Opinion
09 Civ. 4916 (CM).
September 29, 2010
MEMORANDUM DECISION AND ORDER GRANTING DEFENDANT'S MOTION FOR LEAVE TO FILE A FIRST AMENDED ANSWER AND COUNTERCLAIMS
Defendant/Counter-Plaintiff Organic Juice USA, Inc. ("Organic Juice") seeks to amend its Answer and Counterclaims to assert several new counterclaims and an affirmative defense against Plaintiff/Counter-Defendant POM Wonderful LLC ("POM"). Based on information it recently discovered, Organic Juice proposes eight new counterclaims against POM and one affirmative defense: (1) unfair and deceptive business practices under New York General Business Law ("G.B.L.") § 349 (Counterclaims IV, V, VII, X), (2) false advertising under G.B.L. § 350 (Counterclaims VIII, XI), (3) false advertising under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (Counterclaims VI, IX), and (4) Organic Juice alleges that POM's claims are barred by the doctrine of unclean hands. For the reasons stated below, Organic Juice's motion is granted.
I. BACKGROUND
A. Factual History
POM is the producer, marketer, and seller of bottled 100% natural pomegranate juice under the registered trademark "POM WONDERFUL". (Compl. ¶ 10.) Organic Juice competes with POM in the bottled-pomegranate-juice market by marketing and selling its own pomegranate juice under the "`Elite Naturel" brand. (Compl. ¶ 17.) Under that brand, Organic Juice sells two varieties of pomegranate juice: (1) "100% Organic 100% Pure Pomegranate Juice" and (2) "Natural 100% Pure Pomegranate Juice." (Id.)
POM engaged Krueger Laboratories, Inc. ("Krueger") to test its hypothesis that Organic Juice was not actually producing a "100%" pomegranate-juice beverage. (Compl. ¶ 22.) In September 2007, Krueger obtained several 32-ounce bottles of Organic Juice's "100% Organic 100% Pure Pomegranate Juice" and "Natural 100% Pure Pomegranate Juice." (Compl. ¶ 25.) An analysis of those bottles revealed that high-fructose corn syrup, grape juice, a foreign anthocyanin containing sweetener, and possibly apple juice had been added to both products. (Id.) Additional analyses conducted by Krueger in April, November, and December 2008 and February 2009 again revealed that neither variety of Organic Juice's pomegranate juice contained only pomegranate juice. (Compl. ¶¶ 26, 31-34.)
B. Procedural History
POM commenced this suit on May 26, 2009, On August 28, 2009, Organic Juice filed its Answer and Counterclaims. The parties agreed to a Stipulated Scheduling Order on September 8, 2009. Under the Scheduling Order, the last day for amending the pleadings was October 30, 2009. Nevertheless, on April 27, 2010, Organic Juice filed this motion for leave to amend its Answer and Counterclaims.
After reviewing certain claims made by POM on its website regarding the health benefits of its POM WONDERFUL pomegranate juice, the FDA concluded that the marketing of POM WONDERFUL in such a manner violated the Federal Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. § 343 et. seq. (Decl. of Adrienne Hollander ("Hollander Decl.") Ex D.) Additionally, while reviewing POM's discovery production, Organic Juice uncovered certain documents stating that POM's "100% pomegranate juice" contained elderberry juice. (Hollander Decl. Ex. C.) It is this recently discovered evidence that Organic Juice relies on to explain why it is seeking to amend its Answer and Counterclaims after the deadline set by the Scheduling Order.
II. DISCUSSION
A. Organic Juice Has Shown Good Cause For Its Delay.
Typically, amendments to pleadings are governed by Federal Rule of Civil Procedure 15. Under Rule 15, "The court should freely give leave [to amend] when justice so requires." Fed.R.Civ.P. 15(a)(2). Despite the dictates of Rule 15, the time for filing amendments to pleadings can be limited by a scheduling order issued under Rule 16(b). See Kassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d 229, 243-44 (2d Cir. 2007) ("[W]e hold that amendment of a pleading as a matter of course pursuant to Rule 15(a) is subject to the district court's discretion to limit the time for amendment of the pleadings in a scheduling order issued under Rule 16(b)."). Rule 16(b)(4) provides that "A schedule may be modified only for good cause and with the judge's consent." Fed.R.Civ.P. 16(b)(4). "[A] district court does not abuse its discretion in denying leave to amend the pleadings after the deadline set in the scheduling order where the moving party has failed to establish good cause." Parker v. Columbia Pictures Indus., 204 F.3d 326, 340 (2d Cir. 2000). A finding of good cause is dependent on the diligence of the moving party. Kassner, 496 F.3d at 244.
