Kraft asks court to reverse Starbucks ruling

By Dow Jones Newswires
Posted Feb. 10 at 1:04 p.m.

Kraft Foods Inc.  says the U.S. District Court should reverse its decision to allow Starbucks Corp.  to take over distribution of Starbucks’ branded packaged coffee March 1.

The packaged-food giant filed a brief late Wednesday with the U.S. Court of Appeals for the Second Circuit, arguing that Kraft will “suffer loss of customer good will, loss of a unique product line and competitive harm if Starbucks is allowed to unilaterally terminate the contract,” the brief says.

Kraft said just one of the above, much less all three, constitutes “irreparable damage” based on precedents set by the court. So, it is requesting a preliminary injunction be issued to allow for a speedy arbitration.

A Starbucks spokeswoman said that the coffee chain is pleased with the decision and that it will “fight vigorously” as “Kraft continues to use any tactic it can to stand in the way of a smooth transition of the business on March 1, furthering the harm it has already caused to our customers.”

Starbucks is expected to file a response Feb. 17.

Kraft’s filing is the latest among a series of exchanges between the two companies. Kraft sued Starbucks in December to prevent it from terminating its 12-year relationship without agreeing on a buy-out price.

The U.S. District Court for the Southern District of New York, Judge Cathy Seibel, ruled in favor of Starbucks late last month, indicating that Kraft had not established it had “suffered irreparable harm.”

The ruling gave Starbucks permission to move forward to begin distribution of its packaged coffee in-house March 1.

With less than a month before Starbucks takes over its packaged-coffee business, Kraft is left scrambling to replace its high-end coffee line by elevating one of its own brands or collaborating with another supplier.

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