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ADM, Corn Refiners Seek Dismissal From Sugar Producers’ Suit

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March 21 (Bloomberg) -- Archer-Daniels-Midland Co. and four other corn refiners asked a judge to dismiss them from a lawsuit by sugar producers over allegedly false advertising that high-fructose corn syrup is natural.

A lawyer for the corn refiners said at a hearing today before U.S. District Judge Consuelo B. Marshall in Los Angeles that the companies can’t be made liable for the statements of the trade group of which they are members, the Corn Refiners Association.

The judge said after hearing arguments that she would issue a written ruling. She didn’t indicate whether she would dismiss the corn refiners from the lawsuit.

“The association is run as a front for the corn syrup companies,” Mark Lanier, a lawyer for the sugar producers, said after the hearing. “We want the puppet masters to be held accountable.”

A group of sugar growers and refiners last year sued the corn refiners and their trade association, claiming that an advertising campaign that promotes high-fructose corn syrup as “natural” and “nutritionally the same as table sugar” is false and misleading.

‘Drop in Sales’

The sugar producers, in an amended complaint filed in November, said the corn refiners initiated the advertising campaign in 2008 in response to the “growing vilification” of high-fructose corn syrup, which is used as a sweetener in soft drinks and has been linked to an increase in obesity in the U.S., and a “resulting drop in sales.”

Stephen D’Amore, a lawyer for the corn refiners, said after the hearing that the sugar growers will have to explain how obesity has continued to increase in the U.S. even as consumption of high-fructose corn syrup has declined.

“The CRA has answered the complaint and is moving forward to vigorously defend its advertising campaign,” D’Amore said.

During the hearing, D’Amore argued that there was no case law to support the sugar producers’ argument that, since members of the corn refiners association are represented on the association’s board of directors and finance its activities, those members can be held liable for these activities.

The corn refiners have sought approval from the U.S. Food and Drug Administration to substitute “corn sugar” for “high-fructose corn syrup” on ingredient labels, according to the complaint.

Man-Made Substance

The sugar producers say corn sugar is a distinct sweetener made from corn starch, whereas high-fructose corn syrup is a man-made substance created by transforming some of the glucose in corn syrup into fructose that doesn’t naturally occur in the plant.

The sugar producers, which include Sugar Land, Texas-based Imperial Sugar Co., seven other companies and two trade groups, seek triple damages under U.S. antitrust law and a court order to stop the corn refiners from making the alleged false claims.

Marshall last year dismissed the individual corn refiners from the case, saying the allegations were legally insufficient to support a claim against them. She allowed the claim against the trade association to go forward and gave the sugar producers the opportunity to restate their claims against the individual refiners.

Lawyers for the refiners said in their request to throw out the amended claim that the sugar producers still fail to make “individual and particular allegations” against the trade group’s members, and instead “lump all of the companies together as a single unit.”

The case is Western Sugar v. Archer-Daniels-Midland, 11-3473, U.S. District Court, Central District of California (Los Angeles).

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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