Thursday, August 7, 2014
Judge Marshall Declines to Allow Expansion of Action By HFCS Producers Against Sugar Industry
Effort to Add Defendants in Their Cross-Action Comes Too Late, Order Says
By a MetNews Staff Writer
A judge of the U.S. District Court for the Central District of California has declined to allow makers of high fructose corn syrup and a corn industry trade group to expand their action against sugar producers for allegedly waging a war of falsehoods against HFCS, a ubiquitous sweetener in food products.
Judge Consuelo B. Marshall ruled Tuesday that the HFCS interests acted too late in seeking to add defendants to their counterclaim. At present, four companies that manufacture HFCS, along with the Corn Refiners Association, a trade association, are maintaining their action only against the Sugar Association.
The defendants sought leave to add two causes of action under Illinois law and to additionally sue the nine companies that are plaintiffs in the action.
The complaint, filed April 22, 2011, alleges false advertising in violation of the Lanham Act in the form of touting HFCS as the “equivalent” of sugar and referring to it as “corn sugar.”
Some studies have shown that HFCS, made from corn and other substances, is metabolized by the body into fat more rapidly than sugar and might be linked to some diseases. Because it is more inexpensively produced than sugar (sucrose), extracted from sugar cane and sugar beets, it is used widely in foods.
The plaintiffs include C&H Sugar Company, Inc. and its parent, American Sugar Refining, Inc.
In an 11-page order, Marshall said:
“Here, Defendants filed the instant Motion requesting leave to add nine new Counterclaim defendants and two new state law claims on May 23, 2014. This was more than 16 months after the January 2013 scheduling conference, more than 20 months after Defendants filed their Original Counterclaim, and just over a month before the end of an 18-month fact discovery period.”
She said the defendants’ explanations for the tardiness of their request were “not persuasive.” Marshall wrote:
“Defendants have not shown their new claims are based on facts learned so recently in discovery as to justify filing the instant Motion so late in the fact discovery period. Defendants’ vague statements—e.g., ‘only through discovery did Counterclaimants learn that Defendants actually funded and...tried to bury scientific research proving nutritional equivalence between HFCS and sugar’—do not satisfactorily explain why Defendants filed the instant Motion just five weeks from the end of an 18-month fact discovery period.”
Marshall observed that the defendants seek to bring in as cross-defendants companies that are members of the Sugar Association, Inc. She said the original counterclaim “alleged conduct involving all of the Plaintiffs that Defendants now seek to add,” pointing out that the initial pleading alleged that the association had acted “in concert” with its member companies in “craft[ing] a publicity campaign to disparage HFCS.”
This “further demonstrates that Defendants unduly delayed in filing the instant Motion,” Marshall wrote.
Prejudice to Plaintiffs
“[G]ranting leave to amend,” she said, “would prejudice Plaintiffs by imposing higher litigation costs on them and further delaying trial.”
John Bode, president of the Corn Refiners Association, said in a statement yesterday:
“We are disappointed by the ruling, and are considering our options. At a minimum, we would proceed with the case under our original counterclaim against The Sugar Association. We have alleged and expect to prove at trial that The Sugar Association has purposely misled the public to create false health concerns and fear about high fructose corn syrup-all for the purpose of increasing sugar’s market share.”
Los Angeles attorney Adam Fox, a partner in the multi-national law firm of Squire Patton Boggs, said of the ruling:
“It was the right result, and now paves the way for us to prepare for trial without further delays or distractions.”
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