Federal court upholds Starbucks win in Kraft case

NEW YORK — Starbucks Corp. is one step closer to ending its distribution partnership with Kraft Foods Inc. after a U.S. Appeals Court on Friday upheld a lower court ruling against Kraft.

The food maker began distributing Starbucks coffee to groceries and other stores more than a decade ago.

After Starbucks announced in November that it planned to end the arrangement, Kraft tried to get a federal court to prevent Starbucks from abandoning their relationship. The court denied that request in January.

On Friday, the U.S. Court of Appeals for the Second Circuit in New York upheld the lower court's ruling and said Kraft failed to show it faces irreparable harm if Starbucks breaks away before a separate arbitration process ends.

Starbucks said it still plans to take the packaged-coffee business back on Tuesday.

In arbitration, Kraft is seeking to be paid fair market value for losing the business, plus a premium of up to 35 percent.

The business brought Kraft about $500 million per year in revenue.

Sales at grocery stores and other retailers are increasingly important to Starbucks as it tries to expand its business beyond cafes.