False Advertising Dispute over Kona Coffee Results in Rare Lanham Act Class Action

By Thomas M. Williams and Hillary E. Maynard

In late February, a group of Kona, Hawaii coffee farmers filed a lawsuit in federal court in Seattle against coffee distributors, wholesalers, and retailers selling allegedly counterfeit Kona coffee products. The 19 defendants in this action include mega retailers Amazon, Walmart, and Costco, as well as several smaller coffee sellers. The case is interesting for two reasons. First, it is a false advertising claim based on the “geographic origin” provision of the statute. Second, the plaintiffs filed the case as a class action, a rarity in Lanham Act litigation.

History of the Case

According to the plaintiffs, Kona coffee is grown on farms located within the Kona District of the Big Island of Hawaii. As alleged in the complaint, the “Kona name tells consumers that they are buying coffee grown in the Kona District” and “that the beans are of the highest quality.” Plaintiffs allege that similar to sparkling wine originating from the Champagne region of France, only coffee grown in this distinct geographic region may be marketed, labeled, and sold as Kona coffee.

False Geographic Origin Claims are Uncommon

To prevail on their false advertising claim, the plaintiffs will need to establish: (1) the defendants’ “Kona” coffee claims are literally false or misleading; (2) the claims are likely to deceive consumers; (3) the “Kona” claims are material to consumers’ purchasing decisions; (4) the claims were disseminated in commerce; and (5) the plaintiffs are likely to be injured. 15 U.S.C. § 1125(a)(1)(B).

The first element, falsity, is particularly compelling in this case. The plaintiffs allege that the “Kona” coffee labels misrepresent the “geographic origin” of the defendants’ coffee. False advertising claims based on misrepresentations as to geographic origin are relatively uncommon.  Other cases under this prong have involved “Florida” orange juice from other regions or “Havana” rum from Puerto Rico. Here, among other things, the plaintiffs will need to establish that the defendants’ coffee is not from Kona. The plaintiffs allege that coffee sellers have been mislabeling coffee beans for decades, but that they are now able to use modern chemistry to determine the true origin of coffee beans claiming to be from Kona. To do so, the plaintiffs tested the defendants’ packaged coffee for concentrations of particular chemical elements that plaintiffs claim should only be present in genuine Kona coffee beans. The complaint is replete with scientific data, charts, and graphs. These test results allegedly prove that the defendants’ “Kona” coffee labeling is false. The plaintiffs will presumably seek discovery of the defendants’ supply chains, which should also shed light on the geographic origin of the beans.

In addition to falsity, the plaintiffs must ultimately prove that the “Kona” claim was material to consumers. This can be established by witness testimony or consumer surveys showing that the “Kona” claim was likely to influence the purchasing decision. Finally, they must prove that they were injured, or are likely to be injured, by the defendants’ false geographic origin claims.

The plaintiffs seek multiple remedies. These include injunctive relief in the form of a permanent injunction restraining defendants from using the “Kona” name, as well as an order requiring the defendants to conduct a nationwide corrective advertising campaign. They also seek monetary relief, including treble damages, the defendants’ profits, as well as attorneys’ fees and costs. Each of these remedies is available under the Lanham Act. 15 U.S.C. §§ 1116, 1117.

Lanham Act Class Actions are Rare

Interestingly, the plaintiffs filed their complaint as a class action. Class actions are rare in Lanham Act cases. While they are common in consumer class action litigation, the Lanham Act does not provide for consumer standing. So, this class must consist of commercial entities falling within the statute’s “zone of interests.” The plaintiffs define their class as “all persons and entities who, during the applicable statute of limitations period preceding the commencement of this action, farmed Kona coffee in the Kona District and then sold their Kona coffee.”

The plaintiffs will ultimately be required to withstand a challenge based on class requirements as defined in Federal Rule of Civil Procedure 23: the class must be so numerous that joinder of all members is impracticable; there must be questions of law or fact common to the class; the claims or defenses of the representative parties must be typical of the claims or defenses of the class; and the representative parties must fairly and adequately protect the interests of the class.

The plaintiffs’ decision to frame their claim as a class action will likely necessitate extensive motion practice and discovery, which will unfortunately delay the ultimate outcome of the false advertising dispute. Absent an unlikely early settlement, this coffee dispute could percolate for years to come.