Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Juice purchaser lacked standing to sue manufacturer over allegedly misbranded products, (Mar 20, 2014)

By Jody Coultas, J.D.

Amazon Preservation Partners, Inc., d/b/a Zola ACAI, was granted dismissal of California Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA) claims that it misbranded its juice products, the federal district court in San Francisco has held. The purchasers lacked standing to assert the claims (Swearingen v. Amazon Preservation Partners, Inc., March 18, 2014, Orrick, W.).

Juice purchasers alleged that defendant Zola lists Organic Evaporated Cane Juice as an ingredient in its Açai with Pomegranate juice in violation of Food and Drug Administration (FDA) regulations, which require that evaporated cane juice be identified as sugar. Zola allegedly used the term evaporated cane juice rather than sugar to make the products seem healthier. The purchasers alleged that they would not have bought the juice had Zola disclosed that the juice was illegal to sell and possess.

The purchasers lacked standing to assert the UCL claims, according to the court. Actual reliance is required under the UCL where a plaintiff alleges misrepresentations on product labels. The purchasers argued that the only element needed to show UCL liability was proof that Zola sold misbranded food products that were illegal. This argument was dismissed based on precedent holding that UCL unlawful claims require evidence of actual reliance. The purchaser’s argument that they adequately pleaded reliance because they would not have purchased the juice but for the failure to disclose that the product was unlawful to sell or possess also failed.

Similarly, the purchasers lacked standing to assert the CLRA claims because they failed to plead reliance, according to the court. To have standing under the CLRA, a plaintiff must allege reliance on the alleged misrepresentation and an economic injury stemming from the misrepresentation. The purchasers argued they satisfied the reliance requirement because Zola had a duty to disclose the illegality of its misbranded products and failure to disclose this illegality resulted in a presumption of reliance. However, the purchasers did not allege that they relied on the alleged misrepresentation.

The case is No. 13-cv-04402-WHO.

Attorneys: Ben F. Pierce Gore (Pratt & Associates) for Mary Swearingen. William Lewis Stern (Morrison & Foerster LLP) for Amazon Preservation Partners, Inc.

Companies: Amazon Preservation Partners, Inc.

Cases: StateUnfairTradePractices Advertising CaliforniaNews