United States: ‘To Pomegranate Or Not To Pomegranate…’

Last Updated: June 18 2014
Article by Karen Ellis Carr and Joshua B. Saltzman

In an 8-0 decision, the US Supreme Court ruled last week that a private party may bring a Lanham Act claim challenging a food label regulated by the Federal Food Drug and Cosmetic Act (FDCA). The case originated when POM Wonderful LLC (POM), the makers of POM pomegranate juice drink, sued Coca-Cola Company in 2008, alleging that Coca-Cola had misleadingly labeled as "pomegranate-blueberry blended juice" a product that is more than 99 percent apple and grape juice, violating the Lanham Act. Justice Anthony Kennedy, writing for the Court, ruled that FDCA regulation did not preclude a Lanham Act claim and that Congress' intention was for both statutes to co-exist: "Congress did not intend the FDCA to preclude Lanham Act suits like POM's." Slip. Op. 17

The California federal district court hearing the case below granted partial summary judgment to Coca-Cola, holding that the FDCA and its implementing regulations, which prohibit the "misbranding" of food and beverage labels, precluded POM's claims. On appeal, the Ninth Circuit Court of Appeals affirmed that, under the regulatory framework established by the FDCA and implemented by the Food & Drug Administration (FDA), a competitor under the Lanham Act could not seek to declare a competing product label misleading and deceptive under the Lanham Act if that label met the FDCA's standard.

The Supreme Court reversed. The Court disagreed with Coca-Cola's argument that the FDCA preempted POM's Lanham Act claims, noting that preemption covers state-federal conflicts, while this case required the Court to evaluate the co-existence of two federal statutes.

The Court further held that the FDCA and the Lanham Act are complementary and can co-exist. As an initial matter, there is no express preclusion as neither statute "forbids or limits Lanham Act claims challenging labels that are regulated by the FDCA." Slip Op. 9. Moreover, Congress has never acknowledged Lanham Act interference with the FDCA in the 70 years since passage of the Lanham Act, although it has enacted amendments to both statutes. And FDCA's preemption provision only precludes state interference. Therefore, "For purposes of deciding whether the FDCA displaces a regulatory or liability scheme in another statute, it makes a substantial difference whether that other statute is state or federal." Slip Op. 11.

The Court also noted that the Lanham Act and FDCA protect different groups: "Although both statutes touch on food and beverage labeling, the Lanham Act protects commercial interest against unfair competition while the FDCA protects public health and safety." Slip Op. 11. The laws' enforcement mechanisms, together, provide broader protection than each would individually.

The Court was also unconvinced by Coca-Cola's argument that permitting POM's lawsuit would frustrate Congress' intent to create a national uniform labeling system for food and beverage products. Without agreeing Congress had such intent, the Court held that "private enforcement of other federal statutes" would not frustrate any such labeling system. Slip Op. 13. Permitting the case to proceed would, in fact, promote any Congressional intent for a national uniform system under the Lanham Act. And again relying on the complementary nature of the two statutes at issue, the Court disagreed with Coca-Cola's contention that the specificity with which FDA regulates juice-blend labeling limited POM's ability to proceed with its lawsuit.

In an attempt to split the baby, the government argued in an amicus brief that Lanham Act claims are precluded when the FDCA or the FDA specifically authorize the challenged part of the label. Under this argument, POM would not be permitted to challenge Coca-Cola's product name because the FDA regulates juice blend product names. The Court disagreed, holding that the FDCA is not a "ceiling on the regulation of food and beverage labeling." Slip Op. 15. The two laws are complementary; the fact that the FDCA regulations "touch on similar subject matter" does not prevent competitors like POM from pursuing their rights under the Lanham Act. Slip Op. 17. The case is POM Wonderful LLC v. Coca-Cola Co., No. 12-761 (June 12, 2014).

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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