In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig.

383 F.Supp.3d 187

IN RE: KEURIG GREEN MOUNTAIN SINGLE-SERVE COFFEE ANTITRUST LITIGATION

This Document Relates to All Actions

14-MD-2542 (VSB)

United States District Court, S.D. New York.

Signed April 3, 2019

Filed April 22, 2019

Daniel Johnson, Jr., Dan Johnson Law Group, San Francisco, California, Counsel for Plaintiff JBR, Inc.

Aldo A. Badini, Susannah P. Torpey, Winston & Strawn LLP, New York, New York.

Dan K. Webb, James F. Herbison, Winston & Strawn LLP, Chicago, Illinois.

Diana L. Hughes, Winston & Strawn LLP, Los Angeles, California, Counsel for Plaintiffs TreeHouse Foods, Inc.; Bay Valley Foods, LLC; and Sturm Foods, Inc.

Michael M. Buchman, John A. Ioannou, Alex R. Straus, Motley Rice LLC, New York, New York.

Kellie Lerner, Meegan Hollywood, Robins Kaplan LLP, New York, New York, Counsel for Direct Purchaser Plaintiffs and Interim Co-Lead Counsel for the Proposed Direct Purchaser Plaintiff Class.

Fred T. Isquith, Thomas H. Burt, Michael Liskow, Wolf Haldenstein Adler Freeman & Herz LLP, New York, New York, Interim Co-Lead and Liaison Counsel for the Proposed Classes of Indirect Purchaser Plaintiffs.

Robert N. Kaplan, Richard J. Kilsheimer, Gregory K. Arenson, Mario M. Choi, Matthew P. McCahill, Kaplan Fox & Kilsheimer LLP, New York, New York.

Bruce L. Simon, Robert G. Retana, Aaron M. Sheanin, Pearson, Simon & Warshaw, LLP, San Francisco, California, Interim Co-Lead Counsel for the Proposed Classes of Indirect Purchaser Plaintiffs.

Lev Dassin, George S. Cary, Leah Brannon, Elaine Ewing, Cleary Gottlieb Steen & Hamilton LLP, New York, New York.

Wendelynne Newton, Buchanan Ingersoll & Rooney PC, Pittsburgh, Pennsylvania, Counsel for Defendant Keurig Green Mountain, Inc.

