Mot Dismiss Western Sugar Co-Op v Archer-Daniels-Midland

8/3/2019 Mot Dismiss Western Sugar Co-Op v Archer-Daniels-Midland

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WESTERN SUGAR COOPERATIVE,a Colorado cooperative, et al.,Plaintiffs,

v .

ARCHER-DANIELS-MIDLANDCOM PANY , a Delaware corporation,et al.,Defendants.

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Gail J. Standish (SBN: 166 3 3 4)[email protected] R. Ranahan (SBN: 235 28 6)eranahangwinston.cornWINSTON & STRAWN LLP3 3 3 S. Grand AvenueLos Angeles, CA 90 07 1-15 43Telephone: (213) 615-1700Facsimile: (213) 615-1750Dan K. W ebb (admitted pro hac vice)[email protected] V. D'Am ore (admitted pro hac vice)[email protected] & STRAWN LLP3 5 W. Wacker DriveChicago, IL 60 60 1-97 03Telephone: (312) 558-5600Facsimile: (312) 558-5700Attorneys for DefendantsARCHER-DANIELS-MIDLAND COMPANY, CARGILL, INC.,CORN PRODUCTS INTERNATIONAL, INC.,ROQUETTE AMERICA, INC.,AND TATE & LYLE INGREDIENTS AMERICAS, INC.

UNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNIA

Case No. CV11-3473 CBM (MANx)CERTAIN DEFENDANTS' NOTICEOF MOTION AND MO TION TODISMISS PLAINTIFFS' SECONDAMENDED COM PLAINT;MEM ORANDUM OF POINTS ANDAUTHORITIES IN SUPPORTTHEREOFFED . R. CIV. P. 12(b)(6) and 9(b)Hon: Consuelo B. MarshallDate: March 19, 2012Time: 11:00 a.m.Place: Courtroom 2[Proposed] Order Filed Con currentlyHerewith

NOTICE OF MOTION AND MO TION TO DISMISS; MEMO OF POINTS AND AUTHORITIESCASE No. CV11-3473 CBM (MANx)

Case 2:11-cv-03473-CBM-MAN Document 57 Filed 12/16/11 Page 1 of 21 Page ID #:1038


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TO THE COURT, ALL PARTIES AND THEIR ATTORNEYS OF RECORD:PLEASE TAK E NOTICE that on March 19 , 201 2, at 11 :00 a.m., or as soon

thereafter as this matter can be heard before the H onorable Consuelo B . Marshall ofthe United States D istrict Court for the Cen tral District of California, in C ourtroom 2of the above-entitled Court, located at 3 12 North Spring Street, Los Angeles,California 9 0 01 2, Defendants Archer-Daniels-Midland Compan y, Cargill, Inc., CornProducts International, Inc., Roquette America, Inc., and Tate & Lyle IngredientsAm ericas, Inc. (the "M ember Co mpan ies") will and hereby do m ove, pursuant toRules 1 2(b)(6) and 9 (b) of the Federal Rules of Civil Procedure,' for an orderdismissing all claims against them in this action with prejudice.

This M otion is brought pursuant to Rule 1 2(b)(6) on the grounds that Plaintiffs'claim against the Mem ber Com panies for violations of Section 43 (a) of the LanhamAct fails to state a claim upon which relief can be granted.

This M otion is also brought pursuant to Rule 9 (b) on the grounds that Plaintiffs'claim against the Mem ber Compan ies for violations of Section 43 (a) of the LanhamAct is n ot pleaded w ith sufficient particularity.

This Mo tion is based on this Motion and No tice of M otion, the supportingMem orandum of Points and Authorities, and any exhibits attached thereto, and uponsuch oral argument and subm issions that may be p resented at or before the hearing onthis Motion.

This Mo tion is made following the conference of counsel pursuant to L.R. 7-3which took place on December 9, 20 11 .Dated: December 16 , 201 1

1 All further statutory references are to the Fed eral Rules of Civil Procedure unless otherw ise noted.2

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WINSTON & STRAWN LLP

By: /s/ Gail J. StandishGail J. StandishErin R. RanahanAttorneys for DefendantsARCHER-DANIELS-MIDLAND COM PANY,CARGILL, INC., CORN PRODUCTSINTERNATIONAL, INC., ROQUETTEAMERICA, INC., AND TATE & LYLEINGREDIENTS AMERICAS, I N C .

