|August 6, 2014|
Previously published on August 4, 2014
In an 8-0 ruling, the United States Supreme Court held in POM Wonderful LLC v. Coca-Cola Co., 134 S. Ct. 2228 (2014) that competitors may bring Lanham Act claims challenging food and beverage labels, even though those labels are regulated by the Federal Food, Drug, and Cosmetic Act (FDCA). A deceptive or misleading label can now result in competitor Lanham Act lawsuits, in addition to FDA enforcement.
Misleading juice labels
POM Wonderful produces, markets, and sells juice products, including a pomegranate-blueberry juice blend. Coca-Cola makes and sells a juice blend with a label that prominently displays the words “pomegranate blueberry.” The Court noted that Coca-Cola’s juice blend was actually 99.4% apple and grape juices, .01% raspberry juice and only .03% pomegranate juice and 0.2% blueberry juice.
POM Wonderful filed suit against Coca-Cola under the Lanham Act, claiming that the name, label, marketing, and advertising of Coca-Cola’s juice blend misled consumers into believing the product consisted predominantly of pomegranate and blueberry juice, when it in fact consisted predominantly of less expensive juices. POM claimed the confusion caused it to lose sales.
The district court and the Ninth Circuit held that POM’s claim was precluded by the FDCA because the FDCA extensively regulates the labeling (and mislabeling) of food products. The Supreme Court granted certiorari, and reversed.
No preclusion when federal statutes can co-exist
The Court quickly noted that pre-emption is not at issue, because the Lanham Act and the FDCA are both federal statutes. Instead, the proper analysis is traditional statutory interpretation. The only difference is that this interpretation involves two statutes instead of one.
The two statutes have co-existed since 1946, yet neither statute prohibited or limited Lanham Act claims arising out of labels regulated by the FDCA. The Court noted that Congress never amended the statutes to bar claims like POM’s, even though Congress has amended both statutes. In fact, Congress amended the FDCA to expressly pre-empt state law claims. The Court stated that this legislative background was “powerful evidence that Congress did not intend FDA oversight to be the exclusive means” of food labeling regulation.
Complementary Regulatory Schemes
The Court also found that FDCA and the Lanham Act complement each other in the federal regulation of misleading food and beverage labels, for each has its own scope and purpose. The Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety. The FDA enforces the FDCA through enforcement actions, warning letters and other measures. The Lanham Act regulates through private lawsuits, prosecuted by those with a direct interest in truthful labels.
The Court noted that if Lanham Act claims were to be precluded, commercial interests (and indirectly, the public at large) could be left with less effective protection in the food and beverage labeling realm than in many other less regulated industries.
POM Wonderful’s Potential Impact
This unanimous Supreme Court opinion will likely have a significant impact on future litigation:
(1) Food, Drug, and Cosmetic label litigation may increase. Labels are more complex than ever. This action concerned the concentration of ingredients, but there is far-reaching potential for other types of food label conflicts: certified fair trade products versus “ethically sourced” foods; certified organic versus conventional products marketed as “natural;” etc.
(2) Unfair competition claims are fair game, even for highly regulated industries. The Court unambiguously allowed POM’s Lanham Act claim, even while noting the high level of detail in the FDA’s food labeling rules. Competitors in regulated industries now have a strong incentive to bring unfair competition claims if another company’s misrepresentations are hurting their bottom line.
(3) Pre-emption jurisprudence is not dispositive when multiple federal statutes are at issue. This opinion will affect any litigation that involves multiple federal statutes. Litigants may have a difficult time arguing that two federal statutes conflict if a court can find that two federal statutes have co-existed, serving two different purposes. The Court’s extensive pre-emption jurisprudence cannot be the sole support for an argument that two statutes conflict.