POM urges this Court to deny Organic Juice's motion because Organic Juice is seeking to amend its pleadings six months after the October 30, 2009 deadline set by the Scheduling Order. Despite POM's arguments to the contrary, Organic Juice has established good cause for its delay. POM's first produced 30,900 documents to Organic Juice on February 2, 2010. During its review of POM's documents, Organic Juice discovered documents indicating that POM's allegedly "100% pomegranate juice" included elderberry juice. (Hollander Decl. Ex. B (Proposed Am. Answer ¶ 111); Ex. C.) Five days after making this discovery, Organic Juice filed the instant motion. (Decl. of Alexander Kayne ("`Kayne Decl.") ¶¶ 2-4.) While it may have taken Organic Juice some time to uncover those documents, Organic Juice did not delay in filing the instant motion once it found them.
Further, POM has not shown that it will be prejudiced if Organic Juice is allowed to amend its Answer. In gauging prejudice, this Court considers, among other factors, whether an amendment would "require the opponent to expend significant additional resources to conduct discovery and prepare for trial" or "significantly delay the resolution of the dispute." Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993); see also State Teachers Ret. Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981) (explaining that undue prejudice may arise when an `amendment [comes] on the eve of trial and would result in new problems of proof"). "Mere delay, however, absent a showing of bad faith or undue prejudice, does not provide a basis for a district court to deny the right to amend." Id. At the time Organic Juice requested leave to amend, no trial date had yet been set and no motion for summary judgment was pending. Moreover, the information upon which Organic Juice relies to assert its proposed new counterclaims is information best known to POM. Indeed, all documents that could be relevant to (1) the contents of POM's pomegranate juice or (2) whether POM made false statements about the percentage of pomegranate juice in its product — the basis for Organic Juice's proposed new counterclaims under G.B.L. § 349, G.B.L. § 350 and Section § 43(a) of the Lanham Act — should be in POM's possession.
Organic Juice also seeks to amend its Answer to assert new counterclaims alleging false advertising and unfair and deceptive business practices premised on findings made by the FDA in its February 23 letter. Although POM argues that the statements the FDA examined were publicly available on POM's website when this suit was filed, it is the FDA's finding that these statements violate the FDCA that lays the foundation for Organic Juice's proposed new counterclaims.
Further, contrary to POM's arguments, Organic Juice's proposed new counterclaims do not appear futile. To sustain a claim under G.B.L. § 349, Organic Juice must assert sufficient factual allegations to suggest that POM "is engaging in an act or practice that is deceptive or misleading in a material way."Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, N.A., 647 N.E.2d 741, 743 (N.Y. 1995). Claims under G.B.L. § 350 require a showing that "the defendant made misrepresentations or omissions that were likely to mislead a reasonable consumer" under the circumstances. Solomon v. Bell Atl. Corp., 777 N.Y.S.2d 50, 54-55 (N.Y. App. Div. 2004). A claim for false advertising under Section 43(a) of the Lanham Act may rest on one of two grounds: (1) "the plaintiff can demonstrate that the challenged advertisement is literally false, i.e., false on its face" or (2) "a plaintiff can show that the advertisement, while not literally false, is nevertheless likely to mislead or confuse consumers."Time Warner Cable, Inc. v. DIRECTV., Inc., 497 F.3d 144, 153 (2d Cir. 2007). Organic Juice's new allegations that POM marketed its juice as having special health benefits without the FDA's approval, advertised its product as containing "100% pomegranate juice" despite it also containing elderberry juice, and falsely advertised that all research on the health benefits of drinking pomegranate juice were conducted using POM WONDERFUL instead of another brand of pomegranate juice are sufficient to sustain claims under G.B.L. § 349, G.B.L. § 350, and Section 43(a) of the Lanham Act. (Hollander Decl. Ex. B (Compl. ¶¶ 88-113).) Organic Juice should therefore be allowed to amend its Answer to assert its proposed new counterclaims and affirmative defense.
III. CONCLUSION
For the reasons discussed above, Organic Juice's motion to amend its Answer and Counterclaims is granted.
Dated: September 29, 2010