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From Health Law Daily, June 12, 2014

POM Wonderful’s Lanham Act claims not barred by FDC Act

By Melissa Skinner, JD

Unfair competition claims brought by POM Wonderful® LLC (POM) against The Coca-Cola® Company (Coca-Cola) pursuant to the Lanham Act were not barred by labeling provisions of the federal Food, Drug, and Cosmetic Act (FDC Act). In a highly anticipated decision, the Supreme Court reversed the ruling of the Ninth Circuit, which previously held that POM’s claims in regard to its competition, a Coca-Cola juice blend, were precluded by the FDC Act and its accompanying regulations. The Supreme Court explicitly stated that the Ninth Circuit’s ruling that the FDC Act precluded POM’s claims under the Lanham Act was incorrect. The Court found that “nothing in the text, history, or structure of the FDC [Act] or the Lanham Act shows the congressional purpose or design to forbid these suits,” and that, “[q]uite to the contrary, the FDC [Act] and Lanham Act complement each other in the federal regulation of misleading food and beverage labels” (POM Wonderful, LLC v Coca-Cola, Co., June 12, 2014, Kennedy, A).

Competing products. POM is the manufacturer of a blueberry and pomegranate juice blend. The Minute Maid division of Coca-Cola produces a product that is in direct competition with the POM juice blend. According to the Court, the Coca-Cola blend displays the words “pomegranate blueberry” and images of those fruits prominently on its labeling when in fact the product is a blend of five juices and only contains 0.3 percent pomegranate juice and 0.2 percent blueberry juice. The Coca-Cola product is mostly made up of apple and grape juices, which are considerably less expensive than pomegranate or blueberry juices.

Intersecting claims. POM brought suit against Coco-Cola under a provision of the Lanham Act, which creates a cause of action for unfair competition that is based on allegations of a competitor’s misleading advertising or labeling. As such, the Lanham Act allows for private suits brought by entities against competing products. On the other hand, the FDC Act empowers the U.S. government to almost exclusively enforce its provisions and regulations, does not allow for private enforcement suits, and pre-empts many state misbranding and labeling laws. The FDC Act generally prohibits the misbranding of food and drink products and specifically, mandates that in the case “a juice blend does not name all the juices it contains and mentions only juices that are predominant in the blend, then it must either declare the percentage content of the named juice or indicate that a named juice is present as a flavor or flavoring.” In the suit brought by POM, Coca-Cola maintained that POM’s Lanham Act claims were precluded by the existence of these FDC Act regulations.

Procedural background. POM claimed that the Coca-Cola label “tricks and deceives consumers,” as to the true contents of its juice blend. The district court granted Coca-Cola partial summary judgment and found that the FDC Act and regulations barred challenges to the labeling of Coca-Cola’s juice blend. The Ninth Circuit affirmed the ruling and found that “Congress decided ‘to entrust matters of juice beverage labeling to the FDA’; the FDA has promulgated ‘comprehensive regulation of that labeling’; and the FDA ‘apparently’ has not imposed the requirements on Coca-Cola’s label that are sought by POM.” The Supreme Court granted POM’s petition for certiorari in January of 2014 and heard oral arguments from the parties in April of this year.

Supreme Court analysis. The Supreme Court’s determination of the issue as to whether POM’s Lanham Act claims are barred by the FDC Act’s labeling regulations rested on four premises: (1) that the case is not a pre-emption case but instead concerns the issue of preclusion; (2) “[n]either the Lanham Act nor the FDC [Act], in express terms, forbids or limits, the Lanham Act claims challenging labels that are regulated by the FDC [Act]; (3) Coca-Cola’s arguments regarding national uniformity in food and beverage labeling do not support the notion that preclusion is proper in this case; and (4) the Government’s position that POM’s claims are barred because the Lanham Act is precluded by the FDC Act to the extent the FDC Act regulations “require or authorize the challenged aspects of the label” is incorrect.

While the court noted that this was not a pre-emption matter per se, it did acknowledge that preemption principles were “instructive,” and, as such, found that the complementary aspects of the two laws supported the notion that one should not preclude the other. Moreover, after inspecting the history and text of the two intersecting laws, the court found that Congress did not intend for the FDC Act to preclude Lanham Act suits such as this one brought by POM. In so deciding, the Court also contradicted the Government’s position on this matter, which the Court found would in effect “preclude private parties from availing themselves of a well-established federal remedy because an agency enacted regulations that touch on similar subject matter but do not purport to displace that remember or even implement the statute that is its source.”

All of the other justices joined Justice Kennedy in this decision except Justice Breyer, who took no part in the case’s consideration.

The case number is 12-761.

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. Bert W. Rein (Wiley Rein LLP) for The Chamber of Commerce of the USA.

Companies: POM Wonderful LLC; Coca-Cola Co.; The Chamber of Commerce of the USA

MainStory: TopStory LabelingNews FoodNews FoodStandardsNews MisbrandingNews AdvertisingNews PreemptionNews FDCActNews SupremeCourtNews

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