Keurig Green Mountain awaits court ruling

Keurig Green Mountain has found itself once again in hot water as it awaits a court decision to overturn a dismissed investors lawsuit. Keurig investors argued in June last year that a lower court unfairly dismissed their class action which accused company executives of lying about a US$255 million inventory spike which was due to a rise in demand for Keurig coffee brewers. Keurig is arguing that during an investor conference call in February 2011, Keurig CEO Lawrence J. Blanford announced a plan to quickly increase production of Keurig single-cup coffee brewers to build a “cushion” for future demand for the products. The investors are arguing however that Blanford deliberately created a false impression of Keurig’s position for future growth through repeated claims of boosting production capacity. The court heard that Keurig announced in November, 2011 that it had missed sales expectations by about US$50 million, causing stock to plummet nearly 40 per cent. Investors claim the announcement was inexplicable for a company which had boosted its inventory so significantly months earlier. The plaintiffs accuse Keurig of trucking a backlog of unsold products between warehouses before inspections in order to mislead auditors and investors. Keurig executives are accused of selling their stock at inflated prices before investor David Einhorn says he discovered the deception. The US Securities Exchange Commission awarded Keurig a no-action letter in 2014, however, the plaintiffs are currently trying to revive the case on appeal. “The court’s dismissal of this lawsuit reflects what we understood from the beginning – that there was no wrongdoing by anyone at the company and the allegations made by the plaintiffs are baseless,” a company spokesperson told GCR Magazine. “We believe the lawsuit is without merit and the company will continue to defend itself vigorously.” The case was brought before the courts again in December 2014 with a decision expected any time.

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