Friday, October 29, 2010

Somebody should start the Pom litigation blog

I've got another one coming shortly!

POM Wonderful LLC v. Organic Juice USA, Inc., 2010 WL 3912222 (S.D.N.Y.)

Pom sued Organic Juice, which sells "100% Organic 100% Pure Pomegranate Juice" and "Natural 100% Pure Pomegranate Juice,” alleging that its scientific tests proved that the juices contained high-fructose corn syrup, grape juice, a foreign anthocyanin containing sweetener, and possibly apple juice. Organic Juice sought to amend its answer and counterclaims to assert various false advertising causes of action and to raise the unclean hands defense. This was based on the FDA’s actions against Pom’s claims about the health benefits of its product, and on the discovery that Pom’s "100% pomegranate juice" contained elderberry juice.

The court allowed the amended answer and counterclaims. Leave to amend is granted freely when justice so requires, but when it’s outside the time for filing amendments as set forth by a scheduling order, good cause must be shown. Here Organic Juice showed good cause for its delay, even though it was six months after the deadline set by the scheduling order. Organic Juice first discovered the elderberry juice issue by reviewing 30,900 documents produced in February; it filed its motion five days after making the discovery, so even if it took some time to uncover the documents, there was no delay after that.

Further, Pom didn’t show any prejudice from allowing the amendment. Significant delay in resolving the dispute or a requirement that the opponent spend significant additional resources on discovery and trial preparation can show prejudice, but here there was no trial date or pending motion for summary judgment at the time the motion was filed. “Moreover, the information upon which Organic Juice relies to assert its proposed new counterclaims is information best known to POM.” All the relevant information about Pom’s juice content is in Pom’s possession.

The FDA-based counterclaims were also allowed. Although the statements the FDA examined were publicly available when the initial lawsuit was filed, the foundation for the counterclaims is the FDA’s February finding that the statements violate the FDCA. (This will make for an interesting preemption/preclusion argument, though of course Pom is already somewhat constrained on that front by its litigation posture against other juice sellers.) The counterclaims are not futile. The new allegations that Pom marketed its juice as having special health benefits without the FDA's approval, advertised its product as containing "100% pomegranate juice" despite it also containing elderberry juice, and falsely advertised that all research on the health benefits of drinking pomegranate juice were conducted using POM WONDERFUL instead of another brand of pomegranate juice” sufficed to state claims under New York law and the Lanham Act.

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