SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF ALAMEDA
TERRY PATRICK, dba PATRICK FARMS, et al., On Behalf of Themselves and All Others Similarly Situated, Plaintiffs, vs. KONA KAI FARMS, INC., et al., Defendants. ) ) ) ) ) ) ) ) ) ) ) Case No. 810305-5 Assigned To: Judge Kawaichi CLASS ACTION
NOTICE OF PENDENCY AND SETTLEMENT OF CLASS ACTIONS TO: ALL PERSONS WHO BETWEEN JANUARY 1, 1987 AND MARCH 31, 2000 COMMERCIALLY FARMED COFFEE IN THE GEOGRAPHICAL REGIONS IDENTIFIED AS THE NORTH KONA AND SOUTH KONA DISTRICTS ON THE ISLAND OF HAWAII.
THIS NOTICE CONTAINS IMPORTANT INFORMATION WHICH MAY AFFECT YOUR RIGHTS. PLEASE READ IT CAREFULLY. 1. There is now pending in the Superior Court of California for the County of Alameda an action entitled Patrick, et al. v. Kona Kai Farms, Inc., et al., Case No. 810305-5 (the "Action"), in which plaintiffs, on behalf of themselves and other Kona coffee farmers, claim that Brothers Gourmet Coffees, Inc.; Gloria Jean's Gourmet Coffees Corporation; Tri Valley Growers, dba S&W Fine Foods; Peerless Coffee Co., Inc.; Nestlé Beverage Company; First Colony Coffee and Tea Company; The Coffee Beanery, Ltd.; and Price Costco, Inc. (collectively, the "Retail Defendants"); and Klein Brothers International, Klein Ventures, Inc., Robert J. Corkern, Kathryn Jackson, Richard Klein, Steven Klein and Thomas Klein (collectively, the "Klein Brothers Defendants"); and Kona Kai Farms, Inc., Robert Regli, Regton Companies, Inc. and Michael Norton (collectively the "Kona Kai Defendants") violated applicable law by falsely advertising non-Kona coffee as Kona coffee. Plaintiffs have reached settlement with each of the parties listed above. There are also pending in the United States District Court, District of Hawaii two other actions entitled Sugai Products, Inc., et al. v. Kona Kai Farms, Inc., et al., Civil No. 97-00043 SPK; Yamane Enterprises, et al., v. Kona Kai Farms, Inc., et al., Civil No. 98-00853 DAE; and Kona Farmers Alliance v. Kona Kai Farms, Inc., Civil No. 98-229K, Third Circuit Court, Hawaii, based on the same claims (collectively, the "Other Actions"). The Retail Defendants, the Klein Brothers Defendants and the Kona Kai Defendants vigorously deny any and all liability for the claimed allegations in all three actions. Two additional defendants, Peet's Coffee and Tea, Inc. ("Peet's") and Starbucks Corporation ("Starbucks"), were named as defendants in the Other Actions, but not in this Action. Separate settlements have been reached with Peet's and Starbucks. 2. This Notice is published for the sole purpose of informing members of the Settlement Class described below of the pendency of this Action and the Other Actions and of the proposed settlements described below. This Notice also describes what you can do if you wish to be excluded from the Settlement Class and the settlements, or if you want to object to the proposed settlements. 3. The following Settlement Class has been certified for the purposes of the proposed settlements: All persons, and their past and present officers, directors, or employees, and their predecessors, successors, parents, subsidiaries, affiliates, agents, attorneys, accountants, spouses, advisors, shareholders, representatives, partners, heirs and assigns who between January 1, 1987 and March 31, 2000 commercially farmed coffee in the, geographical regions identified as the North Kona and South Kona Districts on the island of Hawaii. Excluded from Settlement Class are C. Brewer & Company, Ltd., the Woolson Spice Company, Inc., Superior Coffee & Foods, Inc the Hawaiian Isles Kona Coffee, Inc., and Captain Cook Coffee Company of San Francisco, and their officers, directors, affiliates, parents or subsidiaries. Also excluded from the Settlement Class are those persons who timely and validly request exclusion from the Settlement Class pursuant to this Notice. 4. Proposed settlements have been reached, under the terms of which, upon Court approval, the Retail Defendants shall pay jointly $180,000, the Klein Brothers Defendants shall pay jointly $25,000, and the Kona Kai Defendants shall pay jointly between $950,000 and $1 million. In addition, with the exception of Tri Valley Growers, dba S&W Fine Foods, and Brothers Gourmet Coffees, Inc., the Retail Defendants agree to purchase, severally, a total of 161,000 pounds of green or roasted Kona coffee beans during the period beginning January 1, 1999, through and including December 31, 2003, subject to price and delivery terms to be negotiated individually by each Retail