OPINION & ORDER

Vernon S. Broderick, United States District Judge

Before me are four motions to dismiss filed by Defendant Keurig Green Mountain, Inc. ("Keurig" or "Defendant"),¹ formerly known as Green Mountain Coffee Roasters, Inc. and as successor to Keurig, Incorporated, in this multi-district litigation. This Opinion & Order addresses all pending motions, which seek dismissal of four separate amended complaints: (1) the First Amended and Supplemental Complaint of Plaintiff JBR, Inc. (d/b/a Rogers Family Company) ("Rogers"), a privately held roaster, packager, and seller of coffee products, which alleges that Keurig has engaged in anticompetitive practices that had the effect of excluding Rogers from the market for cups or pods used in Keurig's single-server brewer machines, (No. 14-CV-4242, Doc. 83 (the "Rogers Amended Complaint" or "Rogers AC")); (2) the Amended and Supplemental Complaint of Plaintiff TreeHouse Foods, Inc., a food manufacturer operating in the United States, as well as its wholly-owned subsidiaries Plaintiff Bay Valley Foods, LLC ("Bay Valley") and Plaintiff Sturm Foods, Inc. ("Sturm") (collectively, "TreeHouse"), which claims that Keurig's allegedly anticompetitive practices excluded TreeHouse from the same market, (No. 14-CV-905, Doc. 86; (the "TreeHouse Amended Complaint" or "TreeHouse AC")); (3) the Consolidated Amended Class Action Complaint of direct purchaser Plaintiffs Kenneth B. Burkley, Roger Davidson, Judy Hoyer, Benjamin Krajcir, James G. Long, Linda Major, Sally Rizzo, Henry A. Rocker, David Rosenthal, and Todd W. Springer (collectively, the "DPP Named Plaintiffs"), individually and on behalf of a class of direct purchaser plaintiffs, (collectively, the "DPPs"), which claims that Keurig's allegedly anticompetitive practices caused the DPPs to be overcharged for their purchases of cups or pods used in Keurig's single-server brewer machines, (Doc. 237 (the "DPP Amended Complaint" or "DPP AC")); and (4) the Second Consolidated Amended Class Action Complaint of indirect purchaser Plaintiffs Yelda Mesbah Bartlett, Lavinia Simona Biasell, Linda Bouchard, Bouchard & Sons Garage, Inc., Jessica Searles Cristani, Kathryn Pauline D'Agostino, Jonna Dugan, Michael J. Flanagan, Larry Gallant, Patricia Hall, Joseph Hurvitz, Jackson & Runyan, Certified Public Accountants, PLLC, Teena Marie Johnson, Darlene M. Kennedy, Lori Jo Kirkhart, John Lohin, Betty Ramey, Brier Miller Minor, David W. Nation, Patricia J. Nelson, Joyce E. Reynolds, Lauren Jill Schneider, Shirley Anne Schroeder, Rhett Montgomery Tanselle, Carey Rei Varnado, Constance Werthe, and Toni Williams (collectively, the "IPP Named Plaintiffs"), individually and on behalf of a class of indirect purchaser plaintiffs, (collectively, the "IPPs"), which claims that Keurig's allegedly anticompetitive practices caused the IPPs to be overcharged for their purchases of cups or pods used in Keurig's single-server brewer machines, (Doc. 238 (the "IPP Second Amended Complaint" or "IPP SAC")).²

The Rogers Amended Complaint, TreeHouse Amended Complaint, DPP Amended Complaint, and IPP Second Amended Complaint all allege violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and the Clayton Act, 15 U.S.C. § 14. (Rogers AC ¶¶ 294–331, 338–82; TreeHouse AC ¶¶ 569–602, 611–38; DPP AC ¶¶ 254–89; IPP SAC ¶¶ 251–94.) The Rogers Amended Complaint and TreeHouse Amended Complaint also allege claims for violations of the Lanham Act, 15 U.S.C. § 1125(a), (Rogers AC ¶¶ 383–88; TreeHouse AC ¶¶ 639–43), and for patent misuse, (Rogers AC ¶¶ 332–37; TreeHouse AC ¶¶ 603–10). The DPP Amended Complaint alleges claims for common law unjust enrichment under the laws of the fifty states and the District of Columbia, (DPP AC ¶¶ 290–300), and the IPP Second Amended Complaint raises claims for common law unjust enrichment under the laws of seventeen states and the District of Columbia, (IPP SAC ¶¶ 481–516).