3NOTICE OF MOTION AND MOTION TO DISMISS; MEMO OF POINTS AND AUTHORITIES

CASE No. CV11-3473 CBM (MANx)



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TABLE OF CONTENTSPage(s)

INTRODUCTIONSTATEMENT OF THE CASEARGUMENTI. Plaintiffs' New Alle ations Concerning Membership AndParticipation In CRA D o Not Resurrect The Lanham Act ClaimAgainst The Member CompaniesII . Plaintiffs' Agency Allegations D o N ot Satisfy Twombly OrRule 9(b)III. Plaintiffs' Conspiracy A llegations D o N ot Satisfy Twombly OrRule 9(b)IV . Plaintiffs Fail To M ake Spec ific Agen cy A llegations Against EachOf The Member C ompanies, As Required To S tate A Claim BasedOn Independ ent Conduct, Agency, Or Conspiracy0CONCLUSION4

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TABLE OF AUTHO RITIESPage(s)

CASESAD /SAT, A Division of Skylight, Inc. v. Associated Press et al.,

181 F.3d 216 (2d Cir. 1999)Alfus v. Pyramid Tech. Corp.,745 F. Supp. 1511 (N.D. Cal. 1990)Ashcro ft v. Iqbal,129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009)Bauman v. DaimlerChrysler Corp.,

644 F.3d 909 (9th Cir. 2011)Bell Atl. Corp. v. Twombly,550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007), 8, 9, 10Buchanan v. Neighbors Van Lines,2010 WL 4916644 (C.D. Cal. Nov. 29, 2010)Coa lianz, LLC v. JHB Inc. Intern.,2005 WL 1113854 (D . Or. May 6, 2005)Coa stal Abstract Serv., Inc. v. First Am . Title Ins. Co.,173 F. 3d 725 (9th Cir. 1999)2EEOC v. Zonta Intern.,1986 WL 7331 (N.D. Ill. Jun. 20, 1986)Gallagher v. Gallagher,130 F. Supp. 2d 359 (N.D.N.Y. 2001)

General Bldg Con tractors Ass 'n, Inc. v. Pennsylvania,458 U.S. 375, 102 S. Ct. 3141, 73 L. Ed. 2d 835 (1982)Greater Rockford Energy & Tech. v. Shell Oil,998 F.2d 391 (7th Cir. 1993)12345678910.4.41- 4 12 13) 614'1 5 '1 15e 2 ,= 1, 16171819202122232425262728 NOTICE OF MOT ION AINID MOTION TO DISMISS; MEMO OF POINTS AND AUTH ORITIES




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In re Processed Egg Products Antitrust Litigation,201 1 W L 446 53 55 (E.D. Pa. Sept . 26 , 2011 )Neubronner v. M ilken,6 F.3d 66 6 (9 th Cir . 19 93 )New.Net , Inc. v. Lavasofi,3 56 F. Supp. 2d 10 90 (C.D. Cal. 200 4)2Pacific Tob acco C orp. v. Am erican Tobacco Co., Inc.,197 4 WL 85 9 (D. Or. 197 4)Palomares v. Bear Sterns Residential Morg. Corp.,2008 WL 68 66 83 (S .D. Cal 2008 Mar. 13 , 2008 ), 1 1Ries v. Hornell Brewing,201 1 W L 129 928 6 (N.D. Cal . Apr. 4 , 201 1)3Rpo st Holding s, Inc. v. Trustifi Corp.,2011 WL 48 023 72 (C.D. Cal . Oct. 11 , 2011), 8Specht v. Goog le, Inc.,66 0 F.Supp. 2d 8 5 8 (N.D. Ill. 20 09 )Swartz v. KPM G LLP,476 F.3 d 765 , 76 4-65 (9 th Cir. 200 7)1United States v. Bonds,60 8 F.3d 49 5 (9 th Cir . 201 0)Vess v. Ciba-Geigy Co rp. USA,3 17 F.3d 109 7 (9 th Cir . 2003 )0Von Ko enig v. Snapple Beverage Corp.,2011 WL 43 57 7 (E.D. Cal . Jan. 6 , 2011)2Western Sugar C ooperative et al. v. Archer-Daniels-Midland Co. et al. ,No. 11-CV-34 73 CBM(MANx) (C.D. Cal . Oct . 19 , 2011 )Western Sugar C ooperative et al. v. Archer-Daniels-Midland Co. et al. ,No. 11-CV-34 73 CBM(MANx) (C.D. Cal. Oct. 21, 201 1)York v. Tennessee Crushed Stone A ss 'n,68 4 F.2d 36 0 (6 th Cir . 19 8 2)NOTICE OF MOTION AND MOTION TO DISMISS; MEMO OF POINTS AND AUTHORITIES




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STATUTES

15 U.S.C. 1125(a)OTHER AUTHORITIESCal. Bus. & Prof. Code 17200 et seq.Fed. R. Civ. P. 9(b)assimFed. R. Civ. P. 12(b)(6)assim

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INTRODUCTIONEven with a second bite at the apple, Plaintiffs still have failed to allege a

Lanham Act claim against the compan ies that are members of defendan t CornRefiners Association Inc. ("CRA"). In the First Amended Complaint ("FAC"),Plaintiffs attempted to allege that Archer-Daniels-Midland Com pany, Cargill, Inc.,Corn Produ cts International, Inc., Roquette America, Inc., and Tate & LyleIngredients Americas, Inc. (the "Mem ber Com panies") were liable for CRA'sallegedly false advertising simply because of their membership an d participation inCRA as a trade association. The Court rejected these allegations and held that theMem ber Comp anies' membership and participation in CRA, standing alone, wasinsufficient to impute the alleged conduct of CR A to the M ember Co mpan ies. TheCourt also held that Plaintiffs failed to allege that the Mem ber Com panies hadauthority to control CRA , as required to establish an agency relationship betweenCRA an d the Membe r Companies. The Court thus dismissed the FAC as to theMember Companies with leave to amend.

