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A month ago, after Starbucks revealed in a conference call with investors that it wanted out of a 12-year-old deal with Kraft to sell its packaged coffee in grocery stores, the companies said they planned to resolve the dispute in private. Not anymore. On Monday, a week after launching arbitration proceedings against Starbucks in Chicago, Kraft and its lawyers at Morgan, Lewis & Bockius filed suit against the coffee retailer in Manhattan federal district court, seeking a preliminary injunction to block Starbucks from terminating the sales arrangement. Grocery store sales of Starbucks coffee bring in revenues of $500 million a year, Kraft says. Kraft’s 34-page complaint asserts that Starbucks tried to buy its grocery store retailing business back from Kraft in August for $750 million. After Kraft refused the offer, according to the complaint, Starbucks’ lawyers at Kellogg, Huber, Hansen, Todd, Evans & Figel sent Kraft a letter in October, accusing Kraft of materially breaching the parties’ sales contract by failing to meet marketing and other obligations. Kraft alleges that Starbucks’ lawyers threatened in their October letter to terminate the companies’ agreement in March 2011 unless Kraft “cured” the purported breaches within 30 days. When Kraft balked and pressed Starbucks for more information, Starbucks began treating the termination as a “fait accompli,” according to the complaint. “Starbucks’ allegations are a concoction on which Starbucks has seized as a pretext for trying to strip Kraft of its rights under the [sales agreement] without living up to Starbucks’ clear contractual obligations to pay for these rights,” Morgan Lewis partner Michael Kraut writes in the Kraft complaint. Kraut declined to comment when we reached him Monday. A Kraft spokesperson referred us to a company statement and told us that Morgan Lewis is also representing the company in its JAMS arbitration against Starbucks in Chicago. Kellogg Huber’s Aaron Panner referred us to his client for comment. In a statement, Starbucks said, “It’s unfortunate that Kraft has chosen to attempt this delaying tactic through seeking preliminary injunction, a course that will ultimately prove harmful to customers. Starbucks has repeatedly said that we have terminated our agreement with Kraft and we continue to look forward to assuming full responsibility for the sales and distribution of our packaged coffee products as of March 1, 2011.”

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