Kachuck Enters. v. Mission Produce, Inc., — F.Supp.3d —-,
2026 WL 216475, No. 2:25-cv-01523-AH-JCx (C.D. Cal. Jan. 22, 2026)

This was a putative class action about alleged
misrepresentations made by distributors and suppliers of Mexican-grown avocados
that their avocados are sustainably and responsibly sourced. Plaintiffs, California
avocado farmers, alleged losses from defendants’ touting of “unsustainably
grown Mexican avocados as ‘sustainable’ to consumers.”

Despite representations about water conservation,
biodiversity, and soil health, defendants allegedly source their avocados from
Mexican orchards installed on lands recently deforested without the proper
permits from Mexican authorities. “Sourcing avocados from deforested land
exacerbates ongoing water scarcity in Mexico, contributes to climate change,
and leads to habitat and biodiversity loss.” Plaintiffs cited various surveys
showing that “significant segments” of U.S. consumers prioritize sustainability
and more transparency from food producers and retailers throughout the entire
food supply chain. Another survey “found that more than half … of consumers
indicated they are willing to spend more money on products that are deemed
sustainable or environmentally friendly.”

Plaintiffs brought the usual
California statutory claims. The court found no standing under the FAL and
the “fraudulent” prong of the UCL because plaintiffs didn’t allege their own
reliance on the false claims; rather, they alleged that they were harmed by
consumers’ reliance on the allegedly false claims. This reasoning seems dumb—these
laws were intended to protect competitors as well as consumers—and the court noted
an increasing minority of federal district courts have rejected it. It’s
probably time for the 9^th Circuit to certify a question, though I don’t
have much doubt that the California Supreme Court will clarify that consumer reliance
is required, but not competitor reliance.

As for unfair competition/UCL unfairness, the court applied
the “tethering” test, which applies in actions “by a competitor alleging
anticompetitive practices.” A finding of unfairness must be “tethered to some
legislatively declared policy or proof of some actual or threatened impact on
competition”: “conduct that threatens an incipient violation of an antitrust
law, or violates the policy or spirit of one of those laws …, or otherwise
significantly threatens or harms competition.”

The test was not satisfied. Although plaintiffs argued in
briefing that “Defendants’ influx of cheaply priced and unsustainably—and
possibly illegally—sourced avocados distorts the market,” while plaintiffs must
comply with strict sustainability requirements, while the complaint focused only
on defendants’ acts of “offering for sale and selling deceptively labeled
Mexican avocados” and “deceptively marketing products.”

Regardless, that theory wasn’t enough. Plaintiffs argued
that defendants’ sourcing practices are exploitative because they are “possible
only by entities with sufficient size and power to dominate operations in
foreign countries with weaker environmental regulations” and they “exploit
residents of a foreign country and contribute to the wholesale destruction of
forests.” Thus, “Defendants leverage their size and reach to flood the market
with avocados, boxing out competitors.” But these were “conclusory assertions,”
and didn’t explain what part of antitrust law was implicated.  Nothing in the FTC Act specifically “precludes
a business from sourcing its products in a lower-cost country where
environmental laws or other safeguards may be less stringent than in the United
States,” and sourcing products abroad is not an FTC Act violation “simply
because regulatory conditions in those countries make the cost of production
lower.” Plus, injury to competitors isn’t injury to competition. [That argument
rings particularly hollow where the alleged distortions operate on whole
countries’ worth of businesses.]

from Blogger https://tushnet.blogspot.com/2026/05/competitor-lacks-standing-under-cal-law.html