Pom Wonderful LLC v. The Coca-Cola Company, 679 F.3d 1170 (9th Cir. 2012), cert. granted January 10, 2014
This case involves the labeling of a blended juice beverage named “Pomegranate Blueberry,” sold under Coca-Cola’s MINUTE MAID brand, depicted in the column to the right.
This beverage contains 99.4% apple and grape juices. The plaintiff, Pom Wonderful LLC (“Pom Wonderful”), produces a competing product containing only pomegranate juice and blueberry juice. Pom Wonderful sued Coca-Cola under Section 43(a) of the Lanham Act, alleging that the prominent use of “pomegranate blueberry” on the label of such a beverage was deceptive. It was apparently uncontested that the MINUTE MAID brand beverage labeling was in compliance with Food and Drug Administration (“FDA”) regulations on juice beverage labeling, which state that the manufacturer may name a beverage using the name of a flavoring juice that is not the predominant juice by volume in the beverage. (21 C.F.R . Section 102.33(c), issued by the FDA under authority granted by the Federal Food, Drug and Cosmetic Act (“FDCA”), to regulate food and beverage labeling, including to police labeling which is false or misleading, 21 U.S.C. Section 343(a)(1)). The contested label also disclosed the actual juices in the beverage.
The case was brought before Judge S. James Otero of the United States District Court for the Central District of California, who granted Coca-Cola’s motion to dismiss the complaint for failure to state a claim (727 F. Supp. 2d 849 (2010)). This decision was affirmed by the United States Court of Appeals for the Ninth Circuit, which held that the intent of Congress was to comprehensively regulate the field of beverage labeling by giving the FDA sole authority; accordingly, the plaintiff could not seek to impose more stringent standards of labeling via a claim under the Lanham Act. Such a result, according to the court, would “undermine the FDA’s regulations and expert judgments,” and “if the FDA believes that more should be done to prevent deception, or that Coca-Cola’s label misleads consumers, it can act.” Neither party challenged prior settled law that the plaintiff did not have a private right of action to enforce the FDCA or to compel the FDA to make a specific determination as to whether the label at issue was deceptive. The court noted that the FDA could have acted under its policing authority against this particular label, but apparently chose not to do so. In so ruling, the court was also careful to state that mere compliance with the FDCA or with FDA regulations would not always, or even usually, insulate a defendant from liability under the Lanham Act. The court also held – an issue apparently not on review to the Supreme Court – that the FDCA and FDA regulations may preempt false advertising claims brought by the plaintiff under California state law, and sent the case back to the trial court to make a determination on that issue. The lower (district) court had not ruled on preemption because it dismissed the state claims on a technicality about standing.
The question now before the United States Supreme Court is whether a private party can bring a Lanham Act deceptive labeling claim challenging a product label already regulated, as to possible deceptiveness, under the FDCA.
A broadly worded Supreme Court decision could have wide-ranging effects on the rights of plaintiffs seeking to bring Lanham Act deceptiveness claims in the areas of food, beverages, cosmetics and pharmaceuticals, all regulated by the FDA. The practical significance of the Supreme Court decision, however, may be limited by the existing high level of FDA regulation in some product areas. FDA regulation of advertising and labeling claims for prescription drugs, for example, is generally perceived as quite stringent, so potential plaintiffs in that field might not believe that a court (even if it could in a Lanham Act claim) would hold a competitor of the plaintiff to a higher standard than would the FDA. It may also be interesting to see whether the Supreme Court will weigh the FDA’s theoretical authority to act, versus the FDA’s practical ability to act, against food or beverage labeling that might only be borderline misleading. The plaintiff in this case may well argue that the FDA may not act in many worthwhile cases due to budget constraints, creating an enforcement gap that should be filled by private claims under the Lanham Act. A Bloomberg news service report on the case quoted the plaintiff as stating that the Ninth Circuit’s ruling “undermines the transparency that health-conscious consumers rightly expect so that they can make informed decisions about what they eat and drink.” Clearly this decision will be anticipated with great interest for companies in these important industries.