Sugar Companies Try to Cane Corn Association

Posted by | February 09, 2012 | General | 2 Comments

 


This past September I wrote about a lawsuit pitting sugar against corn.  Initially, two sugar manufacturers sued the Corn Refiners Association (CRA) and six high fructose corn syrup (HFCS) manufacturers for false advertising under the Lanham Act, as well as for being in violation of California Business and Professions Code Section 17200 as a result of their corn sugar “re-branding” campaign.  At the time I first wrote about it, the court had just heard motions to dismiss the First Amended Complaint.  Soon thereafter, eight more plaintiffs joined.  I wrote about the case again in mid-November, by which time the court had dismissed the HFCS manufacturers from the case and also had stricken the California state law claim, while allowing the federal false advertising case to continue against CRA.  On November 21, 2011 ten plaintiffs filed their second amended complaint against six defendants:

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Sugar

American Sugar Refining Inc., The American Sugar Cane League of the USA Inc., C and H Sugar Company, Inc., Western Sugar Cooperative, Imperial Sugar Corporation, Minn-Dak Farmers Cooperative, The Sugar Association Inc., Michigan Sugar Company, United States Sugar Corporation, and The Amalgamated Sugar Company LLC

VS.

Corn

Archer-Daniels-Midland Company, Cargill, Inc., Corn Products International, Inc., Roquette America, Inc., Tate and Lyle Ingredients Americas, Inc., and The Corn Refiners Association, Inc.

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The Corn Refiners Association (a membership organization comprised of the HFCS manufacturers) filed its Answer on December 16, 2011 and the manufacturers filed another Motion to Dismiss on December 16, 2011.  On Monday, February 2, 2012 the Plaintiffs filed their Opposition to the HFCS manufacturers’ Motion to Dismiss.  Since the court already found that Plaintiffs are likely to succeed in proving the challenged advertising statements false, the issue is which party or parties is/are liable for such false statements.

The Opposition brief essentially argues (without ever stating it expressly) that the CRA is the alter ego of the HFCS manufacturers, which fund it and exclusively benefit from its activities.  The complaint seeks vicarious liability from CRA’s member companies for the activities of CRA and the Opposition brief explains in detail why this is a viable legal claim, both on principles of agency and joint tortfeasors.  Specifically, the Opposition states that each of the member companies: (1) directed CRA’s activities through their voting presence on its board; (2) actively managed CRA’s formulation and execution of the false advertising campaign, (3) co-funded the campaign; and (4) ratified and endorsed the campaign messages apart from the CRA campaign.  In short, the Plaintiffs claim that the manufacturer defendants should not be allowed to circumvent the Trademark Act by “hiding behind an inadequately capitalized trade association they control, govern and fund.”  Sounds right to me — if it looks, walks and quacks like a duck, it should be held liable for false advertising.

Though the issues of false advertising and the legality of re-branding HFCS as “corn sugar” is important, this case could have even bigger implications of setting important precedent (at least for the moment) on vicarious liability in false advertising cases.

About Lara

Lara Pearson is a trademark attorney with Exemplar, where she also serves as the firm's Sustainability Steward. Lara's legal practice focuses on trademark and copyright law, including: intellectual property audits; trademark search & clearance; trademark and copyright registration & maintenance; intellectual property transfers; transactional work; and dispute resolution, including litigation when necessary. Lara primarily represents other social enterprises -- those leveraging their businesses and brands as catalysts for positive social and environmental change. Such businesses engage in CSR (Corporate Social Responsibility) to have a positive "triple bottom line" of people, planet and profit. As Exemplar's Sustainability Steward, Lara works with others in her law firm to measure and reduce the firm's carbon emissions and encourage engagement in social responsibility initiatives, including pro bono legal work and volunteering. Lara is a proud member of the Social Venture Network. Brand Geek is a member of 1% for the Planet and a Certified B Corporation, whose Incline Village office is certified under the regional Keep the Sierra Green program. Exemplar Companies is the most innovative professional services firm in the New Economy. Our unique, diversified expertise spans the disciplines of corporate law, business advisory, and capital/investment banking to better meet the needs of our high-potential customers. We have assembled a comprehensive suite of service to meet the complex issues facing companies in today’s challenging business environment. Our unique, holistic approach ensures the growth and success – and greatly increases the competitive advantage - of our customers. The Exemplar team is comprised of knowledgeable, highly skilled experts in a wide range of industries and disciplines. They work closely with our customers to provide trusted advice, incomparable support, expert guidance and the ultimate competitive advantage as they accelerate their businesses and position themselves to transform industries.

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