|June 26, 2014|
Previously published on June 17, 2014
Last Thursday (June 19), the U.S. Supreme Court unanimously decided that the federal Food, Drug and Cosmetic Act (“FDCA”) does not preclude POM Wonderful’s deceptive labeling claims under the Lanham Act against Coca-Cola. POM Wonderful LLC v. Coca-Cola Co., No. 12-761, slip op. at 2 (June 12, 2014). POM sued Coca-Cola under the Lanham Act for false advertising, arguing that Coca-Cola’s product label was misleading since the beverage contained less than one percent pomegranate juice. Coca-Cola responded that the Food & Drug Administration’s (“FDA”) authority under the FDCA preempted POM’s Lanham Act claim. From Coca-Cola’s perspective, the false advertising claims were barred, because the company was complying with the FDCA.
The Ninth Circuit agreed in part with Coca-Cola, holding that the FDCA precluded Lanham Act claims based on any aspect of a food label regulated by the FDA. POM Wonderful LLC v. Coca-Cola Co., 679 F.3d 1170 (9th Cir. 2012). The court reasoned that by acting when the FDA has not, despite regulating extensively in this area, a court risks undercutting the expert judgments and authority of the FDA.
Reversing the Ninth Circuit’s decision, the Supreme Court stated that a case involving two federal statutes should be decided based on traditional rules of statutory interpretation, not principles of pre-emption. Reviewing the text of the FDCA and Lanham Act, the Court concluded that neither statute prohibited or limited Lanham Act claims involving food labels that are regulated under the FDCA, as both statutes have coexisted since the Lanham Act was passed nearly 70 years ago. The Court further noted that the FDCA’s state law pre-emption provision indicated that Congress did not intend for the FDCA to preclude application of other federal laws to food labels.
Moreover, the Supreme Court observed that private causes of action under the Lanham Act and governmental enforcement actions under the FDCA serve complementary purposes—the Lanham Act allows competitors to bring civil lawsuits to protect their commercial interests from unfair competition, whereas the FDCA protects public health and safety. For these reasons, the Court determined that the FDCA does not preclude a Lanham Act claim based on an allegedly deceptive food or beverage label. The Court then remanded the case to the Ninth Circuit for further proceedings.
As a result of the Supreme Court’s decision, food and beverage manufacturers attempting to differentiate their products with specialized or targeted labeling should closely re-examine their product labels. Despite the considerable uncertainty created for the food and beverage industry, it is now clear that ensuring food and beverage labels comply with FDA labeling regulations is not enough to avoid deceptive labeling lawsuits. The likely result is a proliferation of Lanham Act claims amongst competitors in the food industry.