Defendant with any supplier(s) of genuine Kona coffee. (This time period may be extended under certain conditions set forth in the settlement.) The terms of the proposed settlements in the Action are set forth in detail in the parties' Settlement Agreements. These documents are available to the public to review at the office of the Clerk of the Superior Court, County of Alameda, 1225 Fallon Street, Oakland, CA 94612. In addition, Peet's has agreed to settle the claims brought against it in the Other Actions for the amount of $25,000, and Starbucks has agreed to settle the claims brought against it in the Other Actions for the amount of $25,000. If the class settlements are approved as to the Retail Defendants, the Klein Brothers Defendants and the Kona Kai Defendants, the funds paid by Peet's will be added to the above proceeds for the benefit of the Settlement Class. 5. The proposed settlements are a compromise of disputed claims and are not to be taken as an indication of liability or that damages have been, or would be, found against the Retail Defendants, the Klein Brothers Defendants, or the Kona Kai Defendants. This Notice is not to be construed as an admission of liability of any kind by the Retail Defendants, the Klein Brothers Defendants, or the Kona Kai Defendants. This Notice should not be understood as an expression of any opinion by this Court as to the merits of any claims or defenses asserted by any of the parties in this Action. The Court has passed neither on the merits of the plaintiffs' claims nor on any of the Retail Defendants, the Klein Brothers Defendants or the Kona Kai Defendants defenses, nor has it determined whether this Action is a proper class action for any purpose other than the proposed settlements. 6. If the Court approves the proposed settlements, it will enter judgments which will dismiss this Action with prejudice on the merits as to all Settlement Class members. All class members who do not validly and timely request to be excluded from the proposed settlements shall be forever barred from prosecuting and shall be deemed to have released the Retail Defendants, the Klein Brothers Defendants, the Kona Kai Defendants and each of the Retail Defendants’, Klein Brothers Defendants’, and the Kona Kai Defendants’, past and present officers, directors, or employees, and their predecessors, successors, parents, subsidiaries, affiliates, agents, attorneys, accountants, spouses, advisors, shareholders, representatives, partners, insurers (excluding Odyssey/Sphere Drake), heirs and assigns, from all claims, rights (including rights to reimbursement or restitution), demands, actions, causes of action, suits, matters, issues, debts, liens, contracts, liabilities, agreements, costs, expenses or losses of any nature, including unknown claims (i.e., claims which a Settlement Class member does not now know or suspect to exist in his or her favor which, if known, might have affected his or her settlement with and release of the Retail Defendants, the Klein Brothers Defendants and the Kona Kai Defendants, or might have affected his or her decision not to object to this settlement) whether under Federal law or regulation, or the laws or regulations of any and all states or subdivisions, which are alleged in the Action or Other Actions or Bankruptcy Proof of Claim, or which could or might have been alleged or which arise out of matters referred to in the Action or Other Actions or Bankruptcy Proof of Claim, including claims under §17200 et seq. (including §17500 et seq.) of the California Business and Professions Code, Chapters 480 et seq. and §481A et seq. of the Hawaii Revised Statutes, or claims under the Lanham Act, 15 U.S.C. §1125 et seq., or any similar statutory or common law ("Released Claims"). By operation of the final judgments, Settlement Class members shall be deemed to have waived the provisions of §1542 of the California Civil Code. 7. If a Settlement Class is certified in this Action, and the settlements with Peet's and Starbucks are approved along with the global settlement of this Action, all class members who do not validly and timely request to be excluded shall be deemed to