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North American Olive Oil Association v. Kangadis Food Inc.

United States District Court, S.D. New York

April 25, 2013

NORTH AMERICAN OLIVE OIL ASSOCIATION, Plaintiff,
v.
KANGADIS FOOD INC. d/b/a THE GOURMET FACTORY, Defendant

Decided: April 24, 2013.

Page 515

For North American Olive Oil Association, Plaintiff: Nitin Reddy, PRO HAC VICE, Sidley Austin LLP, Los Angeles, CA; Timothy James Treanor, Sidley Austin LLP (NY), New York, NY.

For Kangadis Food Inc., doing business as The Gourmet Factory, Defendant: John Peter McEntee, LEAD ATTORNEY, Michael Alan-herman Schoenberg, Farrell Fritz, P.C. (LIs), Uniondale, NY.

OPINION

Page 516

OPINION AND ORDER

JED S. RAKOFF, U.S.D.J.

Plaintiff North American Olive Oil Association (" NAOOA" ) brings this action against defendant Kangadis Food Inc., doing business as The Gourmet Factory (" Kangadis" ), asserting claims for false advertising under the Lanham Act and for deceptive acts and practices and false advertising under New York General Business Law § § 349 and 350. Plaintiff alleges that Kangadis has falsely and deceptively marketed a product as " 100% Pure Olive Oil" when in fact it contains Pomace, an industrially processed oil produced from olive pits, skins, and pulp. Plaintiff has moved for a preliminary injunction. In

Page 517

response to that motion, Kangadis represents that all tins of its " 100% Pure Olive Oil" product packed after March 1, 2013 contain no Pomace and instead are 100% refined olive oil.

After oral argument and on consent of the parties, the Court on April 12, 2013 preliminarily enjoined Kangadis (1) from selling as " 100% Pure Olive Oil" any product containing Pomace, and (2) from selling any product containing Pomace without expressly labeling it as such. The Court reserved decision and invited supplemental briefing, however, on several remaining disputed issues relating to plaintiff's motion. On April 19, 2013, the Court resolved those remaining issues as follows: the Court (1) declined to extend the injunction to enjoin Kangadis from selling 100% refined olive oil as " 100% Pure Olive Oil," (2) ordered Kangadis to take certain steps to inform potential consumers that tins of " 100% Pure Olive Oil" packed before March 1, 2013 contain Pomace, (3) declined to order Kangadis to provide notice of its past mislabeling through its website, and (4) ordered NAOOA to post a $10,000 bond not later than April 24, 2013. This Opinion explains the reasons for those rulings.

The basic facts are not in dispute, at least not for purposes of the preliminary injunction motion. Kangadis is a food import and distribution company formed in 2003. Affidavit of Themis Kangadis in Opp'n to Pl.'s Mot. for Prelim. Inj. (" Kangadis Aff." ) ¶ 4. For the past six years, Kangadis has sold, under the brand name Capatriti, a product labeled as " 100% Pure Olive Oil." Id. ¶ ¶ 5-7. The popularity of this product has grown over time, and it now occupies about fifteen percent of the market. Id. ¶ 7.

NAOOA, a trade association representing the interests of the olive oil industry, has produced an expert report from Professor Lanfranco Conte concluding that three samples of Kangadis's product procured in August 2012 in fact contain significant quantities of Pomace. See Expert Report of Prof. Lanfranco Conte (" Conte Report" ), ex. A to Decl. of Timothy J. Treanor in Supp. of Pl.'s Mot. for Prelim. Inj. (" Treanor Decl." ) ¶ ¶ 67-70; Decl. of Ulysees Quiambao in Supp. of Pl.'s Mot. for Prelim. Inj.; Decl. of Brian Dougherty in Supp. of Pl.'s Mot. for Prelim. Inj.

Prof. Conte explains that the substance commonly known as " olive oil" comes from olives that are harvested, quickly carried to a mill, washed, crushed, and spun to separate out extraneous solids and excess water. Conte Report ¶ ¶ 9-14. This process is entirely mechanical and involves no heat or chemicals. Id. ¶ 12. The product directly resulting from this process is generally known as " virgin olive oil." Id. ¶ ¶ 15-17. If virgin olive oil undergoes refining to remove impurities, then it is no longer called " virgin," but remains " olive oil." Id. ¶ 18-19. By contrast, Pomace, also known as olive-Pomace oil, is made from the residue materials left over after olive oil has been mechanically extracted from the flesh of the olives. The residual skins, pits, and pulp are sent to specialized facilities, where they are dried, heated, and treated with industrial solvents to produce Pomace. Id. ¶ ¶ 20-23.

Kangadis does not dispute these significant differences in the production of olive oil and Pomace. See Kangadis Aff. ¶ 14. Kangadis also admits that " at all relevant times prior to this action," its " 100% Pure Olive Oil" product " contained only Olive-Pomace Oil." Def.'s Br. at 7 (citing Kangadis Aff. ¶ 31). Kangadis represents, however, that it " no longer uses any Olive-Pomace Oil in [its " 100% Pure Olive Oil" product] and instead, is now filling its Capatriti tins with only 'Olive Oil.'" Kangadis Aff. ¶ 51. Kangadis further represents that " as of March 1, 2013, ...


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