Kraft Says Appeals Court to Hear Starbucks Distribution Case: DJ

An appeals court has reportedly agreed to hear arguments regarding Starbucks' (NASDAQ:SBUX) takeover of its own coffee distribution from Kraft Food Inc. (NYSE:KFT).

Dow Jones reported on Friday that the U.S. Court of Appeals for the Second Circuit will hold an expedited trial for the appeal after the U.S. District Court for the Southern District of New York denied Kraft’s initial suit last week.

Kraft and Starbucks are wrapping up a 12-year distribution partnership, in which Kraft distributed the coffee giant’s bagged coffee to retailers. Starbucks intends to handle the whole process itself starting next month.

Starbucks claims that Kraft violated many provisions of the contract, including failure to stock shelves correctly, thus allowing the coffee giant to terminate their deal, according to Dow Jones. Kraft asserts that none of the alleged violations is a material breach that would permit Starbucks to cease the partnership and said that ending the agreement would require Starbucks to pay a break-up fee of $1 billion.

A final ruling on the appeal could come by the end of February, Dow Jones reported.