Louisiana Shrimp Association

P.O. Box 1088, Grand Isle, Louisiana 70358

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9th Circuit Appeals Court gives companies new tools to sue sellers of fraudulent products
SEAFOOD.COM NEWS by John Sackton - Jan 20, 2010 - The 9th Circuit Court of Appeals has upheld a judgment that a juice company selling falsely labeled product must pay damages, disgorgement of profits and attorney's fees totaling $1.9 million. The reasoning in the case appears to apply to the very similar issues of fraudulent labeling and short weight that have plagued the seafood industry.

The suit was filed by POM Wonderful, a company selling 100% pomegranate juice, who sued a competitor, Purely Juice, for claiming to sell '100% pomegranate juice with no sugar added', when in fact the juice actually contained low levels of pomegranate solids and added sweeteners.

Dick Gutting cited this case in his import alert column on Urner Barry's Foreign Trade Data service.

Gutting says this case shows that FDA prosecution for misbranding is not the only remedy for seafood fraud. The Lanham act gives companies a legal mechanism to pursue legal claims themselves and recover damages.

Gutting cites the court findings that:
'Despite knowing certain industry brokers had 'credibility issues' and there were 'suitability questions' about some concentrate, Purely Juice did little to vet its broker or suppliers. Purely Juice understood (1) a limited global supply of pomegranates led some concentrate juice manufacturers to blend pomegranate with other juices; and (2) difficult harvesting conditions and lack of refrigeration at processing plants led concentrate manufacturers to add sugar.'

The Lanham Act is a trademark protection law passed in 1946. It is also the legal basis for suits against false advertising, or when false or misleading statements are alleged to have hurt a business.

According to wikipedia, claims under the Lanham act generally have to satisfy 3 principles to be successful: There was a false or misleading statement made, the statement was used in commercial advertising or promotion, and the statement creates a likelihood of harm to the plaintiff.

The significance of the 9th circuit court decision (link here), is that the court explicitly found that the juice maker Purely Juice did not escape liability by relying on the statements of its broker that it was purchasing 100% pomegranate juice.

Instead, the court held that in cases where there is common knowledge of fraud and business practices that lead to adulterated products, the company claiming to sell a pure product has to take affirmative steps to guarantee that it is in fact living up to the claim.

Obviously this case has implications for the seafood industry, because it opens up a legal avenue to sue a company claiming to sell unadulterated products, but who actually is selling such products. The appeals court case awarded damages, attorneys fees, and disgorged profits to the plaintiff in this case.

Violations of the Lanham Act, which is normally enforced though litigation by the company claiming damages, adds to the risk of seafood companies that base their business on sales of mislabeled, adulterated, or substandard product.

As Dick Gutting said in his commentary, the 9th Circuit has opened up another avenue of enforcement that does not depend on the FDA, but allows companies to sue directly for damages caused by sales of falsely labeled products.

NOTICE FROM THE LOUISIANA DEPARTMENT OF WILDLIFE AND FISHERIES
October 27, 2009

The Louisiana Department of Wildlife and Fisheries has received reports and actual specimens of GIANT TIGER PRAWNS, a non-native species of Vermillion and Barataria Bays.
This species of shrimp is native to the Western Pacific. If a population were established in our waterways, they may pose a threat to our native shrimp species. Giant Tiger Prawns were characterized by their distinct dark and white bands. If you come across these in local waterways, you are encouraged to save the specimen (ice or refrigerate), record the location and contact the LDWF Aquatic Invasive Species biologist at: (225) 765-2641.

10/27/2009 3:18 PM
FDA to ban sale of raw oysters from Gulf of Mexico
Click here to read more

LDWF SECRETARY CREATES LOUISIANA SHRIMP HARVESTER ADVISORY PANEL(Click Here)

LDWF SECRETARY CREATES LOUISIANA SHRIMP PROCESSOR ADVISORY PANEL (Click Here)

Attention LSA Members
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US slashes shrimp import duty Click to Read More

Click Here to Read Fishery Market News

The shrimp fishery is the most valuable fishery in the United States. LSA will work hard to keep it this way.
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The "Lagniappe" newsletter is distributed monthly and contains news for both commercial and recreational fisheries. Click here to read the September 2009 issue.

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