Safeway and Fred Meyer owners settle with Hawaii farmers in lawsuit over fake Kona coffee

SEATTLE — In the latest settlement struck in a legal action that saw coffee growers on Hawaii accuse major retailers of selling counterfeit Kona coffee, Safeway, Albertsons and the owner of two other large Northwest grocery chains have agreed to change the way they label their products.

Farmers from the Big Island’s Kona district, an area known for its richly flavored coffee, sued more than 20 companies in February 2019 after a lab test reportedly confirmed long-held suspicions that beans being marketed as Kona coffee weren’t actually from the iconic region.

After roughly two years of interviews, reviews of legal documents and negotiations, a federal judge in Seattle granted preliminary approval for settlements with Kroger, which owns QFC and Fred Meyer, as well as the parent company of Safeway and Albertsons and a Honolulu-based roaster. That settlement, inked this month, follows eight others and brings the total settlement amount to $15.25 million. The settlements secured agreements requiring many of the companies to change how they label their products.

The original complaint included allegations against Costco, Amazon, Walmart and other retailers, as well as one individual.

The companies “misled consumers into believing their products contain an appreciable amount of Kona coffee beans in order to use the reputation and goodwill of the Kona name to justify higher prices for what is actually ordinary commodity coffee,” the farmers alleged in the lawsuit.

That depressed the market price for coffee from the Kona region, the lawsuit claimed, cutting into profits for the coffee growers in Hawaii.

“The alleged false designation damages the geographic designation itself and the designation’s value to the farmers of authentic Kona coffee,” the lawsuit read.

Before heading to court, farmers on the slopes of the Mauna Loa and Hualalai volcanoes had long suspected that competitors falsely labeled their beans, hoping customers would pay more for coffee marketed as coming from the Kona region.

The original lawsuit claimed that 2.7 million pounds of authentic Kona coffee beans are grown each year — but more than 20 million pounds of coffee labeled Kona are sold.

To test the theory, the plaintiffs hired scientists to determine chemical ratios in different types of coffee. The results found much of the coffee sold nationally as Kona failed the test for what growers say are the “telltale chemical signatures of the real stuff,” the Los Angeles Times reported.

The most recent settlements, approved by Judge Robert Lasnik in February, also included Hawaiian Isles Coffee Co. The company agreed to change its name, dropping Kona from its former name Hawaiian Isles Kona Coffee.

The settlement will require each company to include the percentage of coffee beans that came from the Kona region on its packaging, in the same font and color as the word Kona.

Hawaiian Isles Coffee also agreed that its products will include at least the percentage of Kona coffee required by Hawaiian law to earn the Kona designation, and that it will up the percentage if the law changes in the future. It will also send a “special communication” to customers explaining its current products are a Kona blend.

Hawaiian Isles Coffee will pay $800,000 to the plaintiffs while Kroger is on the hook for $1.35 million. Safeway’s settlement did not include any payment, according to the most recent court filing.

Costco, which is based in Issaquah, settled in March 2021 and agreed to change its labeling practices. Marshalls made similar concessions while Florida-based Gold Coffee Roasters agreed to pay $6 million to more than 600 coffee growers who are class members in the lawsuit.

“Each plaintiff runs a small coffee farm, and amidst the challenges of the global pandemic, have unflaggingly devoted their time, along with their expertise and experience as Kona farmers,” to this litigation, the lawsuit read.

The payment amount will depend on how much coffee the farmer sold during a specific period, according to the law firm representing the growers, Lieff Cabraser Heimann & Bernstein. The firm declined to provide additional comment.

From a group of more than 20 defendants, four remain, according to the most recent court filings. Attorneys representing the coffee growers from Kona “will continue to commit substantial resources to this case,” the filing read.

A final hearing for the settlements with Kroger, Safeway and Hawaiian Isles Coffee is scheduled for June.