Kona Coffee False Advertising Settlements Continue
As we reported in 2019, a group of 600 Hawaiian coffee farmers sued a group of coffee sellers, including Walmart, Costco, Amazon, Safeway, Kroger, Cost Plus/World Market, and Bed Bath & Beyond for falsely advertising coffee as “Kona” that did not originate in the Kona region of Hawaii in violation of the Lanham Act. A sister class action was filed by consumers against the same coffee sellers under the same facts, alleging breaches of implied and express warranties, Common Law fraud and intentional misrepresentation. Both complaints centered on the allegation that true Kona-grown coffee is a premium product sought out by consumers for its distinct flavor profile.
While the consumer-brought case was voluntarily dismissed without prejudice in May 2019, the farmer-brought suit has reached settlement agreements with the defendants. Most recently, Costco, Marshalls, and Gold Coffee Roasters reached an agreement on March 9, 2021, approved by the U.S. District Court for the Western District of Washington. In addition to monetary compensation and attorney fees from some sellers, the settlement requires the defendant coffee sellers to follow new labeling guidelines and require vendors to go through a certification process when labeling their coffee as originating in the Kona region. The requirements would bring the sellers into compliance with Hawaii’s strict labeling laws specific to Hawaiian-grown coffee. Earlier this year, the same court approved preliminary settlements with other defendants totaling over $7 million.
Kona coffee has been at the center of other claims, most of which have also avoided trial. A March 2019 suit filed against L & K Coffee Co. alleged the defendant’s Magnum Exotics Kona Blend Coffee product could not be characterized as “Kona” because it did not contain enough Kona coffee (the suit was later voluntarily dismissed with prejudice for undisclosed reasons). An April 2020 suit filed against Hawaiian Isles Kona Coffee Company brought on behalf of consumers alleged that testing of the products showed they did not originate from Kona.
These claims further highlight the importance of reviewing your labels and advertising to ensure that you accurately portray the geographic origin of your food and ingredients so as to avoid misleading consumers and increasing risk of challenge, especially when the foods and ingredients are considered value-added. Keller and Heckman will continue to monitor and report on activity surrounding such claims.