In Sugar v. HFCS (aka “Corn Sugar”), A Message For Trade Association Members

By Ricardo Carvajal –

Late last month, a district court issued a ruling of interest in a Lanham Act case brought by sugar producers and trade associations against corn refiners and the Corn Refiners Association ("CRA") over their marketing of high fructose corn syrup ("HFCS").  The suit alleges that CRA’s claims that “HFCS is corn sugar,” “HFCS is natural,” and “sugar is sugar” constitute false advertising because HFCS is not naturally occurring and has effects on the body that differ from those of table sugar. 

In denying Defendants’ motion to dismiss as to Defendant CRA, the court rejected CRA’s contention that the challenged claims are not advertising, but are instead part of an “education campaign.”  The court noted that statements are not insulated from action under the Lanham Act by virtue of relating to a public health issue, and concluded that the challenged statements were promotional in nature:

As a trade organization made up of corn refiners, an economic motive exists, and the statements refer specifically to [HFCS].  The statements themselves also clearly are promoting corn syrup to food and beverage purchasers. 

However, the court granted Defendants’ motion to dismiss as to the individual corn refiners.  The court rejected Plaintiffs argument that CRA’s conduct should be imputed to the refiners because CRA is an agent of the refiners, all of whom are CRA members and financed CRA’s campaign:

Plaintiffs’ allegations as to the relationship between CRA and its members are conclusory and do not establish the authority to control that is required to show an agency relationship.  Hence, the Court cannot impute CRA’s actions to the remaining defendants.  Furthermore, Plaintiff’s allegations do not establish a false advertising claim against the individual member companies, as the First Amended Complaint lacks any allegations of the Member Defendants engaging in any advertising.

Although CRA has submitted a citizen petition to FDA seeking to rename HFCS as “corn sugar,” the court refused to apply the doctrine of primary jurisdiction.  That doctrine “allows a court to stay or dismiss an action without prejudice pending resolution by a government agency of an issue within its special competence.”  The court noted that the suit raises issues that would not be resolved by a decision on the citizen petition, and that there is no precedent for applying the doctrine in a case involving a challenge to an advertising campaign.