim Romenesko last year, Schultz said one of the results of the company’s growth has been “a watering down of the Starbucks experience” and “stores that no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighborhood store.

“While the current state of affairs for the most part is self induced, that has lead to competitors of all kinds, small and large coffee companies, fast food operators and mom and pops, to position themselves in a way that creates awareness, trial and loyalty of people who previously have been Starbucks customers,” continued Schultz, who is credited with catapulting the chain to global prominence in the 1990s. “This must be eradicated.”

In a letter to employees that trumpeted his return as CEO and posted to the company’s website, Schultz said Starbucks would slow its U.S. growth and close underperforming locations, reignite its emotional connection with customers, restructure its leadership and continue to expand globally. “We know that we are emerging from a period in which we invested in infrastructure ahead of the growth curve,” he wrote. “We know what we need to do to win, and we will do it.”

Schultz has his work cut out for him. Starbucks has made its fair share of enemies who accuse the ubiquitous chain of hurting neighborhood businesses and, despite selling more Fair Trade coffee than any other retailer, exploiting coffee-bean-producing Third World countries. There are “Friends don’t let friends go to Starbucks” bumper stickers. Stores have been vandalized. Independent coffeehouse owners regularly post thoughts and local news about Starbucks on their websites and blogs.

“There’s a ‘Together you stand, divided you fall’ kind of mentality” among indie owners, says Jeff Coppinger, owner of Lazy Daze Coffee House in Indianapolis. He began monitoring those sites regularly about two years ago, once Starbucks tried to open a store directly across the street. A zoning issue ousted Starbucks from that location, so the chain chose another spot — three blocks away.

Coppinger wasn’t surprised. “When I was doing my business plan, I saw that Starbucks had looked here before but declined. But they’re super aggressive, man. I knew that if I came in and was successful, they would be coming soon.”

To prepare for the impending competition, Coppinger bought a credit card machine and expanded his menu to include whole coffee beans and organic teas. He went to Starbucks and introduced himself to the manager. During the Starbucks ribbon-cutting ceremony last summer, he blocked off the street and hosted a music celebration to officially welcome the chain to the neighborhood.

Fortunately, business has remained good — Coppinger says sales at Lazy Daze have actually increased since Starbucks opened. The stores even work together on community fundraisers.

Johnny Morris wanted to focus on selling coffee when he and his wife, Anne, opened Cafv© Ville Bella in Ogden, Utah, in March 2007. But when Starbucks made its neighborhood debut next door five months later, they decided to jump into the food business and showcase both local art and live music. They also hired more staff to extend their hours, staying open six hours later until 9 p.m. — same as Starbucks.

While coffee sales have gone down and another independent shut down after being unable to compete, Morris says more of his customers are coming in to eat, and Cafv© Ville Bella sells lunch to Starbucks employees every day. “We are still plugging away and just trying to do anything we can to get people in the door,” Morris says.

Meanwhile, Hagens Berman Sobol Shapiro, the Seattle law firm representing Stafford, reports that dozens of coffee purveyors in California, Illinois, Washington and other states have complaints similar to those of its client. According to news reports, Boston Coffee Exchange in Boston and Reality Coffee in Kirkland, Wash., are two examples of independent shops forced to close after Starbucks signed new leases with property owners.

But with demand for coffee higher than ever, the market is good for independents overall, according to the U.S. Small Business Administration. Its figures show that independent coffeehouses have almost doubled their numbers since 2000. Researchers at Mintel International Group, a London-based company that tracks global consumer trends, report that independents have much more freedom to cater to neighborhood clientele by offering perks such as free wireless Internet service. (Starbucks, on the other hand, has refused to drop its wireless Internet fee.)

The notion that Starbucks puts independent coffee shops out of business “isn’t merely a bit off the mark — it’s completely false,” writes Taylor Clark in “Starbucked: A Double Tall Tale of Caffeine, Commerce, and Culture.” On the contrary, he says Starbucks paved the way for coffeehouses to go upscale and charge upscale prices in the process.

It certainly hasn’t hindered Dunkin’ Donuts, which last year launched its most comprehensive media blitz since opening in 1950 — part of the New England company’s plan to add thousands of stores around the country over the next decade and reach $10 billion in sales by 2010. With its current advertising campaign pushing the idea that coffee is fuel, Dunkin’ Donuts is echoing the message that the beverage is a lifestyle. “I gotta tell ya, I was shocked at how good it was,” says Richard Dunston, an Angie’s List member and independent contractor from Columbus, Ohio, referring to his first taste of Dunkin’ Donuts coffee a few months ago.

McDonald’s is also jumping into the coffee-drink business. On the same day that Schultz announced his return as CEO, the fast-food giant rolled out its plans to expand the beverage lineup at its U.S. restaurants with cappuccinos, lattes and other drinks. Of the competition, Starbucks spokeswoman Bridget Baker simply says: “We’re focused on continuing to provide the coffee expertise and welcoming experience that customers can get nowhere else.”

Julie Reisman has come to terms with being in the corporate giant’s shadow. When Starbucks moved across the street from the tiny, independent Glo’s in the mid-’90s, the former owner of the Seattle eatery fought back with an outdoor sign advertising $1 coffee with the slogan “Always the best.” These days, co-owner and manager Reisman describes the relationship between the two businesses as “a co-exist peacefully thing.”

“I don’t necessary like looking at it out my window, but it’s kind of nice having that juxtaposition between this tiny mom-and-pop hole-in-the-wall across the street from the corporate mongrel,” says Reisman, who still sells coffee for a buck.

After a short pause, she adds, “It’s not that bad – I do own some Starbucks stock. A good investment is a good investment.”

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