Lanham Act Battle Over Definition of ‘Sugar’ in Advertising Heats Up6 Sep, 2012 By: John Waller, Jeffrey Richter
In connection with the ongoing battle for market share between growers of cane and beet sugar and manufacturers of high fructose corn syrup (HFCS), several growers, producers and refiners of table sugar made from sugar cane or sugar beets – and two related trade associations – filed suit against various corn refiners, including Archer-Daniels-Midland Co., Cargill, and their trade association, alleging violations of the Lanham Act (Western Sugar Cooperative, et al. v. Archer-Daniels-Midland Co., et al., U.S. District Court, Central District of California).
The lawsuit challenges aspects of the defendants’ “Sweet Surprise” advertising campaign for HFCS, which employs a variety of phrases to market HFCS, such as “HFCS is corn sugar,” “HFCS is natural,” and “HFCS is the same as sugar.” The plaintiffs argue that HFCS is a “man-made product” that does not occur “naturally” and, as a result, the defendants’ use of the cited phrases to advertise and promote HFCS constitute false and misleading advertising.
While this lawsuit is still in its early stages, one of its early rulings is noteworthy. In ruling on the defendants’ motion to dismiss portions of the “Second Amended Complaint,” the court strictly followed the rule in the Ninth Circuit regarding the degree of specificity in pleading required to connect individual defendants to an unlawful practice or scheme. Specifically, the Ninth Circuit interprets Rule 9(b) of the Federal Rules of Civil Procedure to preclude generalized non-specific pleading of an individual defendant’s alleged involvement in an unlawful practice or scheme. Attempts to lump multiple defendants together as alleged joint “tortfeasors” or co-conspirators without individualized allegations linking them to the unlawful practice or scheme are not sufficient.
Following this rule, the court found that the Second Amended Complaint’s allegations regarding the defendants’ respective use of spokespersons to disseminate the common advertising theme that “HFCS is no different than sugar,” and their common use of the phrase “corn sugar” in place of HFCS in their respective advertisements (and in their other communications directed towards customers and investors) included sufficiently individualized allegations to tie all but one of the defendants to the alleged campaign to defraud consumers and investors. The sole exception was the deficient allegation against one defendant, Roquette, which the Second Amended Complaint merely alleged to be connected to the alleged “Sweet Surprise” campaign solely by virtue of that defendant’s membership on the board of directors of the defendant trade association.
While it is too early to predict how the defendants’ recent attempt to rebrand HFCS to change the public’s negative perception of it will ultimately fare, the defendants, including direct response marketers, can at least take some comfort in knowing that courts are beginning to require plaintiffs to specifically allege their individual involvement in an unlawful activity before they must endure the cost of defending a lawsuit all the way through the trial of the action.