The Secon d Am ended C omplaint ("SAC") again attempts to allege a LanhamAct claim against the M ember C ompan ies, but does not cure these deficiencies inPlaintiffs' allegations. While the case will proceed against CRA, which has nowanswered the SAC , there is no basis or reason to make the Memb er Compan iesdefendants. Plaintiffs' Lanham Act claim against the Mem ber Comp anies should nowbe dismissed w ith prejudice.

First, Plaintiffs again attempt to impose liability on the M ember C ompan iesbased on allegations concerning their membership and participation in CR A as a tradeassociation. Plaintiffs have puffed up these allegations w ith inconsequential details,such as the names of the mem bers of CRA 's board of directors and the specific sumsof money con tributed to CRA by the M ember Com panies, but these cosmetics do notrectify the fundamen tal defect in Plaintiffs' allegations. The C ourt already has heldthat mem bership and participation in a trade association do es not establish agency.





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Plaintiffs' new allegations add som e gloss to the Mem ber Comp anies' membershipand participation in CRA , but still provide no basis for sustaining a claim against theMember Com panies under the Lanham Act.

Second, Plaintiffs' effort to allege an actual agency relationship between CRAand the M ember C ompan ies falls well short of stating a claim because theirallegations on this issue are threadbare and co nclusory. On the critical issue ofwhether both CR A and the Member Com panies have assented to the M emberCom panies' authority to co ntrol CRA with respect to the alleged false adv ertising atissue, Plaintiffs make only a one-line conclusory allegation, upon information an dbelief. Plaintiffs' allegations do not even come close to satisfying the plausibilityrequired by Rule 12(b)(6) and TwomblylIqbal, much less the particularity required byRule 9 (b) that courts apply to agency claims under the Lanham Act.

Third, and recogniz ing the weakn ess of their allegations on agency, Plaintiffshave sprinkled into the SAC a handful of vague conspiracy allegations against theMem ber Com panies. Like their agency allegations, Plaintiffs' conclusory allegationsof conspiracy lack plausibility and particularity, and thus fail under Rule 12 (b)(6) andRule 9(b), respectively.

Finally, even if Plaintiffs had somehow adequately alleged agency orconspiracy against the "Mem ber Com panies" as a collective unit, the SAC still shouldbe dismissed because Plaintiffs have improperly lumped and com mingled all of theMem ber Com panies together and have failed to set forth individualized allegationsagainst each of the Member C ompan ies, as required to pursue either an agency orconspiracy claim. Indeed, Plaintiffs allege only indepen dent and unilateral conduct bysome of the M ember Com panies. These vague allegations do not state a claim, underagency, conspiracy or o therwise. As to certain of the Mem ber Com panies, Plaintiffshave not m ade any allegations at all.

For all of these reasons, the SAC should again be d ismissed as to the MemberCom panies, but this time w ith prejudice.

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STATEMENT OF THE CASEPlaintiffs' First Amended Com plaint ("FAC ") alleged two causes of action, one

under the Lanham Act (15 U.S.C. 11 25 (a)) and one under the California UnfairBusiness Practices Act (Cal. Bus. & P rof. Code 1 7 20 0 et seq.) (the "UCL Claim").On July 1, 2 01 1, all defendants moved to dismiss the FAC under Rules 12 (b)(6) and9 (b). Among other things, defendants argued that Plaintiffs had failed to allege anagency relationship between CRA and the Member Companies.

In its order and opinion dated October 21 , 201 1 , the Court granted the motion todismiss as to the Me mber Com panies and denied it as to CRA . The Court granted themotion to dismiss as to the Mem ber Compa nies because the FAC failed to allege anagency relationship between the M ember Com panies and CR A: "Plaintiffs'allegations as to the relationship between CR A and its members are conclusory and donot establish the authority to con trol that is required to show an agen cy relationship.Hence, the Court cannot impute CRA's actions to the remaining defendants...Theallegations against the Mem ber Com panies are not sufficient to establish an agencyrelationship and hold the M ember C ompan ies responsible for actions carried out byCRA." Western Sugar Cooperative et al. v. Archer-Daniels-Midland Co. et al., No.11 -CV-3 47 3 CBM(MANx), at 12-13 (C.D. Cal. Oct. 21, 20 11 ) ("Order") .

