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From Antitrust Law Daily, April 21, 2014

High court considers preclusion of juice maker’s Lanham Act claims against rival

By Jeffrey May, J.D.

At least a few of the Supreme Court Justices appear inclined to allow Pom Wonderful to pursue Lanham Act false advertising claims against The Coca-Cola Company over the marketing of its “Pomegranate Blueberry” juice product. Today, the Court heard argument on whether the U.S. Court of Appeals in San Francisco erred in holding that a private party cannot bring a Lanham Act claim challenging a product label regulated under the Food, Drug, and Cosmetic Act (FDCA). The Court granted review of Pom’s petition for certiorari on January 10 (Pom Wonderful LLC v. Coca-Cola Co., Dkt. 12-761).

The Ninth Circuit had ruled that Pom was precluded from asserting Lanham Act false advertising claims based on Coca Cola’s naming of “Pomegranate Blueberry Flavored Blend of 5 Juices” (679 F.3d 1170, 2012-1 Trade Cases ¶77,892) because the challenge would create a conflict with Food and Drug Administration (FDA) regulations and would undermine the FDA’s apparent determination that so naming the product is not misleading. Pom also had questioned the product’s label, including the size of the words “Pomegranate Blueberry” in relation to the words “Flavored Blend of 5 Juices.”

Apparently, the product contains less than one percent of pomegranate juice. Pom has asserted that more than a third of consumers who look at the product’s label believe that pomegranate and blueberry juice are the majority juices.

Arguing on behalf of Pom, Seth P. Waxman of Wilmer Cutler Pickering Hale and Dorr LLP told the Court that Coca-Cola’s label grossly misleads customers, and that, even if it were consistent with FDA regulations, Pom had a right to prove a willful Lanham Act violation. “Congress has never precluded or conditioned enforcement of the Lanham Act in food labeling cases, and it is entirely possible, in fact, entirely easy for Coke to comply with both statutory obligations,” he added.

In calling for preclusion of the Lanham Act claims in the face of regulatory action, Kathleen M. Sullivan of Quinn Emanuel Urquhart & Sullivan, LLP, argued on behalf of Coca-Cola that “Congress wanted nationally uniform labeling regulations whereby a manufacturer could pick one label and stick with it.” However, Coca-Cola had a difficult time trying to convince some of the justices that the regulatory actions foreclosed the Lanham Act claims.

Justice Anthony M. Kennedy asked whether it was “part of Coke’s narrow position that national uniformity consists in labels that cheat the consumers like this one did.”

“I think it’s relevant for us to ask whether people are cheated in buying this product,” Kennedy continued. “Because Coca-Cola’s position is to say even if they are, there’s nothing we can do about it.”

“Under the FDCA and the FDA regulations, Coke’s label is as a matter of law not misleading,” Sullivan responded. “And once we reach that conclusion under FDCA and FDA, [the] Lanham Act can’t come in from the side and say, oh, yes, it is, because that would undermine the express preemption provision that was designed to create national uniformity.”

Justice Ruth Bader Ginsburg suggested that the two acts were serving different purposes. One is “concerned with nutritional information and health claims,” while the other is focused on “a competitor losing out because of the deception.”

Justice Sonia Sotomayor pondered whether the authorization to a name should permit the name’s use in a misleading way. “That’s really the government’s position,” said Sotomayor, which is “if you’re using the name in combination with other factors in a misleading way that’s not a subject to the regulation, just the name, then it’s actionable under the Lanham Act.”

U.S. views. Explaining the government’s approach to the preclusion issue, Melissa Arbus Sherry, Assistant to the U.S. Solicitor General, said that federal district courts were permitted to determine whether labels, in fact, comply or did not comply with FDA regulations. Sherry suggested that courts “look to whether or not allowing the claim to go forward would complement what the agency has done or would actually conflict with what the agency has done.”

In its amicus brief, the government contends that, “[b]ecause the court of appeals dismissed petitioner’s claim in its entirety based on an overly broad view of preclusion, the decision below should be vacated and the case remanded for further proceedings.” Rejecting the approach taken by the appellate court and the approach urged by Pom, the government explained that Pom’s Lanham Act claim is precluded only to the extent that FDCA or FDA regulations specifically require or authorize the challenged aspects of Coca Cola’s label.

Attorneys: Seth P. Waxman (Wilmer Cutler Pickering Hale and Dorr LLP) for POM Wonderful LLC. Kathleen M. Sullivan (Quinn Emanuel Urquhart & Sullivan, LLP) for Coca-Cola Co. Melissa Arbus Sherry, U.S. Department of Justice, Office of Solicitor General.

Companies: Pom Wonderful LLC; Coca-Cola Co.

MainStory: TopStory Advertising

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