have released, relinquished and discharged Peet's and Starbucks and all of their predecessors, successors, parents, subsidiaries, divisions, owners, members, assigns, officers, directors, shareholders, agents, employees, consultants, contractors and attorneys from all claims, including Unknown Claims, demands, rights, liabilities and causes of action of every nature and description whatsoever, known or unknown, asserted, unasserted or that might have been asserted, including, without limitation, claims for violations of the Lanham Act, the Hawaii Uniform Deceptive Trade Practices Act and the Hawaii Unfair Practices Act, by any of the class members against Peet's arising out of the facts and matters alleged in Sugai Products, Inc., et al. v. Kona Kai Farms, et al., 97-00043-SPK (U.S.D.C. Hawaii), or any other case by growers of Kona coffee arising out of the same or related transactions, facts or circumstances, including, but not limited to, the sale of allegedly mislabeled "Kona" coffee ("Peet's and Starbucks' Released Claims"). 8. If the settlements are approved by the Court and unless individual members of the class exclude themselves from the Settlement Class, individual class members will be barred from bringing their own lawsuits for recovery on any Released Claims. 9. If you fit within the definition of the Settlement Class described above, you are a member of the Settlement Class, and you have the following options: (a) If you agree with the settlements, you need do nothing at all. You will be a member of the Settlement Class and will be eligible to receive the benefits of the settlements and will be bound by the final judgment and the release described above. (b) To participate in the distribution of settlement proceeds, you must timely complete and return the Claim Form that accompanies this Notice. The Claim Form must be post-marked on or before August 8, 2000, and delivered or mailed to the address included on the Claim Form. If you do not submit a timely claim, you will be barred from receiving any payment from the settlement proceeds, unless otherwise ordered by the Court. (c) If you do not wish to be included in the Settlement Class, you must send a signed letter postmarked no later than June 23, 2000, and include your name, address, telephone number, the name of the case (Patrick, et al. v. Kona Kai Farms, et al.), the number of acres in green coffee that you had in commercial production for each of the years from 1987 through 1996, and state the reason why you believe you are a class member and that you wish to be excluded. Your request must be sent to each of the following: Joy Bull, 2
Milberg Weiss Bershad Hynes & Lerach LLP, 600 West Broadway, 1800 One America Plaza, San Diego, CA 92101-1058 (Counsel for Plaintiffs); Lori A. Schechter, Morrison & Foerster LLP, 425 Market Street, San Francisco, CA 94105 (Counsel for the Retail Defendants); Kenneth J. Philpot, Preuss Walker & Shanagher, LLP, 225 Bush Street, 15th Floor, San Francisco, CA 94104 (Counsel for the Klein Brothers Defendants) and J. James Sogi, Law Offices of J. James Sogi, 75-170 Hualalai Road, Suite D-120, Kailua-Kona, HI 96740. TO BE CONSIDERED VALID, A REQUEST FOR EXCLUSION MUST SET FORTH ALL OF THIS INFORMATION AND MUST BE TIMELY POSTMARKED. (d) If you validly and timely request exclusion from the settlement (i) you will be excluded from the Settlement Class, you will not receive the benefits provided to the Settlement Class, and you will not be permitted to object to the settlement; (ii) you will not be bound by the final judgments entered in the Action; and (iii) you will not be precluded from otherwise prosecuting any individual claim, if timely, that you may have against any of the Retail Defendants, the Klein Brothers Defendants, the Kona Kai Defendants, Peet's or Starbucks related to the matters referred to in the Action. (e) If you do not request to be excluded from the Settlement Class and are a member of the Settlement Class, you may object to the terms of the settlement under the procedures set forth below. However, you will be barred from bringing your own individual lawsuit asserting claims related to the matters referred to in the Action, and, if your objection is rejected, you will be bound by the final judgments just as if you had not objected. (f) You may, but need not, enter an appearance through counsel of your choice. If you do, you will be responsible for your personal attorneys' fees and costs. If you do not request exclusion and do not enter an appearance through separate counsel, you will be represented by the plaintiffs' counsel identified above. 