The Court also dismissed Plaintiff's UCL Claim under the California anti-SLAP P statute, holding that "CRA's conduc t is protected under the a nti-SLAPPstatute." Western Sugar Cooperative et al. v. Archer-Daniels-Midland Co. et al., No.11 -CV-34 7 3 CBM (MANx), at 7 (C.D. Cal. Oct. 19 , 201 1) ("Order GrantingDefendants' Motion to Strike"). The Court held that Plaintiffs had failed to show aprobability of prevailing on their UCL C laim because they "have not presented anyevidence to supp ort their burden on the c laims that CRA's statements have influencedany purchasing decisions and that Plaintiffs have suffered an injury." Id . at 11 .

On N ovember 18 , 20 11 , Plaintiffs filed a Second Amended Com plaint ("SAC")alleging one cause of action under the Lanham A ct against both CRA and the Mem ber



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Com panies. CRA, w hich is not a party to this motion to dismiss, has answered theSAC. H owev er, because the SAC still does not adeq uately allege that the Mem berCom panies may be vicariously liable for the allegedly false advertising mad e by C RA(under an agency theory or otherwise) the Mem ber Compan ies hereby move todismiss the SAC w ith prejudice.

ARGUMENTI.laintiffs' New Allegations Concerning M embership And Participation InCRA Do Not Resurrect The Lanham Act Claim Against The MemberCompaniesAs this C ourt already has held, mem bership in a trade association is insufficientto establish an agency relationship between the association and its members.Specifically, the Court held that plaintiffs' allegations that "CRA is a tradeorganization representing the interest of the corn refining industry, including thepromotion of HFC S, that Defendants (other than the CRA) are CRA mem bers, that thecampaign led by CRA is fmanced by the mem bers, and that HFCS [sic] use CRA astheir agent to affect consumer sentimen t" are "not sufficient to establish an agen cyrelationship and ho ld the Mem ber Defendan ts responsible for actions carried out byCRA."(Order at 11-13 .)

The C ourt's ruling on this issue is well supported by the c ase law h olding that atrade association is not the agent of its mem ber compan ies, even though its purpose isto prom ote their interests generally. See Gallagher v. Gallagher, 13 0 F. Supp. 2d 35 9(N.D.N.Y. 20 01 ) (trade association cannot be an agent of its member employers, eventhough its purpose is to prom ote their interests and those o f the industry generally);EEOC v. Zonta Intern., 19 8 6 WL 7 3 3 1, at *2 (N.D. I ll . Jun. 20 , 198 6) (noting that"case law do es not support the con clusion that the parent association is an agent for itsactive mem bers."); York v. Tennessee Crushed Stone A ss 'n, 68 4 F.2d 3 60 (6th Cir.19 8 2) (trade association was not "agent" of any of the 29 compan ies engaged in thecrushed stone business who w ere its members, even though its purpose was to





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promote the interests of the industry generally); see also General Bldg. ContractorsAss 'n, Inc. v. Pennsylvania, 45 8 U.S. 37 5 , 39 4-395 , 102 S. Ct. 3 141 , 73 L. Ed. 2d 83 5(19 8 2) (providing funds to a com mittee does not turn the committee into the agent ofthe funders).The SA C includes some new details about the Member Co mpan ies' allegedmem bership and participation in CRA. B ut these dressed-up allegations do notprovide a ba sis for disturbing this Court's dismissal of Plaintiff s Lanham Act claimagainst the Mem ber Com panies. Simply put, while marginally extended, Plaintiffs'new allegations are not m aterially different from the insufficient allegations alreadyrejected by the Court.

For exam ple, in the FAC, Plaintiffs alleged that the CRA board of directorsincludes two em ployees or agents from each of the Mem ber Compan ies. (FAC T T 22-28 .) In the SAC , Plaintiffs make the same allegation, only now they allege "uponinformation and belief' 2 the names of some of the mem bers of the CRA board ofdirectors. (SAC 11122-27.) In the FAC , plaintiffs alleged that CRA and its M emberCom panies crafted a publicity campaign to "revitalize and rebrand HFC S" and that2 Throughout the SAC , Plaintiffs make twen ty-three separate allegations based on "information andbelief." In addition to alleging matters concerning the Member Companies' membership andparticipation in CR A on information and belief, Plaintiffs' critical allegations on ag ency andconspiracy are also made on information and belief. See, e.g., SAC I 29 (alleging on informationand belief that both CRA an d the Mem ber Compa nies assent to the right of the Mem ber Compa niesto control CRA); SAC If 46 (alleging on information and belief that the Member Com paniesconspired to control CRA ). However, Plaintiffs never identify any facts on w hich their "informationand belief' for any of these allegations is based. Such allegations fail under Rule 9(b) and all ofPlaintiffs' allegations predicated on "information and belief' thus should be dismissed withprejudice. Neubronner v. M ilken, 6 F.3 d 66 6, 6 72 (9 th Cir. 199 3 ) (dismissing complaint for lack ofparticularity under Rule 9 (b) because "a plaintiff who mak es allegations on inform ation and beliefmust state the factual basis for the belief' even though the allegations concern matters "peculiarlywithin the defendant's knowledge."); see also Specht v. Google, Inc., 660 F .Supp . 2d 85 8 , 8 65 (N.D.Ill. 20 09 ) (dismissing complaint alleging violation of the Lanham Act that "fail[ed] to make an ydistinction amo ng the 48 Corporate Defendants...consist[ed] of vague allegations on informationand belief with no factual specifics [and] treat[ed] the numerous D efendants (other than Google) as acollective who le and d[id] not identify any specific act of infringement by an y single Defendant");Coalianz, LLC v. JHB Inc. Intern., 200 5 W L 111 3 8 54 , at*3 (D. Or. May 6, 2005 ) (dismissingconspiracy allegations made on inform ation and belief).

