After The Coca-Cola Co.’s Minute Maid division started marketing a pomegranate-blueberry juice blend in September 2007, POM Wonderful began losing sales of its own pomegranate-blueberry beverage.
One year later, POM sued Coca-Cola in federal district court, alleging that Coke’s naming and labeling of a beverage consisting mostly of apple and grape juices as pomegranate-blueberry juice misled consumers in violation of the false advertising provisions of the federal Lanham Act and two California statutes. Coca-Cola’s product contains 99.4 percent apple and grape juices, 0.3 percent pomegranate juice, 0.2 percent blueberry juice and 0.1 percent raspberry juice.
The district court dismissed POM’s claims on Coca-Cola’s motion for summary judgment, holding that labeling that complies with the Food, Drug, and Cosmetic Act (FDCA) and its implementing regulations bars federal Lanham Act and state law false advertising claims. POM could not file its suit under the FDCA because the law provides no private right of action. Only the Food and Drug Administration (FDA) can take action under the FDCA.
On May 17, a 9th Circuit panel in POM Wonderful LLC v. The Coca-Cola Company affirmed the district court’s dismissal of the federal claims, but remanded POM’s California Unfair Competition Law (UCL) and False Advertising Law (FAL) claims to the district court to determine whether POM had standing to pursue its state claims and, if so, whether the FDCA preempts those claims.
“The most important thing about the 9th Circuit’s decision is that the safe harbor provided by federal regulatory oversight for certain naming and labeling elements is bigger than some observers thought,” says Kelley Drye Partner August Horvath.
FDA regulations permit marketers of blends to identify their products through the juices that provide their characterizing flavors, regardless of whether these juices predominate by volume. But POM contended that the name and specific elements of the labeling of Coke’s product was misleading, including the fruit depicted and the font size of the wording. For example, POM sought to prevent “Pomegranate Blueberry” from appearing in larger, more conspicuous type than “Flavored Blend of 5 Juices.”
The court found the FDA had not imposed the specific labeling requirements POM sought. It said if font size or pictures on the label concerned the FDA, it would be up to it to create a standard, so a private litigant, whether a competitor or consumer, cannot ask a court to impose its own standard, according to Perkins Coie Partner David Biderman.
“The 9th Circuit ruled that if a claim requires the interpretation of FDA regulations or some other resolution of an ambiguity in the FDCA, it can’t be sustained under the Lanham Act. However, Congress didn’t intend to preempt the field of food and drug advertising, so claims that can be shown to be false or misleading without reliance on the FDCA can still proceed,” adds Georgetown Law School Professor Rebecca Tushnet.
The district court may next decide whether the FDCA preempts the state claims under much the same logic as the 9th Circuit’s preclusion analysis. To the extent the California UCL and FAL create requirements that are not identical to those imposed by the FDCA and its implementing regulations, the state law claims will likely be preempted.
“If, on remand, POM were found to have standing to pursue its UCL and FAL claims, I would expect Coca-Cola to renew its summary judgment motion for preemption of those claims, and with this 9th Circuit ruling in hand, Coke would have a good chance of success,” Horvath says.
Tushnet agrees, saying “it seems unlikely that POM can get much traction on state-law claims either.”
Private Action Setback
POM’s deceptive labeling claims against other marketers of juice products touched off a series of related competitor, class action and Federal Trade Commission cases that have become known as the “Juice Wars” (see “POM Pummeled”).
In cases POM filed against beverage makers Tropicana Products Inc., Welch Foods Inc. and Ocean Spray Cranberries Inc., district courts denied similar motions for summary judgment for defendants on FDA preclusion grounds. Each defendant subsequently prevailed over POM at trial. The 9th Circuit’s recent ruling, however, holds that these denials of summary judgment were inconsistent with the 2010 9th Circuit precedent in Photomedex, Inc. v. Irwin, and those cases should not have gone to trial.
The dismissal of POM’s Lanham Act claim illustrates the hurdles facing plaintiffs claiming false advertising or deceptive marketing in industries subject to FDA regulation, namely the food, drug, medical device and cosmetic industries, and may discourage consumer class actions against such companies.
“The 9th Circuit’s decision is a significant victory for food manufacturers,” Biderman says.
Labeling that complies with FDA regulations will be fully protected from competitor suits and consumer class actions, Biderman adds. However, he advises companies to carefully review their nonlabeling marketing practices in areas in which the FDA’s authority remains uncertain and preemption protections will be challenged.