Kroger Broke ‘Kona’ Coffee Settlement, Farmers Claim
As seen in Law360 (November 3, 2023, 7:39 PM EDT) —
Hawaiian coffee farmers have alleged that Kroger has breached a settlement agreement to stop selling falsely labeled “Kona” coffee and urged a Washington federal judge to order the grocery chain to turn over sales records so the farmers can calculate the damages.
A class of coffee farmers in the Kona District of Hawaii said The Kroger Co. has continued to sell products labeled “Kona blend” without disclosing the percentage of Kona beans to customers, which reneges on the 2022 agreement Kroger struck with the growers, according to a motion filed Thursday in Washington federal court.
The farmers said they first discovered in November 2022 that Kroger was allegedly violating the agreed labeling requirements, and after several months, Kroger falsely claimed it had fully cured the breach, the motion said.
“After further letter exchanges, plaintiffs confirmed that not only had the issues not been resolved, but it appeared Kroger had been consistently selling falsely labeled coffee through at least its online storefronts for the entire period following execution of the settlement agreement,” the farmers said.
The coffee growers on Thursday asked U.S. District Judge Robert S. Lasnik to order Kroger to produce documents showing revenues and profits from its Kona coffee products sold in violation of the agreement.
The Hawaiian farmers need the records — which Kroger allegedly has refused to turn over — to calculate the profits and petition the court for a judgment and attorney fees and costs incurred in enforcing the settlement agreement, the motion said.
“Anything less will be insufficient to make the class members whole as they have no way of knowing the full extent of the breach or how much Kroger has profited from that breach,” the farmers said.
Under the January 2022 settlement with the farmers, Kroger agreed to label the minimum percentage of Kona coffee beans contained in Kivu Kona products and Private Selection Kona products, the coffee farmers’ motion said. Kroger had a 10-month grace period to make the label changes, the motion said.
“Given Kroger’s sophistication, there is no reason why (and no reason has ever been offered) Kroger should have had any difficulty in timely complying,” the farmers said. “Instead, Kroger admits that it failed to make the required changes to its Kivu and Private Selection product lines until months after plaintiffs discovered and notified Kroger of its noncompliance.”
On Oct. 27, Kroger accused the coffee farmers of playing a game of “gotcha” with the company rather than engaging “fairly and with an eye towards resolution and compliance,” according to a motion filed in the case. And Kroger said the farmers were seeking alleged “damages” for nonexistent breaches.
“Nonetheless, at each juncture, Kroger has quickly responded, investigated, and took action and made genuine efforts to come into compliance in the time it is permitted under the settlement agreement’s cure provision,” the company said.
Coffee farmers in the Kona region sued in 2019, claiming that only coffee harvested from Hawaii’s Big Island is actually Kona coffee. The farmers alleged 21 companies, including Kroger and Costco, marketed and sold coffee deceptively labeled as being from the Kona region in violation of the Lanham Act.
Though the suit was filed under the federal trademark statute, the Hawaiian farmers don’t claim trademark rights to the name. Instead, the lawsuit is more akin to efforts by groups of European food exporters to enforce “appellations of origin” over geographic names like Champagne.
The farmers relied on scientific testing that confirmed the coffee marketed and sold by defendants as Kona coffee contained little or no coffee grown by the Kona farmers, according to court documents.
The class has reached deals for more than $33 million from claims alleging companies sold beans and ground coffee as Kona without buying from actual Kona growers, including convenience store chain MNS Ltd.’s $12 million settlement approval in September.
Representatives for the coffee farmers and Kroger did not immediately respond Friday to requests for comment.
The coffee farmers are represented by Nathan T. Paine, Daniel T. Hagen and Joshua M. Howard of Karr Tuttle Campbell and Jason L. Lichtman, Daniel E. Seltz and Andrew Kaufman of Lieff Cabraser Heimann & Bernstein LLP.
Kroger is represented by Jaime Drozd of Davis Wright Tremaine LLP.
The case is Bruce Corker et al. v. Mulvadi Corporation et al., case number 2:19-cv-00290, in the U.S. District Court for the Western District of Washington.
–Editing by Janice Carter Brown.