United States: Supreme Court: FDCA Compliance Does Not Bar Lanham Act Claims

POM Wonderful LLC v. Coca-Cola Co.

In a unanimous decision, the Supreme Court of the United States reversed the U.S. Court of Appeals for the Ninth Circuit ruling that the Food, Drug, and Cosmetic Act (FDCA) and its regulations do not bar lawsuits authorized under the Lanham Act.  POM Wonderful LLC v. Coca-Cola Co., Case No. 12-761 (Supr. Ct., June 12, 2014) (Kennedy, Justice).  Justice Kennedy, writing for the Supreme Court, explained that the two federal statutes are complementary, and the FDCA's delegation of enforcement authority to the federal government did not indicate Congress' intent to foreclose private enforcement of other federal statutes, such as the Lanham Act.

Background of the Case

Pom Wonderful produces, markets and sells pomegranate juice and pomegranate juice blends, including a pomegranate blueberry juice blend.  The Coca-Cola Company markets and sells juices and juice blends, including a pomegranate blueberry juice blend product.  The Coca-Cola product contains about 99.4 percent apple and grape juices, 0.3 percent pomegranate juice, 0.2 percent blueberry juice and 0.1 percent raspberry juice.  Among other things, the front label displays the words "pomegranate blueberry" in all capital letters, on two separate lines, and below those words, the phrase "flavored blend of 5 juices" in much smaller font.

Pom sued Coca-Cola alleging Coca-Cola's name and labeling of the pomegranate blueberry juice blend product violated the false-advertising provision of the Lanham Act.  The district court granted partial summary judgment to Coca-Cola, ruling that Pom's name and labeling claim under the Lanham Act was barred by the FDCA's regulations.  Pom appealed.

The Ninth Circuit affirmed, holding that the FDCA and its regulations barred both the name and labeling aspects of Pom's Lanham Act claim.  Relying on its own precedent, PhotoMedex, Inc. v. Irwin, the Ninth Circuit noted that "[w]here the FDA has not concluded that particular conduct violates the FDCA, we have even held that a Lanham Act claim may not be pursued if the claim would require litigating whether that conduct violates the FDCA."  The Ninth Circuit thus concluded that "for a court to act when the FDA has not—despite regulating extensively in this area—would risk undercutting the FDA's expert judgments and authority."  IP Update, Vol. 15, No. 6.

The Supreme Court Decision

The Supreme Court granted certiorari to address the issue of whether a private party may bring a Lanham Act claim challenging a product label regulated under the FDCA.  IP Update, Vol. 17, No. 1.

Writing for the unanimous court, Justice Kennedy stated that competitors may bring Lanham Act claims challenging food and beverage labels regulated by the FDCA.  The Supreme Court first noted that this is not a pre-emption case dealing with whether state law is pre-empted by federal law, but rather a statutory interpretation case involving "the intersection of two federal statutes."

Moving to the text of the two statutes, Justice Kennedy observed that neither the Lanham Act nor the FDCA expressly forbids or limits Lanham Act claims challenging labels that are regulated by the FDCA.  In fact, the Supreme Court noted that the two statutes "complement" each other in major respects, including their scope and purpose.  Namely, the Lanham Act permits one competitor to sue another for unfair competition and so protects commercial interests against unfair competition and the public from false or misleading product descriptions.  The FDCA prohibits misbranding and so protects public health and safety regarding food and beverage labeling.  The two statutes also complement each other in remedies, because while the FDA enforces the FDCA and its regulations, it "does not have the same perspective or expertise in assessing market dynamics that day-to-day competitors possess."  On the other hand, the Lanham Act allows private parties whose "awareness of unfair competition practices may be far more immediate and accurate than that of agency rulemakers and regulators" to sue competitors. Justice Kennedy explained that in this regard the two statutes serve as distinct mechanisms to enhance protection of competitors and consumers.

The Supreme Court also reasoned that where two statutes are complementary (as here), it would show "disregard for congressional design" to hold that enforcement of one should preclude the other: "[i]t is unlikely that Congress intended the FDCA's protection of health and safety to result in less policing of misleading food and beverage labels than in competitive markets for other products."

On a similar basis, Justice Kennedy rebuffed the argument of the solicitor general, noting that the government's position wrongly "assumes that the FDCA and its regulations are a ceiling on the regulation of food and beverages."  As to whether U.S. Food and Drug Administration label regulations pre-empt the field, Justice Kennedy noted "[a]n agency may not reorder federal statutory rights without congressional authorization."

Justice Breyer took no part in the consideration or decision of the case.

Practice Note: The Supreme Court's ruling opens the door for competitors to bring Lanham Act claims even if a product label is compliant with the FDCA and its regulations.  This may lead to a rise in private false advertising claims brought by competitors in the food and beverage industry as food labels come under more scrutiny.

Supreme Court: FDCA Compliance Does Not Bar Lanham Act Claims

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