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The Franchise Memorandum

Arkansas Court Dismisses Online Retailer’s Sherman Act Claims
Posted in Antitrust

Last month, the United States District Court for the Western District of Arkansas dismissed state and federal antitrust claims brought by Coffee.org against Green Mountain Coffee relating to the distribution of the “K-cup” single-serve coffee capsule, which is used with a patented coffee machine owned by Green Mountain. Coffee.org, Inc. v. Green Mountain Coffee Roasters, Inc. et al., 2012-1 Trade Cases ¶ 77,790 (W.D. Ark. Feb. 15, 2012). Coffee.org, an online retailer of coffee and coffee-related products, alleged that Green Mountain acquired essentially all distributors of K-cups and terminated its business relationship with Coffee.org, thereby ending Coffee.org’s existing supply source for K-cups in violation of state and federal antitrust laws.

In granting the defendant’s motion for judgment on the pleadings, the district court rejected Coffee.org’s overly narrow, one-brand relevant product market—the market for the K-cup product. The court noted that in some instances one brand of a product can constitute a specific market but, as set forth in the Supreme Court’s 1962 Brown Shoe decision, in all instances, a relevant market can only be determined after considering all reasonably interchangeable products. The court found that many products are reasonably interchangeable with the K-cup. Accordingly, Coffee.org’s market definition was too narrow and its claims were dismissed.

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The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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