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From Antitrust Law Daily, August 25, 2014

Consumers’ deception claims revived against alternative Keurig pod maker

By Greg Hammond, J.D.

Grove Square Coffee (GSC) drinkers have been given a second chance at bringing their deceptive advertising claims against alternative Keurig® coffee pod maker Sturm Foods, Inc. In reversing and remanding the lower court’s decision refusing to grant class certification and awarding summary judgment in favor of Sturm, the U.S. Court of Appeals in Chicago determined that: (1) the question of whether GSC packaging was likely to mislead a reasonable consumer is common to the claims of the class; and (2) the lower court was confused about the distinction between “soluble” and “microground” coffee (Suchanek v. Sturm Foods, Inc., August 22, 2014, Wood, D.).

Keurig coffee machines allow consumers to prepare a single cup of freshly brewed coffee by placing a small pod—containing ground coffee—into the machine and pushing a button. Unable to wait until Keurig’s patent expired in 2012, Sturm introduced its own product as an alternative to Keurig’s pods. The alternative product used the same external design as the Keurig pods, but the internal design did not contain a filter; was comprised primarily of instant coffee, and only contained 5 percent microground coffee. The GSC packaging contained an image of a pod surrounded by coffee beans; stated “naturally roasted soluble and microground Arabica coffee;” and stated “for use by owners of Keurig® coffee makers.” It did not state that the pod contained over 95 percent instant coffee with only tiny bits of microground coffee mixed in, and did not explain that soluble coffee is actually instant coffee.

A group of consumers filed multiple class action suits against Sturm for allegedly deceptive advertising under the consumer protection laws of eight states. The separate lawsuits were consolidated into the instant action, but the district court refused to certify the class and granted summary judgment against all eight individual plaintiffs. The consumers appealed.

Class certification. According to the appellate court, the lower court erred in denying class certification, because it failed to recognize that the question—whether the GSC packaging was likely to mislead a reasonable consumer—was common to the claims of all putative class members; and it applied too strict a test when considering whether common questions predominate over individual questions. On remand, the lower court will be required to determine whether it should certify the consumer fraud class by: (1) engaging in a rigorous analysis into whether the consumers’ damages are susceptible of measurement across the entire class; (2) considering the difficulty and complexity of the class-wide issues as compared with the individual issues; and (3) examining whether the class allegations are satisfied through evidentiary proof.

The appellate court noted that, if the “lower court’s approach were correct, it would never be possible to certify a consumer class action because some individual proof is always needed.”

Individual claims. The district court also granted summary judgment against the eight class representatives because it determined that the GSC packaging was not likely to mislead a reasonable consumer, and none of the individual plaintiffs set forth evidence that he or she was deceived. The appellate court disagreed with these findings, noting that: (1) “ironically—it appears the district court itself was confused about the product: the court’s analysis reveals that it failed to understand that ‘soluble’ coffee and ‘microground’ coffee are not the same thing”; (2) the lower court overlooked that one or more plaintiffs thought they were purchasing ground coffee; (3) the court failed to take facts in the light most favorable to the non-moving party; and (4) a jury could find that the allegedly misleading packaging caused the consumers’ misconceptions about the products. Consequently, the court reversed the previous grants of summary judgment, and remanded the case for further proceedings.

The case number is 13-3843.

Attorneys: Peter Burke (Burke Harvey & Frankowski) for Linda Suchanek. Craig S. Fochler (Foley & Lardner LLP) for Sturm Foods, Inc. and Treehouse Foods, Inc.

Companies: Sturm Foods, Inc.; Treehouse Foods, Inc.

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