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Case Over Starbucks Ham Quality Advanced

CAMDEN, N.J. (CN) - Starbucks can pursue claims that it was supplied with poor-quality ham because of misrepresentations from its meat suppliers, a federal judge ruled.

The complaint stems from revamped breakfast sandwiches that the coffee giant ordered from its supplier of one year, SK Food Group, in 2008.

Relying on the results of a blind taste test, Starbucks wanted SK to assemble the sandwiches with Black Forest ham made by Wellshire Farms.

When the coffee chain began getting complaints from customers about the ham in the sandwiches, however, it passed the complaints along to SK in September 2010.

Consumers said the meat was "discolored, had an unusual taste, and appeared spoiled," Starbucks said.

Complaints about the bad ham continued into November, at which time Starbucks learned for the first time that SK was assembling Starbucks sandwichwes with ham from Hahn Brothers, not Wellshire, according to the complaint.

Swedesboro, N.J.-based Wellshire Farms, which allegedly contracted Hahn to satisfy its obligation in producing ham for Starbucks, filed a federal complaint against SK Food Group Inc. and Hahn Brothers in 2011.

The parties settled in that case, but the dispute appeared again when Starbucks sued Wellshire and Hahn Brothers this past February, claiming breach of contract, negligent misrepresentation and deceptive trade practices.

Westminster, M.D.-based Hahn Brothers moved to dismiss the new action based on its claim that all activities related to the processing and testing of the allegedly defective ham occurred in Maryland.

Since the alleged customer complaints began in September 2010, Hahn also said that a three-year statute of limitations expired in September 2013.

Opposing Hahn's motion, Starbucks and Wellshire called it premature to determine which state's law applies.

U.S. District Judge Noel Hillman sided with Starbucks and Wellshire on Nov. 21.

"Even though the complaint states that Hahn is a Maryland corporation with a principal place of business in Maryland, the complaint is otherwise silent as to the location of all other events, except for the country-wide distribution of the ham to sandwich assemblers, and the sandwiches' shipment to Starbucks locations throughout the United States and Canada," the ruling states.

Hillman also cited the lack of "allegations concerning the details of the contract between Wellshire, a New Jersey company, and Hahn, or where the ham was processed or shipped from."

"Although it could be guessed that Hahn's principal place of business in Westminster, Maryland was where the ham was produced and where Starbucks eventually tested it on-site, the complaint does not specify the location or any other details about Wellshire and Hahn's business dealings," the opinion continues.

Even if the ham was produced in Maryland, "it is the relationship between New Jersey-based Wellshire and Hahn that forms the basis of Starbucks' claims," the judge added.

With Starbucks failing to say what law applies to the contractual relationship between Wellshire and Hahn in its complaint, Hillman agreed that "a record more robust ... than simply Starbucks' complaint is necessary before the court can determine what state's law applies to Starbucks' claims against Hahn."

Hahn can still raise the issue later.

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