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1 this campaign was funded by the CRA member companies. (FAC l i l i 3, 48.) NowPlaintiffs allege, once again "upon information and be lief," that the Mem berCom panies provided $13 million for the educational campaign at an unspecified timein 200 8 and that the Mem ber Companies' funding of the campaign exceeded $13million in 2009, 2010, and 2011. (SAC in 3 , 50 .)

All of this window dressing does n ot materially alter the insufficient agencyallegations already dismissed by the Court. At bottom, Plaintiffs are still attemptingto establish vicarious liability based on the Me mber Co mpan ies' membership andparticipation in C RA as a trade organiz ation. As the Court already has held, theseallegations fail to establish agenc y and Plaintiffs' Lanham Act claim against theMem ber Comp anies therefore should be dismissed.II. Plaintiffs' Agency Allegations Do Not Satisfy Twombly Or Rule 9(b)

Since Plaintiffs cannot establish vicarious liability based on the Mem berCom panies' mem bership and p articipation in CRA , Plaintiffs must instead set forthfactual allegations of a principal-agent relationship between CRA and the M emberCom panies. And these allegations m ust satisfy both the plausibility required by Rule1 2(b)(6) an d the p articularity required by Rule 9 (b). Plaintiffs' agency allegations failto meet either of these standards, and thus the Lanham A ct claim against the M emberCom panies should be dismissed.

As to R ule 1 2(b)(6 ), it is not enough for P laintiffs to satisfy the outdated "anyset of facts" standard. Under Twombly and Iqbal, Plaintiffs m ust plausibly allege anagency relationship between CR A and each of the Member Com panies, andconclusory allegations reciting legal buzz words w ill not suffice. Ashcro ft v. Iqbal,129 S. Ct. 193 7, 19 5 0, 17 3 L. Ed. 2d 8 68 (2009 ) ("[W]here the well-pleaded facts donot permit the court to infer more than the m ere possibility of misconduct, thecomplaint has alleged but it has not ' show n'that the pleader is en titled to relief.");Bell Atl. Corp. v. Twombly, 55 0 U.S. 54 4 , 545 , 127 S. Ct . 19 55 , 16 7 L. Ed. 2d 929(2007) ("a plaintiff s obligation to provide the 'grounds' of his 'entitle[ment] to relief





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1 requires more than labels and con clusions, and a formulaic recitation of a cause ofaction's elemen ts will not do.").

Further, when a Lanham Act false advertising claim is premised on an agencytheory, a plaintiff must allege the agency relationship w ith the particularity requiredby Rule 9(b). Rpo st Holdings, Inc. v. Trustifi Corp., 201 1 WL 48 023 72, a t *3-4 (C.D.Cal. Oct. 11 , 201 1) (applying Rule 9(b) in Lanham A ct false advertising claimpremised on an agency theory and noting "[t]he fact that Plaintiff is proceeding underan agency theory does n ot absolve Plaintiff of the Rule 9 (b)'s requirement to explain[Defendant's] role in the false statements.").

As the Court already held in dismissing the FAC as to the Memb er Compan ies,to allege an agency relationship Plaintiffs must allege that both the principal and theagent have m anifested an assent that the principal has the right to control the agent.(Order at 12 ) ("An agency relationships exists when both the principal and the agentassent to the p rincipal's right to con trol the agent. Actual con trol is not necessary, aslong as there is an agreement that the principal has the right to con trol the agent, anagency relationship exists."); see also Un ited States v. Bond s, 608 F .3d 495 , 50 6 (9 thCir. 20 1 0) ("[t]o form an agency relationship, both the principal and the agent mustmanifest assent to the principal's right to control the agent"); Bauman v.DaimlerChrysler Corp., 64 4 F.3 d 90 9 (9 th Cir. 20 11 ) (applying same test). 3

