For Whom Is POM Wonderful?
Seller Beware: Consumer Protection Insights for Industry
In its recent decision on the long-running dispute between POM Wonderful, LLC and Coca-Cola, the Supreme Court endorsed the position that FDA regulations represent a regulatory "floor"— not a ceiling — and that these regulations may be "complemented" by additional and more stringent requirements of law. Specifically, the Court ruled that the Lanham Act's prohibition against false advertising is not superseded by FDA regulations, even where those regulations expressly permit the advertising claims at issue.
The Court's unanimous ruling was the culmination of years of litigation, which readers of the Seller Beware Blog will remember from previous posts here. POM, maker of POM WONDERFUL® pomegranate juice, brought suit against Coca-Cola in 2008, claiming that its Minute Maid Enhanced Pomegranate Blueberry Flavored 100% Juice Blend violates the Lanham Act's prohibition against false advertising because the product contains only 0.3% pomegranate juice and 0.2% blueberry juice. Coca-Cola had argued, successfully until now, that because regulations promulgated under the federal Food, Drug & Cosmetic Act (FDCA) squarely address labeling of juice blends, and the Minute Maid juice label complies with these regulations, the FDCA precluded POM's suit.
The Supreme Court, following an oral argument notable for the Justices' skepticism of Coca-Cola's position, rejected Coca-Cola's argument, holding instead that Congress intended the two statutes to be complementary with respect to food and beverage labeling. It noted that neither act expressly preempts the other, and that the coexistence of both statutes provides more protection for consumers and industry than either could alone. The Court further reasoned that the FDA lacks the perspective or expertise in market dynamics, whereas competitors may have "far more immediate and accurate" awareness of practices that constitute unfair competition. Applying this logic, the Court explicitly rejected the federal government's argument that a Lanham Act claim is precluded to the extent that FDCA regulations specifically require or authorize the challenged aspects of the label. The Court therefore reversed the earlier summary judgment for Coca Cola and remanded the case to the District Court.
It is unclear whether this decision will ultimately benefit POM. In a similar case brought by POM against Welch Foods, Inc., the jury found that Welch's had deceptively marketed its product, but also found POM had not proven that it suffered lost sales. A comparable outcome in its lawsuit against Coca-Cola would be a hollow victory. Moreover, the Supreme Court's decision against Coca-Cola may well be used against POM, which has been sued by consumers and the FTC over allegedly false and misleading claims.
The big question is how big a win this decision will be for the consumer class action plaintiff's bar. It could have been worse for sellers of foods and beverages: because the Court's holding bears on Lanham Act claims, its express scope is limited to suits between competitors. But this holding relies in large part on the Court's determination that competing laws, both of which address false and misleading product descriptions, can complement one another. This reasoning could undermine preemption defenses formerly available to industry, especially the argument that compliance with the FDCA insulates manufacturers against claims under state consumer protection laws. Consequently, this decision may embolden plaintiffs, and increase the already heavy load of consumer class actions burdening food manufacturers.
© Arnold & Porter Kaye Scholer LLP 2014 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.