competitor lacks standing under Cal. law because it didn't rely on alleged misrepresentations; its customers did

Kachuck Enters. v. Mission Produce, Inc., --- F.Supp.3d ----, 2026 WL 216475, No. 2:25-cv-01523-AH-JCx (C.D. Cal. Jan. 22, 2026)

This was a putative class action about alleged misrepresentations made by distributors and suppliers of Mexican-grown avocados that their avocados are sustainably and responsibly sourced. Plaintiffs, California avocado farmers, alleged losses from defendants’ touting of “unsustainably grown Mexican avocados as ‘sustainable’ to consumers.”

Despite representations about water conservation, biodiversity, and soil health, defendants allegedly source their avocados from Mexican orchards installed on lands recently deforested without the proper permits from Mexican authorities. “Sourcing avocados from deforested land exacerbates ongoing water scarcity in Mexico, contributes to climate change, and leads to habitat and biodiversity loss.” Plaintiffs cited various surveys showing that “significant segments” of U.S. consumers prioritize sustainability and more transparency from food producers and retailers throughout the entire food supply chain. Another survey “found that more than half ... of consumers indicated they are willing to spend more money on products that are deemed sustainable or environmentally friendly.”

Plaintiffs brought the usual California statutory claims. The court found no standing under the FAL and the “fraudulent” prong of the UCL because plaintiffs didn’t allege their own reliance on the false claims; rather, they alleged that they were harmed by consumers’ reliance on the allegedly false claims. This reasoning seems dumb—these laws were intended to protect competitors as well as consumers—and the court noted an increasing minority of federal district courts have rejected it. It’s probably time for the 9^th Circuit to certify a question, though I don’t have much doubt that the California Supreme Court will clarify that consumer reliance is required, but not competitor reliance.

As for unfair competition/UCL unfairness, the court applied the “tethering” test, which applies in actions “by a competitor alleging anticompetitive practices.” A finding of unfairness must be “tethered to some legislatively declared policy or proof of some actual or threatened impact on competition”: “conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws ..., or otherwise significantly threatens or harms competition.”

The test was not satisfied. Although plaintiffs argued in briefing that “Defendants’ influx of cheaply priced and unsustainably—and possibly illegally—sourced avocados distorts the market,” while plaintiffs must comply with strict sustainability requirements, while the complaint focused only on defendants’ acts of “offering for sale and selling deceptively labeled Mexican avocados” and “deceptively marketing products.”

Regardless, that theory wasn’t enough. Plaintiffs argued that defendants’ sourcing practices are exploitative because they are “possible only by entities with sufficient size and power to dominate operations in foreign countries with weaker environmental regulations” and they “exploit residents of a foreign country and contribute to the wholesale destruction of forests.” Thus, “Defendants leverage their size and reach to flood the market with avocados, boxing out competitors.” But these were “conclusory assertions,” and didn’t explain what part of antitrust law was implicated.  Nothing in the FTC Act specifically “precludes a business from sourcing its products in a lower-cost country where environmental laws or other safeguards may be less stringent than in the United States,” and sourcing products abroad is not an FTC Act violation “simply because regulatory conditions in those countries make the cost of production lower.” Plus, injury to competitors isn’t injury to competition. [That argument rings particularly hollow where the alleged distortions operate on whole countries’ worth of businesses.]