On this critical issue of agency specifically, whether both CR A and theMem ber Compan ies have man ifested an assent that the Mem ber Compan ies have the3 Plaintiffs also fail to me et the three-part test for agency that other courts in the N inth Circuit apply:"To plead a n agenc y relationship, a plaintiff must allege: (1) that the agent or a pparent agent holdspower to a lter legal relations between [the] principal and third persons and betw een [the] principaland him self; (2) that the agent is a fiduciary with respect to m atters within [the] scope of [the]agency; and (3 ) that the principal has right to control [the] conduct of [the] agen t with respect tomatters entrusted to him." Buchanan v. Neighbors Van Lines, 201 0 WL 4 91 66 44, at *3 (C.D. Cal.Nov. 29 , 20 10 ). Plaintiffs fail to state a claim under this test because the SAC d oes not contain anyallegation that: (1) CRA is in a fiduciary relationship with each of the M ember Com panies; or (2)CRA has the power to alter legal relations between e ach of the Mem ber Compa nies and third partiesand between each of the of the Member Com panies and CRA.7

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right to control CRA the allegations of the SA C are w oefully lacking. Indeed, theonly allegation on this issue in the en tire SAC is a single line in w hich Plaintiffs allegethe following: "Upon information and belief, both the CRA and the MemberCom panies assent to the right of the CRA m embers to control the CRA in this way, inparticular with respect to the advertising challenged in this action." (SAC IR 29 .) Thisbarebones allegation of assent and right to control, based on information an d belief, isinadequate to sustain a claim of agency . The SA C supplies no d etails or factualsupport of any kind to describe how, when , or to what extent any allegedmanifestation of assent occurred between CR A and the Mem ber Compan ies. Theseallegations thus do not satisfy the plausibility required by R ule 12 (b)(6), much less theparticularity required by Rule 9 (b). See Rpost Holdings, Inc., 2011 WL 48 023 72 , a t*4 ("Asserting that Trustifi is an agent o f USPS is a legal conclusion. Plaintiff has notalleged any facts to support its false-advertising-agency theory, let alone pleaded thistheory with particularity."). Plaintiffs' Lanham Act claim against the MemberCom panies thus fails and should be dismissed.III. Plaintiffs' Conspiracy Allegations Do Not Satisfy Twombly Or Rule 9(b)

Although the SA C does not set forth conspiracy as a stand-alone claim o r causeof action, as an apparent alternative to their defective agency allegations P laintiffs hintin indirect fashion that CRA an d the Mem ber Com panies are parties to a conspiracy.These vague an d unsubstantiated conspiracy allegations likewise do not m eet therequirements of Twombly or Rule 9 (b), and should be dismissed.

W here a false advertising claim is premised on a theory of conspiracy, theelements of conspiracy m ust be alleged with particularity pursuant to Rule 9 (b).Palom ares v. Bear Sterns Residential Morg. Co rp., 200 8 WL 68 66 8 3 , a t *4 (S.D. Cal20 08 Mar. 13 , 200 8 ) ("When a plaintiff alleges that a defendant is liable forintentional misrepresentation under either an agency o r civil conspiracy theory, Rule9(b) requires that the plaintiff allege with particularity facts that support the existenceof an agency relationship or civil conspiracy."); Alfus v. Pyramid Tech. Co rp., 745 F .





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Supp. 15 11 , 15 21 (N.D. Cal. 19 9 0) ("In civil conspiracy actions, courts insist upon ahigher level of specificity than is usually demanded of other pleadings.... [P]laintiff'sallegations that defendan ts conspired to com mit fraud are insufficient both for failureto plead con spiracy with the requisite particularity and for failure to plead anagreement to p articipate in an un lawful act").

Further, while also failing to establish agency, m embership in a tradeassociation is insufficient to establish that the m embers of the association are part of aconspiracy. See In re P rocessed Egg Products An titrust Litigation, 2011 WL44 6 5 3 5 5 , at *9 (E.D. Pa. Sept. 26 , 20 11 ) ("Certainly, pertinent legal authority is clearthat participation in a trade group association an d/or attending trade group m eetings,even those meetings w here key facets of the conspiracy allegedly were adopted oradvanced , are not enough on their own to give rise to the inference of agreement tothe conspiracy.") (emphasis in original); Greater Rockford Energy & T ech. v. ShellOil, 99 8 F.2d 3 91 , 39 6-97 (7th Cir. 199 3 ) (finding that common membership in tradeassociation and standard-setting organization w as not evidence of con spiracy); PacificToba cco Corp. v. American Tobacco Co., Inc., 19 74 W L 85 9, at *5 (D. Or. 19 74 )("Plaintiff cannot establish a conspiracy by the simple fact of comm on m embership intrade associations."); AD /SAT, A Division of Skylight, Inc. v. Associated Press et al.,18 1 F.3 d 21 6 , 23 4 (2d C ir. 19 99 ) (noting that "every action by a trade association isnot concerted action by the asso ciation's mem bers" and that a "plaintiff must presentevidence tending to show that association members in their individual capacities,consciously comm itted themselves to a common schem e designed to achieve anunlawful ob jective.") (emphasis added).The SA C do es not contain any plausible or particularized allegations ofconspiracy. Plaintiffs allege that "on information and belief, the CRA's MemberCom panies conspired to exercise their collective right and actual pow er to control theCRA " and that the Mem ber Compan ies "collaborate[d] in the formation of a comm onscheme to authorize, develop, and fund an advertising campaign to promote HF CS[d"9NOTICE OF MOTION AND MOTION TO DISMISS; MEMO OF POINTS AND AUTHORITIES




