Thursday, January 07, 2010

Pom day: this time, a loss

Pom Wonderful LLC v. Welch Foods, Inc., 2009 WL 5184422 (C.D. Cal.)

Pom (I’ll follow the court’s capitalization) sued Welch for state and federal false advertising based on Welch’s “White Grape Pomegranate” juice blend that competes with Pom’s juices. Related case against Ocean Spray.

The court here granted Welch’s motion to dismiss the California UCL and FAL claims for lack of standing, though (with hesitation) allowed Pom to amend. Currently, a UCL or FAL claim requires a showing of injury in fact: lost money or property as a result of unfair competition. The UCL’s remedies are limited to restitution and injunctive relief. So, to establish loss of money or property, a plaintiff must have prior possession or a vested legal interest in the money or property lost. Here, the court reasoned, Pom sought an unavailable remedy. The damages alleged were lost business and goodwill, injury of relationships with existing and prospective cutomers, and hindered sales of Pom products. But the California Supreme Court has held that disgorgement of profits is not authorized under the UCL where the profits aren’t money taken for a plaintiff or funds in which a plaintiff has an ownership interest. A California court of appeal case has recently held that harm to goodwill isn’t loss of money or property sufficient to confer standing. All Pom has is a “contingent expectancy of payment from a third party”—consumers. Lost profits are damages, not restitution.

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