Keurig Contests Sanctions In K-Cup Antitrust Case

Keurig Dr Pepper Inc said on Monday it will challenge a Manhattan federal judge’s order that rebuked the beverage company for failing to preserve certain evidence in a long-running antitrust case. The judge also awarded attorneys’ fees and costs to the plaintiffs’ lawyers.

US Magistrate Judge Sarah Cave’s 119-page ruling, unsealed on Monday, said Keurig “sloppily implemented” a directive to employees to preserve material amid the litigation, which began in 2014.

The suit was filed over claims that Keurig was asserting monopoly power in the market for disposable cups that are used in single-serve coffee brewers, often known as K-cups.

Food and beverage distributor McLane claims that because of Keurig’s anticompetitive behavior, it was overcharged on more than US$1.5 billion worth of K-Cups it purchased from Keurig and its licensees; J.M. Smucker and Starbucks Coffee.

Cave said the missing evidence included three laptops and a set of handwritten notes. The plaintiffs’ lawyers will be allowed to present evidence to the jury about missing information, Cave ruled. But she declined to allow the jury to hear an “adverse inference” that the missing or destroyed evidence would have been unfavorable to Keurig.

Keurig’s attorneys at Buchanan Ingersoll & Rooney and Cleary Gottlieb Steen & Hamilton in a court filing called the sanctions order “contrary to law.” The sanctions will provide a “broad windfall” in fees and costs for the plaintiffs’ lawyers, the defense lawyers said.

Cave’s ruling said the plaintiffs will be allowed to seek legal fees and expenses for months of work focused on various discovery matters.

Lawyers for Keurig did not immediately respond to a request for comment on Tuesday. Lawyers for plaintiffs including food and beverage company TreeHouse Foods Inc and supply chain servicer McLane Co Inc also did not immediately respond to requests for comment.

A U.S. district court judge has the power to review Cave’s findings. Cave heard arguments in January on the plaintiffs’ bid for sanctions against Keurig.

The judge found “plaintiffs suffered prejudice from the loss of evidence that should have been preserved.”

Still, Cave did not find Keurig intended to conceal information from the plaintiffs, and she noted Keurig broadly has complied with its evidence-sharing obligations, preserving nearly 100 hard drives and disclosing millions of pages.

“This is not, therefore, a case in which plaintiffs are bereft of evidence to support their claims,” Cave wrote.

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