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(SAC If 46 .) These indirect and vague allegations of conspiracy are insufficient underTwombly because they merely recite the legal conclusion that the M ember Co mpanies"conspired" and formed a "common scheme." Further, the allegations are not pledwith particularity as required by Rule 9 (b) because they provide no details regardingwhen , where, and how the alleged conspiracy was formed, which m embers werepresent, or what the members agreed to do. Vess v. Ciba-Geigy Corp. USA, 3 17 F .3 d10 97 , 11 06 (9th Cir. 200 3 ) (conspiracy claim failed to satisfy Rule 9(b) because,amon g other things, the pleading failed to "provide the particulars of when, w here, orhow the alleged conspiracy occurred"). Because Plaintiffs' conspiracy claims areinadequate under Twombly and Rule 9 (b), the Lanham A ct claim against the Mem berCom panies should be dismissed with prejudice.IV. Plaintiffs Fail To Make Specific Agency Allegations Against Each Of The

Member Companies, As Required To State A Claim Based OnIndependent Conduct, Agency, Or ConspiracyFinally, even if Plaintiffs had some how adequately alleged agency or

conspiracy as to CRA and the "Mem ber Com panies" as a collective unit, the SAC stillshould be dismissed because Plaintiffs have improperly lumped all of the Mem berCom panies together and have failed to set forth individual and particular allegationsagainst each of the Mem ber Comp anies, as required to pursue any Lanham Act claim,including one based o n agency or conspiracy. Plaintiffs attempt to allege independe ntconduct by som e of the Mem ber Com panies, but these allegations do not state anyclaim under a theory o f agency, con spiracy, or otherwise. And, as to certain of theMem ber Com panies, Plaintiffs have not m ade any individual allegations at all.

Plaintiffs' agency and co nspiracy allegations must be d ismissed because theyfail to mak e specific allegations as to each of the M ember C ompan ies, but rather lumpall of the companies together as a single unit: the "Member Companies." Indeed,plaintiffs repeat the mantra "Mem ber Com panies" forty-five times in the SAC . Forexamp le, Plaintiffs allege that "CRA an d the Me mber Com panies assent to the right of



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the CRA m embers to control the CRA" and that "CRA's Mem ber Compan iesconspired to exercise their collective right and actual pow er to control the CR A astheir agent." (SAC I N 29, 46.)

These allegations fail as a m atter of law. Plaintiffs must set forth separate andindividualized allegations of conspiracy and agency as to each of the Mem berCom panies. Rather than lumping all the M ember Co mpan ies together, Plaintiffs mustset forth plausible and p articular factual allegations dem onstrating that eac h ofArcher-Daniels-Midland, Cargill, Corn Products, Roquette, and Tate & Lyle, in theirseparate and individual capacities, either manifested the assent necessary to form anagency relationship with CRA or conspired with CRA . Palomares, 2 0 0 8 W L 6 8 6 6 8 3("Rule 9 (b) does not allow a complaint to merely lump m ultiple defendants togetherbut require[s] plaintiffs to differentiate their allegations w hen suing m ore than o nedefendant ... and inform each defendant separately of the allegations surrounding hisalleged participation in the fraud. The plaintiffs must, at a minimum, 'identify the roleof each d efendant in the alleged fraudulent scheme." ); Swartz v. KPM G LLP, 47 6F.3 d 7 6 5 , 76 4-6 5 (9th Cir. 20 07 ) (concluding that, in a suit involving multipledefendants, a plaintiff must "identif [y] the role" each defendan t played "in the allegedfraudulent scheme," informing "each defendant separately of the allegationssurrounding h is alleged participation in the fraud") (alteration in original) (internalquotation marks omitted); Specht v. Goog le, Inc., 66 0 F.Supp. 2d at 8 65 (dismissingcomplaint because it failed to distinguish between n umerous defend ants and failed toallege supporting factual information of some specificity as to each defend ant).Plaintiffs do n ot.Indeed, apart from their inadequate trade association allegations, the on lyallegations Plaintiffs make against specific M ember C ompan ies seem to describeindependent and unilateral conduct, rather than any joint action that would support anagency or conspiracy claim. Fo r exam ple, Plaintiffs allege that Cargill and Co rnProducts have links on their websites to the CR A "Sw eet Surprise" website. (SAC

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5 3 .) Plaintiffs allege that "Cargill, and others, including Tate & L yle" have also usedspokespersons to state that "HFCS is no different than sugar." Id . Plaintiffs allegethat ADM and Corn Products have m ade unspecified direct commu nications toconsumers and that ADM , Cargill, and Tate & L yle have used the phrase "corn sugar"in unspecified presentations, annual reports, pricing sh eets and "othercommunications." (SAC I 61, 62.) In addition to being vague and unspecified, noneof these allegations suggest joint, collective action amon g the M ember C ompan ies andCRA . Instead, these allegations describe independen t and un ilateral conduct bycertain, but not all, of the Mem ber Com panies.

