POM Wonderful, which makes pomegranate juice drinks, filed a Lanham Act suit against Coca-Cola alleging that one of its drinks misled consumers into believing it consisted predominantly of pomegranate and blueberry juice. The drink, sold by Coca-Cola subsidiary Minute Maid, had the words “pomegranate blueberry” in all capital letters on two separate lines but contained only 0.3% pomegranate juice and 0.2% blueberry juice.
The District Court granted summary judgment to Coca-Cola, ruling that the Federal Food, Drug, and Cosmetic Act (FDCA) and its regulations preclude Lanham Act challenges to the name and label of the drink. The Ninth Circuit affirmed this.
The Supreme Court in an 8-0 verdict reversed the Ninth Circuit and held that competitors may bring Lanham Act claims such as POM’s that challenge food and beverage labels regulated by the FDCA. Justice Anthony Kennedy delivered the opinion. Justice Stephen Breyer took no part in the case.
The Supreme Court said neither the Lanham Act nor the FDCA forbids or limits Lanham Act claims challenging labels that are regulated by the FDCA, suggesting Congress did not intend the FDCA to be the exclusive means of ensuring proper food and beverage labelling. It added that this is also not a pre-emption case, where state law is pre-empted by federal law. It said it is a statutory interpretation case and the traditional rules of statutory interpretation do not change because it involves multiple federal statutes.
The Supreme Court said Coca-Cola’s arguments did not support its claim that preclusion is proper because Congress intended national uniformity in food and beverage labelling.
The Court’s ruling also disagreed with the US government, which had said that a Lanham Act claim is “precluded to the extent that FDCA or FDA regulations specifically require or authorise the challenged aspects of [the] label,” and that this rule precludes POM’s challenge to the name of Coca-Cola’s product. The Supreme Court said this view is “flawed” because the FDCA neither discusses nor cites the Lanham Act.
Following oral arguments in the case in April, some observers said the importance of the case depended on the broadness of the Supreme Court ruling. A broad ruling could potentially apply to other statutes and lead to more false advertising claims in industries that are regulated by bodies other than the FDA, such as banking and telecommunications.
The Supreme Court decision kept its discussed only the FDCA and the Lanham Act. But the decision could lead to other cases similar to POM’s in the food and beverage area. The ruling establishes that defendants cannot use one federal statute to avoid liability under another.
“…the FDCA and the Lanham Act complement each other in the federal regulation of misleading labels. Congress did not intend the FSCA to preclude Lanham Act suits like POM’s,” said the Supreme Court. “The position Coca-Cola takes in this court that because food and beverage labeling is involved it has no Lanham Act liability here for practices that allegedly mislead and trick consumers, all to the injury of competitors, finds no support in precedent or the statutes.”
The Supreme Court noted, however, that unlike other types of labels such as drug labels, the FDA does not pre-approve food and beverage labels. It relies instead on enforcement actions, warning letters and other measures. So the Court reasoned that if Lanham Act claims were precluded then commercial interests could be left with less effective protection for food and beverage labeling than in other industries.
“It is unlikely that Congress intended the FDCA’s protection of health and safety to result in less policing of misleading food and beverage labels than in competitive markers for other products,” said the Supreme Court.
