Supreme Court Paves The Way For Lanham Act Claims Against FDA-Regulated Competitors

pomThe Supreme Court issued a unanimous decision last week in Pom Wonderful LLC v. Coca-Cola Co., a case pitting the false advertising provisions of the Lanham Act against the beverage labeling standards of the federal Food Drug & Cosmetics Act (FDCA).  Pom Wonderful, maker of 100% pomegranate juice and other pomegranate-based products, brought false advertising claims against Coca-Cola, accusing its Minute Maid Pomegranate Blueberry drink of misleading consumers into believing they were drinking more pomegranate and blueberry juice than they in fact were.  Coca-Cola’s drink, in reality, contains about 0.3% pomegranate juice, 0.2% blueberry juice, and about 99% apple and grape juices (which are, unsurprisingly, less expensive).

The Parties’ Arguments

As a factual matter, the dispute revolved around the manner in which Coca-Cola’s label complies with FDA regulations governing the naming of fruit juices.  Those regulations allow manufacturers to list the most characteristic flavors first even if they are not the predominant ingredients by volume.  The label in question, however, displays the words POMEGRANATE BLUEBERRY in large capital letters, followed by the phrase “flavored blend of five fruit juices,” in fine print underneath.  Pom Wonderful contended that this presentation creates a misleading impression even if it technically complies with the FDA’s mandates.

Coca-Cola argued essentially that since its label was FDA-compliant, Pom Wonderful should be barred from bringing a false advertising claim that could undermine the FDA’s authority to prescribe labeling guidelines for the protection of consumers.  Allowing private plaintiffs to use the Lanham Act as an end-run around the fact that the FDCA provides no private right of action would also, Coca-Cola asserted, threaten the national uniformity that Congress sought to establish through the FDCA.

The Court’s Decision

The Supreme Court ruled in favor of Pom Wonderful, concluding that Coca-Cola’s label could and should comply with both the FDCA and the Lanham Act.  The decision was based largely on the statutory text, in particular, the fact that Congress had amended the FDCA to pre-empt certain state laws but had not stipulated that it should also preclude enforcement of federal laws.  Finding nothing in either statute to indicate that the FDCA was meant to preclude application of the Lanham Act, the Supreme Court held that Congress intended the two statutory schemes to complement each other: “Although both statutes touch on food and beverage labeling, the Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety.”  Slip Op. at 11.  The Court noted that competitors engaging in the market on a day-to-day basis have a different – and perhaps “more immediate and accurate” – perspective on unfair practices than the FDA does, and the Lanham Act “draw[s] upon this market expertise” to provide an additional mechanism of protection for both competitors and consumers.  Id. at 12.  In other words, the FDA regulations provide a floor but not a ceiling for fair food and beverage labeling.

As for Coca-Cola’s national uniformity argument, the Court pointed out that “Pom Wonderful seeks to enforce the Lanham Act, not the FDCA or its regulations,” and “[t]he variability about which Coca-Cola complains is no different than the variability that any industry covered by the Lanham Act faces,” because the Lanham Act’s false advertising standards, although nationwide, are enforced on a case-by-case basis.  Id. at 13, 14.

The U.S. government had filed an amicus brief arguing for a somewhat middle-of-the-road position – one that would preclude Pom’s challenge to the name of Coca-Cola’s drink but permit claims based on unregulated aspects of its label, such as the image of the various fruits in the blend – but the Court deemed this approach likewise too restrictive of Lanham Act claims.

The Takeaway

The Court’s opinion has broad implications for manufacturers of food and beverages, which could now face many more false advertising suits.  As the Court put it in conclusion, companies can no longer claim that “because food and beverage labeling is involved [they have] no Lanham Act liability . . . for practices that allegedly mislead and trick consumers, all to the injury of competitors.”  Id. at 17.

This case is the Supreme Court’s second major Lanham Act decision this term.  As we have previously reported, the Static Controls v. Lexmark case, decided in March, clarified the standing requirements for Lanham Act false advertising suits.

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