A district court erred in denying class certification and granting summary judgment to Sturm Foods and its parent company Treehouse Foods in a putative class action accusing the coffee manufacturer of misleading consumers to believe its Keurig-compatible coffee pods contained high-quality coffee rather than low-quality instant coffee, the Seventh Circuit Court of Appeals has decided. Suchanek v. Sturm Foods, Inc., No. 13-3843 (7th Cir., order entered August 22, 2014). The court found that the district court’s reasoning for denying class certification would make consumer class actions nearly impossible.
Combined from four separate consumer protection lawsuits, the case centers on Sturm’s Grove Square Coffee (GSC) pods. The Keurig K-Cup typically contains ground coffee beans and a filter system, but the filter technology was protected by a patent until 2012. In 2010, Sturm began manufacturing pods that could be used in Keurig brewers, but to avoid infringing the patent, the company apparently used a mixture of about 95 percent instant coffee and a small amount of microground coffee. The GSC label showed fresh roasted coffee beans and touted that the product contained “naturally roasted soluble and microground Arabica coffee,” with no clarification that “soluble” meant “instant.” After consumers purchased the GSC product, they filed lawsuits against Sturm alleging that the packaging misrepresented what the pods contained as being high-quality ground beans like those in other K-Cups sold at the time.
The district court denied class certification, and the Seventh Circuit identified two errors in its analysis: it failed to recognize that the question of whether the GSC packaging was likely to mislead consumers was common to all claims, and it “applied too strict a test when it considered whether common questions predominate over individual questions.” The district court pointed to a change in GSC packaging that identified the product as instant coffee to find that the plaintiffs had not been subject to the same allegedly injurious conduct, but the Seventh Circuit noted that the in-store distribution of the adjusted packaging was apparently minimal and that all members of the class were alleging an injury from the marketing and packaging of GSC. In addition, the district court had erred by focusing its discussion on whether each member of the potential class could prove an injury. “If the court thought that no class can be certified until proof exists that every member has been harmed, it was wrong,” the Seventh Circuit said. In addition, the circuit court found an error in the district court’s assessment of the packaging. “[T]he district court had almost nothing to say. This is it: ‘The Court has seen the packaging at issue—Plaintiffs bring it to each hearing—and finds that it is not designed to mislead consumers. It is what it says it is.’ That is a conclusion, not a reason.” The circuit court noted that a package does not have to contain literal falsehoods to be misleading under the law. “Moreover—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.”