An investigation on behalf of current investors Diedrich Coffee, Inc. (Public, NASDAQ:DDRX), who purchased the DDRX shares before November 02, 2009, over potential breaches of fiduciary duty and other violations of state law in connection with an alleged unfair takeover price was announced.

The investigation by a law firm focus on potential breaches of fiduciary duty and other violations of state law by the Board of Directors of Diedrich Coffee, Inc. arising out of their attempt to sell Diedrich Coffee to Peet's Coffee & Tea, Inc. On November 02, 2009 Diedrich Coffee, Inc. (NASDAQ: DDRX) and Peet's Coffee & Tea, Inc. (NASDAQ: PEET) announced that they have entered into a definitive agreement under which Peet's will acquire Diedrich in a cash-and-stock transaction valued at $26.00 per share or a total value of approximately $213 million. The acquisition has been unanimously approved by the board of directors of each company.

But according to an investigation by a law firm the transaction appears to be unfair to current investors of Diedrich Coffee, Inc. (NASDAQ:DDRX) because the offer to purchase Diedrich Coffee, Inc. (DDRX) per share appears opportunistically timed to take advantage of the current economic downturn and offers no or little premium to DDRX sharesholders. The investigation concerns whether the Diedrich Coffee Board of Directors breach their fiduciary duties to Diedrich Coffee (DDRX) shareholders by agreeing to sell the DDRX at an unfair price thereby harming Diedrich Coffee, Inc. and its shareholders, whether the directors of Diedrich Coffee, Inc. may have breached their fiduciary duties by not acting in DDRX shareholders' best interests, and the Company may not have adequately shopped itself around before entering into this transaction and, pursuant to this proposed transaction, Peet's Coffee & Tea, Inc may be underpaying for Diedrich Coffee, Inc. , thus unlawfully harming DDRX shareholders.

Shares of Diedrich Coffee, Inc (DDRX) traded at $22.74 per share the day before the announcement, and at $25.83 per share after the news. DDRX shares traded at over $26.95 per share on Thursday October 29, 2009 and over $31 per share on October 26, 2009. Diedrich Coffee, Inc., located in Irvine, California, is a specialty coffee roaster, wholesaler and retailer. The Companys brands include Diedrich Coffee, Gloria Jeans and Coffee People. The majority of its revenue is generated from wholesale customers located across the United States. Diedrich Coffee, Inc reported in 2007 Total Revenue of $39.98million and in 2008 Total Revenue of $62.31million with a Net Income of $1.59million.