Antitrust Law Daily Wrap Up, TOP STORY—U.S. Sup. Ct.: POM Wonderful’s Lanham Act false ad claims not precluded by Food, Drug, and Cosmetics Act, (Jun 12, 2014)

By Jody Coultas, J.D.

The Food, Drug, and Cosmetics Act did not preclude Lanham Act claims based on deceptive food and beverage labeling, such as alleged in the case brought by POM Wonderful LLC against Coca-Cola Co., the U.S. Supreme Court has held (POM Wonderful LLC v. Coca-Cola Co., June 12, 2014, Kennedy, A.). The Court reversed a Ninth Circuit decision, with eight justices joining in the majority opinion and Justice Breyer taking no part.

POM alleged that Coca-Cola deceptively advertised its Minute Maid juice blend by displaying the words “pomegranate blueberry” with far more prominence than other words on the label, which shows the juice to be a blend of five juices. The juice actually contained only 0.3% pomegranate juice and 0.2% blueberry juice. The allegedly deceptive name, label, marketing, and advertising of the juice mislead consumers about the contents of the juice and caused POM to lose sales, according to the complaint.

The Ninth Circuit held that POM was precluded from asserting the Lanham Act false advertising claims (679 F.3d 1170, 2012-1 Trade Cases ¶77,892) because it would create a conflict with Food and Drug Administration (FDA) regulations and the Food, Drug, and Cosmetics Act (FDCA). The Supreme Court granted certiorari to address whether a private party may bring a Lanham Act claim challenging a food label regulated by the FDCA.

The Lanham Act creates a cause of action that can be brought by competitors for unfair competition through misleading advertising or labeling. The FDCA prohibits misbranding of food and drink, and prohibits information on a label not be prominently placed thereon or bear the common or usual name of the food. The FDA regulations require that if a juice blend does not name all the juices it contains and mentions only juices that are not predominant in the blend, then it must either declare the percentage content of the named juice or indicate that the named juice is present as a flavor or flavoring.

The Court noted at the outset that this was an issue of preclusion of a federal cause of action by another federal statute, rather than an issue of preemption of a state law claim by federal law. POM argued that the case concerned whether the FDCA as amended, was an “implied repeal” of the Lanham Act, and therefore the court must give full effect to both statutes unless they are in “irreconcilable conflict.” Coca-Cola countered that the issue was whether the FDCA clarified or narrowed the scope of the Lanham Act. Regardless of this dispute, Coca-Cola was incorrect that the best way to harmonize the statutes was to bar the Lanham Act claim.

POM’s Lanham Act claim was not precluded by the FDCA or federal regulations, according to the Court. Coca-Cola argued that the FDCA and the FDA’s regulations should take precedent over private causes of action authorized by the Lanham Act. However, the statutes complement each other in the federal regulation of misleading labels. The Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety. The statutory remedies available under the two statutes also complement each other. When two statutes complement each other, it would show disregard for the congressional design to hold that Congress nonetheless intended one federal statute to preclude the operation of the other.

There was no evidence that Congress intended the FDCA to preclude Lanham Act suits, nor was there any precedent or statute that supported Coca-Cola’s argument. Congress never enacted a provision to address the preclusion of other federal laws that might bear on food and beverage labeling. Although Coca-Cola was correct that Congress intended the FDCA to create national uniformity in food and beverage labeling, there was no evidence that Congress intended to preclude Lanham Act claims or private enforcement of other federal statutes.

In its amicus brief, the federal government argued that a Lanham Act claim is precluded “to the extent the FDCA or FDA regulations specifically require or authorize the challenged aspects of [the] label.” Therefore, the government argued that POM may not bring a Lanham Act challenge to the name of Coca-Cola’s product—because FDA regulations specifically authorized the names of juice blends—but that it may challenge other aspects of the label. The government took the position that private parties may not avail themselves of a federal remedy where agency-issued regulations touch on similar subject matter, even though the regulations do not explicitly displace the federal remedy. However, this argument assumed that the FDCA and its regulations were at least in some circumstances a “ceiling” on the regulation of food and beverage labeling. As noted above, the Court found that Congress intended the Lanham Act and the FDCA to complement each other with respect to food and beverage labeling.

The case is No. 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.

Companies: POM Wonderful LLC; Coca-Cola Co.

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