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Advertising, Marketing & Promotions Alert >> U.S. Supreme Court’s POM Wonderful Decision: Impact on Product Advertisements & Labels

August 7, 2014

The U.S. Supreme Court has decided that POM Wonderful LLC may challenge a Coca-Cola Company product’s labeling under the federal Lanham Act, notwithstanding the Food and Drug Administration’s (FDA) regulations governing the same label. The Court’s decision may lead more and more competitors – and perhaps even consumers – to bring actions against companies who until now have considered their products’ names, labels, marketing, and advertising to be immune to litigation because they met federal standards.

Background
POM Wonderful, which produces a pomegranate-blueberry juice blend, sued Coca-Cola under the Lanham Act, alleging that the label on Coca-Cola’s “pomegranate blueberry” juice blend misled consumers into believing that the product consisted predominantly of pomegranate and blueberry juice when it in fact consisted predominantly – over ninety nine percent – of less expensive apple and grape juices.  The label also read “100% Fruit Juice Blend” and stated, albeit in smaller print, “Flavored Blend of 5 Juices.”  Under the FDA’s rules, the label was fine.  But POM complained that the label caused confusion leading to lost sales, and it therefore sought damages and injunctive relief.

The district court ruled that the Food, Drug, and Cosmetic Act (FDCA), which forbids the misbranding of food, including by means of false or misleading labeling, precluded POM’s challenges to the name and label of Coca-Cola’s juice blend.  

The U.S. Court of Appeals for the Ninth Circuit agreed with the district court, reasoning that Congress had entrusted “matters of juice beverage labeling” to the FDA and the FDA had promulgated “comprehensive regulation of that labeling.”

The Supreme Court’s Decision
The Supreme Court disagreed with both lower courts, ruling that a competitor could bring a Lanham Act claim challenging a food and beverage label even though it was already regulated by the FDA.  

The Court explained that neither the Lanham Act nor the FDCA, in express terms, forbade or limited Lanham Act claims challenging labels that were regulated under the FDCA. Moreover, the Court continued, although both statutes touched on food and beverage labeling, their purposes did not conflict – the Lanham Act protected commercial interests against unfair competition, while the FDCA protected public health and safety.

Significantly, the Court did not accept the federal government’s argument that, even if POM were permitted to bring a Lanham Act claim challenging Coca-Cola’s product’s label, it should not be able to challenge the name of the product because that was specifically authorized by the FDCA and federal regulations. That position, the Court reasoned, assumed that the FDCA and its regulations were at least in some circumstances a “ceiling on the regulation of food and beverage labeling” – a view the Court rejected.

Significance of the Decision
The Court’s ruling is not a blanket reversal of all federal preemption laws. Indeed, the Court quite specifically recognized that the FDCA contains a provision that preempts certain state laws on misbranding, and the decision does not mean that competitors or consumers now can use those laws to challenge labels or advertising that meet FDCA requirements.

Nevertheless, the POM Wonderful opinion could lead to a deluge of litigation in a wide variety of other circumstances, and it provides good reason for labels and other advertising to be scrutinized from a false advertising perspective regardless of whether this advertising separately satisfies the FDCA or other federal requirements.  Moreover, it is important to recognize that the POM Wonderful decision may have implications beyond food and beverage labels.  Compliance with any federal or state regulations, including those specific to advertising, should never be presumed to obviate the need for separately analyzing materials from a false advertising perspective.  This decision is a great example of how the failure to conduct this type of analysis as part of the product’s vetting process could detract, or even derail, an otherwise successful product.    

 

Bottom Line

The Supreme Court’s POM Wonderful decision is a lesson to companies and advertisers who have tried to streamline their vetting process for product advertisements and labels by focusing their efforts only on satisfying federal agencies’ regulations (e.g., FDA, U.S. Department of Agriculture (USDA), Environmental Protection Agency (EPA). The analysis of product labels and advertisements must consider all potential challenges by competitors, consumers, and other governmental agencies.