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Lawsuit will continue after sour ruling for corn groups

 

 

By MATTHEW D. ERNST

Missouri Correspondent

 

LOS ANGELES, Calif. — A federal judge has dismissed an action sought by corn groups in a false advertising lawsuit involving claims made by sugar and corn syrup groups. The dismissal moves the original lawsuit closer to trial.

The original lawsuit, filed in 2011 by Western Sugar Growers and other sugar interests, claimed corn groups engaged in false advertising when calling high fructose corn syrup (HFCS) "corn sugar."

On Sept. 4, 2012, the corn industry defendants – ADM, Cargill, Ingredion and Tate & Lyle – filed a counterclaim against the Sugar Association, one of the original plaintiffs with Western Sugar Growers. In that counterclaim, corn groups said that the Sugar Assoc. misrepresented HFCS as unhealthy in advertising.

The Aug. 5 ruling concerned an amended counterclaim that corn processors filed on May 23, when they named nine new plaintiffs in addition to the Sugar Assoc. That amended counterclaim also added two new causes of action based on alleged violations of Illinois state law.

Judge Consuelo B. Marshall, U.S. District Judge in the Central District of California, concluded the corn groups were "unduly delayed in seeking leave to amend" and waited too long to file their "eleventh hour" amended counterclaim. Specifically, their delay would subject the sugar groups to legal "prejudice" if they had to respond to the new aspects named by the corn groups. "In short, granting leave to amend would prejudice Plaintiffs by imposing higher litigation costs on them and further delaying trial," Marshall wrote.

The ruling was sour for corn but sweet for sugar. "We are disappointed by the ruling and are considering our options," said John Bode, president of the Corn Refiners Assoc. "At a minimum, we would proceed with the case under our original counterclaim against The Sugar Assoc."

Adam Fox, co-lead counsel for the sugar plaintiffs, appreciated the ruling.

"It was the right result and now paves the way for us to prepare for trial without further delays or distractions," Fox said.

According to USDA, U.S. supply of HFCS was about 9 million tons annually from 1999 to 2006, then declined steeply. The HFCS supply of 7.3 million tons in 2013 represents a drop more than 20 pounds of HFCS per person since 1999, according to USDA. Introducing the term "corn sugar" was part of marketing efforts as consumers started to reduce HFCS consumption from 2006 on.

The outlook clouded for using "corn sugar" interchangeably for HFCS after an FDA ruling in 2012 that denied the Corn Refiners Assoc. to authorize "corn sugar" as an alternate common or usual name for HFCS. According to the Sugar Assoc., corn refiners continued to use the term "corn sugar" after the FDA’s ruling. The Corn Refiners Assoc. does not believe its use of "corn sugar" is wrong and hopes to prove it is actually the sugar groups that are engaging in false advertising. "We have alleged and expect to prove at trial that the Sugar Assoc. 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," John Bode said.

8/13/2014