Supreme Court’s Ruling in Pom Wonderful LLC v. Coca-Cola Co. Confirms That Private Companies May Sue Competitors For False and Deceptive Food and Beverage Labels
June 17, 2014
On June 12, 2014 the Supreme Court ruled in Pom Wonderful LLC v. Coca-Cola Co. that competitors may bring claims of misbranding of food and drinks under the Lanham Act. In the case, the Supreme Court analyzed whether the Federal Food, Drug and Cosmetic Act (“FDCA”) preempted the Lanham Act and determined that both statutes work together, allowing private companies to sue competitors for false and deceptive food and drink labels. The ruling overturns previous rulings by a California U.S. District Court and the Ninth Circuit Court of Appeals.
Case Background and Procedure
Pom Wonderful LLC (“Pom”) is a California company that produces and advertises a pomegranate juice that contains 85% pomegranate juice and 15% blueberry juice. Coca-Cola Co.’s Minute Maid Division (“Minute Maid”) produces and advertises a pomegranate juice that contains 99% grape and apple juice, 0.3% pomegranate juice, and 0.2% blueberry juice.
Pom sued Coca-Cola Co., under the Lanham Act, asserting that Minute Maid’s pomegranate juice advertising is deceptive because the juice contains less that 1% pomegranate juice. Pom also alleged that the deceptive labeling caused sales of Pom’s pomegranate juice to decrease.
The Lanham Act permits a private company to sue a competitor for unfair competition arising from false or misleading product descriptions. Minute Maid argued that Pom’s suit under the Lanham Act was improper because the Lanham Act is preempted by the Federal Food, Drug, and Cosmetic Act (“FDCA”), an act that prohibits the misbranding of food and drinks. The FDCA, and its regulations, give the United States nearly exclusive enforcement authority and does not permit private enforcement suits. Additionally, the FDCA preempts certain state misbranding laws. The U.S. Food and Drug Administration (“FDA”) promulgates regulations and implements the FDCA’s provisions. Minute Maid pointed to a specific FDA regulation on juice blends and argued that since the FDA, implementing the FDCA, already had a regulation in place on juice labeling, Pom’s suit under the Lanham Act was improper.
The District Court in California agreed with Minute Maid and granted partial summary judgment against Pom’s Lanham Act claim, ruling that the FDCA and its regulations preclude challenges to the name and label of Minute Maid’s juice blend. The Ninth Circuit affirmed in relevant parts.
The Supreme Court overruled the lower Courts’ rulings and held that a private company may bring a Lanham Act claim against a competitor challenging a food or beverage label that is regulated by the FDCA. The court determined that a preemption argument did not exist because the issue was not whether a state law was preempted by a federal law, but rather the alleged preclusion of a cause of action under one federal statute by the provisions of another federal statute.
The Court reasoned that neither the Lanham Act nor the FDCA in express terms forbids or limits Lanham Act claims challenging labels that are regulated by the FDCA. The Court found the absence of such a textual provision probative, given that both the FDCA and Lanham Act have coexisted for 70 years, that Congress did not intend FDA oversight to be the exclusive means of ensuring proper food and beverage labeling. Thus, the Court maintained that two statutes are read to work together, not against each other.
Implications of the Case
It is important to note that the Supreme Court ruling did not decide the merits of the case between Pom and Coca-Cola Co. The Court held that private companies may sue competitors over improper advertising and labeling of foods and beverages. Significantly, the Court gave this “policing power” to private businesses and competitors because of the detailed information companies have on how consumers rely upon certain sales and marketing strategies. The Court reasoned that this detailed information coupled with the ability of companies to sue competitors regarding deceptive food and beverage labels under the Lanham Act, could lead to more immediate consumer protection from deceptive food and beverage labels than a FDA investigation under the FDCA. This ruling will now force companies to look more closely at their labeling practices, or risk being sued by a competitor.
The case has now been remanded to the trial court to hear the merits of the case.