United States: Supreme Court Opens Door To Food And Beverage Label Challenges Under Lanham Act

Last Updated: June 13 2014
Article by David Conway

The United States Supreme Court paved the way today for competitors to challenge FDA-regulated food and beverage labels under the Lanham Act.  The Court's opinion in POM Wonderful LLC v. The Coca-Cola Co. is the latest chapter in a long-running feud between POM Wonderful and Coca-Cola, which arose in 2008 when POM accused Coke of mislabeling one of its fruit juice blend products by prominently displaying the words "pomegranate blueberry" despite the product consisting mostly of less expensive apple and grape juices.  To date, Coke had successfully persuaded a California district court and the Ninth Circuit that POM's Lanham Act claims were precluded by the Federal Food, Drug, and Cosmetic Act and attendant FDA regulations specifically addressing the labeling of fruit juice blends. 

However, Justice Kennedy, writing for a unanimous Supreme Court, rejected this reasoning and instead held that Congress intended the Lanham Act and the FDCA to "complement each other with respect to food and beverage labeling."  The Court began by noting that neither the FDCA nor the Lanham Act expressly prohibits Lanham Act claims challenging FDA-regulated labels, despite the fact that both statutes have co-existed for 70 years and undergone numerous amendments.  The Court was especially persuaded by the fact that the FDCA expressly preempts some state law claims but remains silent regarding the preclusion of federal causes of action.  Additionally, the Court determined that the Lanham Act and FDCA complement one another because the former statute protects commercial interests against unfair competition, while the latter protects public health and safety.  As the Court explained, the FDA "does not have the same perspective or expertise in assessing market dynamics that day-to-day competitors possess."  The Court also rejected the notion that preclusion of Lanham Act claims was necessary to  achieve Congress's goal of "national uniformity in food and beverage labeling."  Although the Court acknowledged that application of the Lanham Act could lead to "some variation in outcome," it concluded that Congress intended to permit Lanham Act claims 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.

In one sense, the Supreme Court's sweeping opinion will have a broad and decisive impact on food and beverage advertisers.  Lanham Act suits challenging FDA-regulated label claims are now fair game, and food and beverage advertisers must ensure that their labels comply with both FDA and Lanham Act requirements.  In effect, this may mean more onerous labeling requirements than the FDA would otherwise mandate, especially in instances where a label claim may still be misleading despite complying with FDA regulations.  At the same time, advertisers should take comfort in knowing the limits of the Supreme Court's decision.  The Court's holding applies only to Lanham Act challenges between competitors, and the current law regarding FDCA express preemption of state law consumer claims should remain intact.  Furthermore, product labels that are subject to pre-market approval by the FDA, USDA, or other agencies may be entitled to heightened protection because the Court's holding was premised in part on the fact that "FDA does not preapprove food and beverage labels."  Although future decisions will clarify the scope and true impact of the Court's decision, for now it appears that food and beverage advertisers will have more exposure for their own label claims but also a better weapon for challenging the claims of their competitors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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