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U.S. court revives suit over Sturm coffee pod 'knockoffs'

By Jessica Dye

(Reuters) - A U.S. appeals court on Friday reinstated a lawsuit by consumers who said they were duped into buying substandard single-serve coffee cartridges made by Sturm Foods Inc for use in popular Keurig brewing machines.

The 7th U.S. Circuit Court of Appeals said a lower court had been too hasty in denying plaintiffs’ request to sue as a group and dismissing their claims against Sturm and its parent company TreeHouse Foods, the makers of Grove Square Coffee. The ruling reinstated the case and ordered the lower court to reconsider whether to certify a class of customers from eight states who bought the product.

Sturm and TreeHouse had attempted to jump into the lucrative market for Keurig-compatible coffee pods, or K-cups, in 2010, two years before Keurig’s patent on a design for the filter for the cartridge expired, the ruling said.

To steer clear of Keurig’s patent, Sturm made its Grove Square Coffee cartridges without a filter, although that prevented the company from using fresh coffee grounds, the ruling said. Instead, Sturm used “soluble” freeze-dried brewed, or instant, coffee mixed with fresh grounds, according to the ruling.

The public response to the product was “awful,” the ruling said. In 2011, four lawsuits were filed by customers accusing Sturm and TreeHouse of violating state consumer-protection laws by misleading them about the cartridge’s contents, calling them “cheap knockoffs” of premium K-cups, according to court filings.

The cases were consolidated, and plaintiffs asked the judge to certify a class of all consumers in eight states – including New York, California and Illinois – who bought the cartridges.

Sturm said it had clearly stated on its labeling that the cartridges contained “soluble” coffee. Last year, a federal judge in Illinois agreed with the company that the packaging was not misleading, rejected plaintiffs' request for class certification and dismissed the individual plaintiffs’ claims.

The plaintiffs appealed, and the 7th Circuit agreed that the district court had not given enough credence to plaintiffs' claims before tossing them.

“A jury should have decided the question whether the packaging was likely to mislead reasonable consumers,” U.S. Circuit Judge Diane Wood wrote. She also said the lower court had erred in finding that there was not enough in common among plaintiffs to let them sue as a class.

That decision overlooked the common question shared by plaintiffs - namely, whether Grove Square Coffee packaging was misleading to a "reasonable consumer," Wood wrote.

A lawyer for the plaintiffs, Peter Burke, said he was pleased with the decision. A spokesman for TreeHouse, Ron Bottreel, said the company had received the decision and is evaluating its next steps.

The case is Suchanek v. Sturm Foods, 7th U.S. Circuit Court of Appeals, No. 13-3843.

(Reporting by Jessica Dye in New York; Editing by Alexia Garamfalvi and Andrew Hay)

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