The Rogers Amended Complaint also alleges claims for violation of the California Cartwright Act, (Rogers AC ¶¶ 389–90), and for: (1) violation of the California False Advertising Law, (id. ¶¶ 393–97); (2) violation of the California Unfair Competition Law, (id. ¶¶ 398–406); (3) violation of California common law unfair competition, (id. ¶¶ 391–92); (4) intentional interference with prospective economic advantage under California law, (id. ¶¶ 407–11); and (5) intentional interference with contractual relations under California law, (id. ¶¶ 412–14). The TreeHouse Amended Complaint also alleges claims for violations of: (1) the Illinois Antitrust Act, (TreeHouse AC ¶¶ 569–602, 611–38, 650–53); (2) the Wisconsin Antitrust Act, (id. ¶¶ 569–602, 611–38, 654–57); (3) the New York Donnelly Act, (id. ¶¶ 577–84, 625–38, 644–45); (4) the Illinois Consumer Fraud and Deceptive Business Practices Act, (id. ¶¶ 639–43); (5) the New York Consumer Protection Act, (id. ); (6) the Illinois Uniform Deceptive Trade Practices Act, (id. ¶¶ 639–43, 646–49); and (7) Wisconsin common law unfair competition, (id. ¶¶ 658–61). The TreeHouse Amended Complaint also alleges claims for negligent and intentional interference with business relations under New York law, (id. ¶¶ 662–70), tortious interference with contract under New York Law, (id. ¶¶ 671–77), tortious interference with contract under Wisconsin law, (id. ¶¶ 678–80), tortious interference with prospective business expectancy under Illinois law, (id. ¶¶ 681–84), and tortious interference with contract under Illinois law, (id. ¶¶ 685–91). The IPP Second Amended Complaint alleges violations of the antitrust and unfair competition laws of twenty-one states and the District of Columbia, (IPP SAC ¶¶ 225–50, 295–447), and the consumer protection and unfair trade practices laws of six states, (id. ¶¶ 448–80). Keurig purports to move to dismiss the amended complaints in each action in their entirety under Federal Rule of Civil Procedure 12(b)(6).³ I held oral argument on these motions on July 9, 2015.

For the reasons stated herein, Keurig's motions are granted in part and denied in part.

I. Background ⁴

A. Keurig's Products and the Relevant Markets

Keurig manufactures and sells Single Serve Brewers⁵ and Portion Packs⁶ in, among other places, the United States. (Rogers AC ¶¶ 9, 82; TreeHouse AC ¶ 3; DPP AC ¶¶ 1, 7; IPP SAC ¶ 7.) Keurig introduced the K-Cup Brewer,⁷ the first commercially successful Single Serve Brewer, to the United States market in or around 1998. (Rogers AC ¶ 19; see also IPP SAC ¶ 110.) While Portion Packs come in many different forms, to be usable with a particular Single Serve Brewer, a Portion Pack must be compatible with that Single Serve Brewer. (DPP AC ¶ 8.) The same year it introduced the K-Cup Brewer, Keurig introduced its branded Portion Packs, or K-Cups,⁸ which are compatible with and used in K-Cup Brewers. (See TreeHouse AC ¶¶ 3, 110.) Today, K-Cups also include Portion Packs licensed by Keurig that are compatible with K-Cup Brewers. (Rogers AC ¶ 31; TreeHouse AC ¶ 4; DPP AC ¶ 9; IPP SAC ¶ 9.)

K-Cups are not the only Portion Packs that are compatible with K-Cup Brewers. Keurig's competitors, including Rogers and TreeHouse, manufacture, distribute, and sell their own Competitor Cups,⁹ which are Portion Packs that are compatible with K-Cup Brewers. (Rogers AC ¶ 31; TreeHouse AC ¶¶ 105–06; DPP AC ¶ 9; IPP SAC ¶¶ 8–11.) Compatible Cups¹⁰ —Portion Packs that are compatible with K-Cup Brewers—thus include (i) K-Cups, and (ii) Competitor Cups. (Rogers AC ¶ 31; TreeHouse AC ¶¶ 105–06; DPP AC ¶ 9; IPP SAC ¶¶ 8–11.)

Since Keurig's initial introduction, Keurig has designed, manufactured, and sold a variety of different K-Cup Brewers marketed either for use in the individual consumer's home or for use outside the home at locations such as office buildings, hotels, and gas stations. (Rogers AC ¶ 19.) K-Cup Brewers are compatible only with Compatible Cups, and Portion Packs designed to work in other Single Serve Brewers are not compatible with K-Cup Brewers. (IPP SAC ¶ 93.) Keurig has dominated the markets for the design, manufacture, and sale of Single Serve Brewers, Portion Packs, and Compatible Cups. Specifically, in the United States, Keurig controls at least 89% of the market for Single Serve Brewers (the "Single Serve Brewer Market"), 73% of the market...