Legal Review: After POM/Coca-Cola Decision, Some Claims Aren’t Worth the Squeeze1 Jul, 2014 By: Jeffrey D. Knowles, Venable LLP’s Advertising, David D. Conway, Venable LLP’s Advertising, Marketing and New Media Group Response
A recent U.S. Supreme Court decision in POM Wonderful v. Coca-Cola has opened a potential new avenue for challenges to advertising claims that appear on the labels of products subject to the Federal Food, Drug and Cosmetic Act (FDCA) and the Food and Drug Administration (FDA) regulations that enforce the it. Direct response marketers, especially those who market dietary supplements and cosmetics, should take notice of the decision and monitor its still-evolving legal and business implications.
What It’s All About
In 2008, POM Wonderful, a marketer of pomegranate juice products, filed a Lanham Act lawsuit alleging that an advertising claim on the label of Coca-Cola’s Minute Maid “Pomegranate Blueberry Flavored Blend of 5 Juices” product was deceptive. POM Wonderful alleged that the label gave consumers the impression that the beverage consisted primarily of pomegranate and blueberry juices when, in fact, those juices each constituted less than one-third of one percent of the blend.
Much less expensive apple and grape juices made up more than 95 percent of the product. In response, Coca-Cola argued that POM Wonderful’s Lanham Act claims were precluded by the FDCA and FDA regulations governing the labeling of fruit juice. This argument found receptive audiences in both a California district court and the Ninth Circuit Federal Court of Appeals.
However, the Supreme Court disagreed with the lower courts in a unanimous decision, noting that neither the FDCA nor the Lanham Act specifically prohibit challenges of FDA-regulated labels under the Lanham Act. The fact that the FDCA expressly preempts some state law claims but remains silent regarding the preclusion of federal causes of action had been a central point in POM’s arguments.
That line of reasoning clearly struck a chord with the Court, which concluded that Congress intended to permit Lanham Act challenges as a means “to enforce a national policy to ensure fair competition” because it chose not to apply the FDCA’s express preemption clause to them. The Court’s decision also noted that Congress intended the Lanham Act and FDCA to “complement each other with respect to food and beverage labeling.”
What It Means for Marketers
It would be understandable for marketers to shrug their shoulders and ask, “What does pomegranate juice have to do with direct response?” In this case, the unfortunate answer is, “A lot.”
In holding that the FDA “does not have the same perspective or expertise in assessing market dynamics that day-to-day competitors possess,” the Court made Lanham Act lawsuits challenging FDA-regulated label claims fair game. This means that marketers of foods, dietary supplements, cosmetics and other products regulated under the FDCA now need to ensure that their products’ labels comply with both FDA labeling requirements and that the claims on those labels would not be deemed deceptive when challenged under the Lanham Act.
The decision likely will lead to practical defensive labeling practices that are more onerous than those the FDA would otherwise mandate. In addition, it is unclear exactly what the decision means for the labeling of products subject to pre-market approval by the FDA, the U.S. Department of Agriculture or other agencies.
For now at least, the Court’s decision applies only to Lanham Act challenges between competitors. Although the decision appears to leave current law regarding FDCA’s express preemption of state law consumer claims intact, there is also little question that aggressive plaintiffs’ attorneys will allege that some FDA-compliant on-label advertising claims are deceptive.
Future court decisions will clarify the scope of this decision, but this much is clear: marketers of products subject to the FDCA have gained a powerful tool for challenging the claims of their competitors. ■