Kona coffee farmers will soon be eligible to receive a share of millions of dollars thanks to proposed settlements in a 2019 class action lawsuit against retailers that falsely labeled commodity coffee beans as premium “Kona” coffee.
Kona coffee growers Bruce Corker, Colehour and Melanie Bondera and Robert and Cecelia Smith filed the class action suit on behalf of approximately 600 Kona coffee farmers against a group of coffee sellers, including Walmart, Costco, Amazon, Safeway, Kroger, Cost Plus/World Market, Bed Bath &Beyond, and other distributors, wholesalers, and retailers for falsely advertising coffee as “Kona” that did not originate in the Kona region in violation of the Lanham Act, which addresses false advertising.
The litigation claimed the defendants’ deceptive practices have flooded the market with counterfeit “Kona” coffee products, injuring honest Kona farmers by driving prices down and misleading consumers into believing that Kona coffee is nothing special, making it less likely they would pay a premium price for the product in the future.
“Everyone wants a piece of the Kona market because our brand value and reputation are high,” said Suzanne Shriner, owner of Lions Gate Farms, one of the 600 farms represented in the class action suit. “But the fakes undercut our integrity. When people have a bad cup of fake Kona, they may not be willing to buy the real beans. Over time, we lose our customer base.”
But under proposed settlements filed with some of the defendants in the case, that appears less likely to occur going forward.
Most recently, Costco, Marshalls, and Gold Coffee Roasters reached an agreement on March 9 for an undisclosed amount. In addition to monetary compensation, the settlement preliminary approved by the U.S. District Court for the Western District of Washington requires the defendant coffee sellers to follow new labeling guidelines and vendors to go through a certification process when labeling coffee as originating in the Kona region.
That agreement was reached about a month after the court approved preliminary settlements with defendants BCC Assets, Cameron’s Coffee and Distribution Company, Copper Moon Coffee, Cost Plus Inc., and Pacific Coffee, which does business as Maui Coffee Company, totaling over $7 million. Cameron’s will make the largest payment at $4.9 million followed by BCC Assets at $1.125 million.
Gold Coffee Roasters has agreed to a $6.1 million settlement plus injunctive terms.The injunctive provisions create detailed labeling obligations that will increase information available to consumers about Kona content and subject Gold to Hawaii’s more stringent labeling laws on a nationwide basis. Gold agrees “that any of its current or future products labeled as ‘Kona’ will accurately and unambiguously state on the front label of the product the minimum percentage of authentic Kona coffee beans contained in the product. Only Kona coffee certified and graded by the Hawaii Department of Agriculture as 100% Kona shall be considered authentic Kona coffee.”
Though none of the defendants have acknowledged any wrongdoing, more than a half dozen defendants have settled to avoid further litigation.
The settlements will be distributed to farmers on a pro-rata basis, less court-awarded attorneys’ fees and expenses, as calculated by reported sales volumes, less any voluntary contributions for the benefit of the Kona region. The settlement class includes all persons and entities that farmed and sold their Kona coffee between Feb. 27, 2015, and Feb. 17 of this year.
The U.S. District Court will hold a final approval hearing for the $7 million on June 18 during which the judge will consider whether the proposed settlements are fair, reasonable, and adequate.
Litigation remains ongoing with defendants who have not reached a settlement with the farmers.
“The first round of settlements means the case is in the process of being decided,” said Bondera, who declined further comment due to still active lawsuit. “It is moving forward.”
Farmers included in this settlement will have to submit a claim by a date yet to be determined. Information regarding the settlements can be found at www.konacoffeesettlement.com.
