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Costco and Other Retailers Settle Kona Coffee Class Action Advertising Fraud Lawsuit

As reported by Law360 (subscription), Costco, Marshalls and Gold Coffee Roasters have reached agreements with Hawaii’s Big Island coffee farmers to settle the class action lawsuit filed by Lieff Cabraser and co-counsel accusing them of falsely labeling ordinary coffee beans as premium “Kona” coffee. The settlement includes a $6 million payment from Gold Coffee Roasters to Kona coffee growers.

The lawsuit was filed in 2019 on behalf of “farmers who grow the entire worldwide supply of authentic Kona coffee,” who claimed that only coffee grown in the Kona District of the Big Island of Hawaii can legally be labeled and sold as “Kona” coffee. According to the lawsuit, only 2.7 million pounds of actual Kona coffee is grown in Hawaii each year, but over 20 million pounds of coffee ends up being sold with the name, such that nearly 90% of what consumers see marketed as Kona Coffee is an inferior non-Kona substitute.

Under the proposed settlement, defendant Gold Coffee Roasters Inc. would make the $6 million payment to over 600 class members, with amounts dependent on how much product each coffer grower sold during the proposed class period. Gold also agreed to new labeling that will adhere to Hawaii’s stringent labeling laws.

Though the retailers were not found to have knowingly participated in the fraud, Costco and Marshalls agree to follow new labeling guidelines.

The settlements “deliver substantial monetary relief to the settlement class and include injunctive terms that will accomplish one of the primary objectives of this litigation: to bring about changes in the labeling of coffee described as containing coffee from the Kona region, thus preventing further economic harm to the growers of legitimate Kona coffee,” the farmers said.

Read the full article on the Law360 website.

The Hawaiian coffee farmers are represented by Lieff Cabraser partners Andrew Kaufman, Jason L. Lichtman, and Daniel E. Seltz, as well as attorneys from Karr Tuttle Campbell.