United States: U.S. Supreme Court: Pom’s Mislabeling Suit Against Coke Not Precluded By FDA Regulations

Yesterday the Supreme Court ruled, 8-0, that Pom Wonderful LLC could pursue mislabeling claims under the federal Lanham Act against the Coca-Cola Company, even though the label at issue complied with FDA labeling regulations. The decision reversed the Ninth Circuit's 2012 ruling that the FDA's "comprehensive regulation" of food and beverage labeling under the Federal Food, Drug and Cosmetic Act ("FDCA") precluded private claims for mislabeling under the Lanham Act. The Lanham Act is a federal statute allowing private companies to sue competitors for unfair competition through false advertising.

How did the Court reach this important decision?  And what does its ruling mean for food and beverage producers going forward?

What the Court Decided

The Court's unanimous opinion found that "neither the Lanham Act nor the FDCA [limited] Lanham Act claims challenging labels that are regulated by the FDCA."  While the FDCA expressly pre-empted state labeling requirements that were not identical to those under the FDCA, it did nothing of the sort for other federal laws. With no express conflict between these statutes, the Court concluded that Congress's intent was for these two laws to complement one another—not for "one federal statute to preclude the operation of the other."

Through the FDCA, Congress had given the FDA authority to regulate food and beverage labeling "primarily to protect the health and safety of the public at large." But the FDA "does not have the same perspective or expertise in assessing market dynamics that day-to-day competitors possess." Private mislabeling suits for "unfair competition" under the Lanham Act thus served a distinct purpose separate from the regulation of health and safety, which was still primarily the FDA's responsibility.

What Comes Next

In an important sense, the impact of POM Wonderful is limited for food and beverage companies facing suits over mislabeling. The decision only resolves the tension between two specific federal laws, the FDCA and the Lanham Act. The Court, in sum, held that Congress's grant of regulatory authority to the FDA through one statute, the FDCA, did not mean it intended to close off private litigation over labeling under another federal statute serving a different core purpose.

But the decision does not speak to whether the FDA's authority under federal law preempts mislabeling claims brought under state law. As the Court made clear at the outset, "this is not a pre-emption case." Companies whose labels are FDA-compliant remain free to argue that state law claims challenging these labels are preempted, citing the FDCA's preemption clause and the FDA's "primary jurisdiction" over labeling in interstate commerce.

Indeed, even before the Supreme Court weighed in, it was far from clear that the Ninth Circuit's 2012 decision would have any lasting impact on the preemption debate. In practice, only a handful of decisions had relied on the Ninth Circuit's ruling to preempt state law labeling claims. Others, meanwhile, had already declined to extend its reasoning beyond the Lanham Act to claims under state law.

All that said, there is at least a risk that Pom Wonderful's reasoning could weaken the primary jurisdiction and preemption doctrines by undermining the FDA's position as the central authority for food and beverage labeling. Despite recognizing that the FDA was primarily responsible for labeling regulations, the Court noted that the agency does not require the same preapproval for food and beverage labels that it does for pharmaceutical labels. To the Court, this contrast was "consistent with the less extensive role the FDA plays in the regulation of food than in the regulation of drugs." In characterizing the FDA's food regulation as more of a floor than a ceiling, the Court took a decidedly more restrictive view of the agency's "comprehensive" labeling authority than did the Ninth Circuit.

Going forward, expect creative plaintiff-side attorneys to stretch Pom Wonderful to argue against the preemption of food labeling claims under state law, despite the important limits on the decision's reach discussed above.  As the "food wars" continue, the impact of Pom Wonderful on preemption may become the newest battleground.

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