Nor do any of these vague assertions of unilateral conduct adequately allegethat any of the Mem ber Com panies is engaged in "comm ercial advertising" under theLanham Act. The N inth Circuit defines "comm ercial advertising or prom otion" as (a)comm ercial speech; (b) by the defendant who is in com mercial competition with theplaintiff; (c) for the purpose of influencing consumers to buy defendant's goods orservices; and (d) the representations m ust be disseminated sufficiently to the relevantpurchasing public to constitute "advertising" or "promotion" w ithin that industry.Co astal Abstract Serv ., Inc. v. First Am. Title Ins. Co., 173 F. 3d 7 25 , 73 5 (9 th Cir .1 9 9 9 ). The SAC m akes no allegations regarding the "sufficient dissemination" of anyof these statements or conduct. New.Net , Inc. v. Lavasoft, 35 6 F. Supp. 2d 109 0,11 18 (C.D. Cal. 200 4) (dismissing Lanham Act claim w ith prejudice because, amongother things, complaint failed to allege sufficient dissemination). Plaintiffs do notquote any of the statements or comm unications allegedly made by any of the Mem berCom panies and fail to provide any specifics whatsoever, such as the time, place,recipient, or content of any of these un specified commun ications. Von Koenig v.Snapple Beverage Corp., 201 1 WL 43 57 7, at *3 (E.D. Cal. Jan. 6, 20 11 ) (dismissingclaims regarding use of the term "natural" in a produc t with HFC S in unspecified"comm ercial advertisements" an d "other p romotional materials" because plaintifffailed to identify any specific advertisements, allege when plaintiffs were ex posed to

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each advertisement, or explain how such advertisements were false and m isleading);Ries v. Hornell Brewing, 201 1 W L 129 928 6, at *4 (N.D. Cal. Apr. 4 , 2011 )(dismissing com plaint because it lacked details regarding dates of purchase ofproducts containing HFC S, prices paid, which products containing HF CS w erepurchased, and w here such products w ere purchased). Because P laintiffs' allegationsof unilateral conduct are lacking in even the most b asic of details, they fail to state anyclaim under Rule 9 (b) and should be dismissed with prejudice.

W ith respect to other Mem ber Com panies, Plaintiffs fail to make anyallegations wh atsoever, beyond their mem bership in the CRA . In particular, as toRoquette, Plaintiffs fail to mak e any allegations w hatsoever. Plaintiffs do not allegethat Roquette is engaged in any joint action with CRA or any other Me mberCom panies to establish conspiracy; do not allege any facts to establish a principal-agent relationship between Roquette and CR A; and do not allege any comm ercialadvertising or o ther independent co nduct by Roquette. As to Roquette, Plaintiffs thushave said nothing, beyond the bare allegation that Roquette was a m ember of CR A.In other w ords, Plaintiffs have done nothing m ore that repeat the allegations that theCourt previously held were insufficient when it rejected the FAC against Roquette andthe other Mem ber Com panies. After this second bite at the apple, Plaintiffs claimsagainst Roquette, and each of the other Member Co mpanies, should be dismissed withfinality.

In short, Plaintiffs cannot state a claim by lum ping all of the Mem berCom panies together under the heading "agency" or "conspiracy." Because the SACfails to make any individualiz ed allegations against each Mem ber Com pany thatwould support a claim of agency, conspiracy or an y other theory of liability, theLanham Act claim against the Mem ber Compan ies should be dismissed withprejudice. CRA has answered Plaintiffs' allegations. It is moving forward to defendits protected conduct, w hile also showing that it is Plaintiffs who are trying to confuseconsumers into believing they can improve their health by switching away from

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products sweetened w ith HFCS to products containing refined sugar. There is simplyno reason or legal basis to proceed vicariously against the CRA 's membership.

CONCLUSIONFor the foregoing reasons, Plaintiffs' Second Am ended C omplaint should bedismissed as to the Mem ber Compan ies with prejudice.

Respectfully submitted,Dated: December 16, 2011INSTON & STRAWN LLPBy: /s/ Gail J . StandishGail J. StandishErin R. Ranahan

Attorneys for DefendantsARCHER-DANIELS-MIDLAND COMPANY,CARGILL, INC., CORN PRODUCTSINTERNATIONAL, INC., ROQUETTEAMEMCA, INC., AND TATE & LYLEINGREDIENTS AMERICAS, INC.

Additional co unsel for D efendants:Cornelius M. Murphy (adm itted pro hac vice)nmurphy winston.cornBryna J. Dahlin (admittedpro hac vice)bdahlin winston.comWINST N & STRAWN LLP3 5 W. Wacker DriveChicago, IL 606 01 -970 3

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Documents

Mot Dismiss Western Sugar Co-Op v Archer-Daniels-Midland