Court Allows Consumer Fraud Claims to Proceed Against Margarine Maker

A federal court in California has denied in part and granted in part the motion to dismiss filed by Smart Balance, Inc., which is defending a putative class action alleging that the company misled consumers by marketing its Nucoa margarine as cholesterol-free and healthy despite the artificial trans fat in the product. Yumul v. Smart Balance, Inc., No. 10-00927 (C.D. Cal., order entered July 30, 2010). The plaintiff alleges violations of the state’s unfair competition and false advertising laws and violation of the Consumer Legal Remedies Act. She seeks an injunction requiring that the misleading advertising practices cease, a corrective advertising campaign, restitution, and an injunction requiring the destruction of all misleading and deceptive materials and products.

The defendant asserted that the factual allegations lacked sufficient specificity and also contended that the complaint be dismissed because it was based on conduct outside the applicable limitations period. Declining to consider some materials submitted in support of defendant’s motion, including advertising exemplar samples, the court refused to find that plaintiff could not prove that fraudulent advertising had occurred before 2009. While the court agreed with defendant that the plaintiff failed to allege “in any form the manner of her discovery” of the facts underlying her claim and that her complaint thus “does not adequately plead tolling under the delayed discovery rule,” the court allowed her to file an amended complaint to cure the deficiency