10. A hearing will be held before the Honorable Ken Kawaichi, Department 20 of the Superior Court for the County of Alameda, at the address listed in ¶4, on July 14, 2000, at 10:00 a.m. The purpose of the hearing is for the Judge to decide whether the proposed settlements, including the provisions for allocation of settlement proceeds and attorneys' fees, are fair, and should be approved. The time and date of this hearing may be continued or adjourned without further notice. If the Retail Defendants and/or the Klein Brothers Defendants determine that requests for exclusion from the Settlement Class have been made by a significant number of class members, the Settlement Agreement as to either the Retail Defendants and/or the Klein Brothers Defendants may be terminated at their option. 11. If you have not timely and validly requested exclusion, you may object to the settlement or to the payment of attorneys' fees and reimbursement of expenses, provided that you have by June 23, 2000, filed with the Court a written notice of your objection, together with all supporting papers and a statement under penalty of perjury that you are in fact a member of the Settlement Class, and have sent copies of such notice and papers to the counsel identified in paragraph 9(c) above and such papers are received by the counsel identified in paragraph 9(c) no later than June 23, 2000. Your notice and papers must set forth the case name and number ("Patrick, et al. v. Kona Kai Farms, Inc., et al.," Case No. 810305-5). CLASS MEMBERS WHO DO NOT TIMELY MAKE THEIR OBJECTIONS IN THIS MANNER WILL BE DEEMED TO HAVE WAIVED ALL OBJECTIONS AND SHALL NOT BE HEARD AT THIS HEARING. 12. Settlement proceeds after deduction of Court approved attorneys' fees and expenses will be distributed to eligible claimants based on the number of acres in green coffee that you had in commercial production for each of the years from 1987 through 1996. Distribution of settlement proceeds will be on a pro rata basis, i.e., each eligible claimant will be paid the percentage that his or her claim bears to the total of all eligible claims. All claims will be reviewed by a committee of coffee farmers for accuracy and you may be required to submit documentation to support your claim. 13. To date, Plaintiffs' Counsel have not received any payment for their services or out-of-pocket expenses in conducting this Action and the Other Actions on behalf of plaintiffs and members of the class. The initial case was filed on January 9, 1997. At the Final Approval Hearing on July 14, 2000, Plaintiffs' Counsel will request the Court to approve payment of attorneys' fees not to exceed 33% of the total recovery, plus out-of-pocket expenses not to exceed $508,149.17, but with a ceiling of 50% of the total settlement proceeds going to counsel. Class members are not personally liable for any of the fees or expenses. Any amount approved by the Court will be paid from the gross settlement proceeds. The total attorneys' fees and expenses requested by Plaintiffs' Counsel are significantly less than the one-third contingent fee agreements plus expenses negotiated with the Representative Plaintiffs and significantly less than the hourly billings and expenses in these cases. In addition, Plaintiffs' Counsel will request the Court to approve small service awards to the Representative Plaintiffs. Plaintiffs' Counsel will propose that each of the Representative Plaintiffs who were required to produce records, work with our accountants, attend depositions and fly to Honolulu be reimbursed $2,500 each for their time and costs. Plaintiffs' Counsel will propose that each of the remaining Representative Plaintiffs be reimbursed $500 to cover any costs incurred. 14. This is a summary of the proposed settlements with the Retail Defendants, the Klein Brothers Defendants, the Kona Kai Defendants, Peet's and Starbucks. More information can be obtained by examining the file in this Action at the Superior Court of California, City and County of Alameda. DATED: April 28, 2000 3 BY ORDER OF THE ALAMEDA COUNTY SUPERIOR COURT