Supreme Court: Food Label Challenges Are Allowable Under Lanham Act

Supreme Court: Food Label Challenges Are Allowable Under Lanham Act

 WASHINGTON, D.C. — (Mealey’s) The Ninth Circuit U.S. Court of Appeals erred in holding that a private party cannot allege Lanham Act false advertising in connection with a product label regulated under the Food, Drug and Cosmetic Act (FDCA), the U.S. Supreme Court unanimously ruled today (POM Wonderful LLC v. The Coca-Cola Co., No. 12-761, U.S. Sup.; See 5/5/14, Page 38) [ subscribers may access Supreme Court briefs and the opinion for this case].

Justice Anthony M. Kennedy wrote that contrary to arguments presented by respondent The Coca-Cola Co. and the U.S. government, acting as amicus curiae, petitioner POM Wonderful LLC’s case is not one of preemption, but rather one of statutory interpretation.

“Even assuming that Coca-Cola is correct that the Court’s task is to reconcile or harmonize the statutes and not, as POM urges, to enforce both statutes in full unless there is a genuinely irreconcilable conflict, Coca-Cola is incorrect that the best way to harmonize the statutes is to bar POM’s Lanham Act claim.  . . .  The Lanham Act and the FDCA have coexisted since the passage of the Lanham Act in 1946.  If Congress had concluded, in light of experience, that Lanham Act suits could interfere with the FDCA, it might well have enacted a provision addressing the issue during these 70 years.  . . .  Yet Congress did not enact a provision addressing the preclusion of other federal laws that might bear on food and beverage labeling.  This is ‘powerful evidence that Congress did not intend [Food and Drug Administration] oversight to be the exclusive means’ of ensuring proper food and beverage labeling,” the Supreme Court ruled, citing Wyeth v. Levine, 555 U. S. 555, 563 (2009) [an enhanced version of this opinion is available to subscribers].

Advertising, Marketing

POM sells bottled pomegranate juice and pomegranate juice blends while Coca-Cola sells bottled juices and juice blends under the Minute Maid brand.  In 2007, Coca-Cola announced the sale of Pomegranate Blueberry, which was also marketed under the name “Pomegranate Blueberry Flavored Blend of 5 Juices.”  POM sued Coca-Cola in the U.S. District Court for the Central District of California, alleging that Coca-Cola misled consumers to believe that Pomegranate Blueberry consists primarily of pomegranate and blueberry juices when it actually consists mainly of the cheaper apple and grape juices.  Specifically, POM challenged the name, labeling, marketing and advertising of Pomegranate Blueberry.

POM alleged that Coca-Cola committed false advertising under the Lanham Act and violated California’s unfair competition law (UCL) and false advertising law (FAL).  POM sought damages, recovery of Coca-Cola’s profits and an injunction barring further false advertising of Coca-Cola’s juice. Coca-Cola moved to dismiss the complaint, and the District Court partially granted and partially denied the motion.  The court found that POM's Lanham Act challenge to Pomegranate Blueberry’s name and labeling was barred because POM’s suit could be construed as an impermissible challenge of FDA regulations permitting the name and labeling that Coca-Cola uses.

The District Court held that POM’s Lanham Act challenge could otherwise proceed, however, because although POM could not challenge Pomegranate Blueberry’s name and labeling, it could challenge Coca-Cola’s other advertising and marketing of the product because those parts of the claim would not require the court to interpret FDA regulations.  The court further held that the FDCA expressly preempted POM’s state law claims to the extent that the UCL and FAL impose obligations that are not identical to those imposed by the FDCA and its implementing regulations.  POM then amended its complaint to bring it within the scope of the court’s ruling, repleading the Lanham Act, UCL and FAL claims.  Coca-Cola again moved to dismiss, but the District Court this time denied the motion and ruled that POM could conduct discovery to clarify which aspects of Coca-Cola’s conduct constituted labeling and therefore could not, under the court’s earlier ruling, support POM’s Lanham Act claim and which aspects constituted advertising or marketing and thus could support the Lanham Act claim.

Petition Filed

After discovery, the District Court partially granted summary judgment to Coca-Cola, reiterating that POM’s Lanham Act challenge to Pomegranate Blueberry’s name and labeling was barred by the FDCA’s implementing regulations.  The court further ruled that POM lacked statutory standing to pursue its state law claims.  The District Court concluded that triable issues remained on the non-naming and nonlabeling aspects of POM’s Lanham Act claim and permitted POM to proceed to trial on those matters.  However, POM conceded that the summary judgment order prevented it from carrying its burden on the claim, so the court entered judgment for Coca-Cola.

POM appealed to the Ninth Circuit, which in May 2012 affirmed the District Court’s summary judgment to the extent that it barred POM’s Lanham Act claim with respect to Pomegranate Blueberry’s name and labeling.  The panel then vacated the summary judgment ruling to the extent that it held that POM lacked statutory standing on its UCL and FAL claims and remanded so that the District Court can rule on the state claims in accordance with the panel's opinion.  On remand, the District Court granted summary judgment to Coca-Cola on the state claims.  Regarding the Lanham Act claim, the Ninth Circuit, using the guidance of PhotoMedex, Inc. v. Irwin, 601 F.3d 919, 924 (9th Cir. 2010) [enhanced version], held that the FDCA and its regulations bar pursuit of both the name and labeling aspects of the claim.

POM filed a petition for writ of certiorari that presented the following question:  “Whether the court of appeals erred in holding that a private party cannot bring a Lanham Act claim challenging a product label regulated under the Food, Drug, and Cosmetic Act.”  The Supreme Court granted certiorari on Jan. 10, 2014, and held oral arguments on April 21.

Substantial Difference

Reversing the Ninth Circuit, the Supreme Court found that “the closest” the Lanham Act and FDCA have come to addressing preclusion of claims brought under the former statute is a preemption provision added to the FDCA in 1990 at 21 U.S. Code Section 343-1.  That provision forbids a state or political subdivision of a state from imposing requirements that are “of the type but ‘not identical to’” the corresponding FDCA requirements for food and beverage labeling, the Supreme Court noted.

“It is significant that the complex preemption provision distin­guishes among different FDCA requirements.  It forbids state-law requirements that are of the type but not identi­cal to only certain FDCA provisions with respect to food and beverage labeling.  Just as significant, the provision does not refer to requirements imposed by other sources of law, such as federal statutes.  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.  By taking care to mandate express preemption of some state laws, Congress if anything indicated it did not intend the FDCA to preclude requirements arising from other sources. Preemption of some state requirements does not suggest an intent to preclude federal claims,” the Supreme Court held.

Complementary Statutes

Instead of conflicting, the FDCA and Lanham Act are complimentary “in major respects,” according to the Supreme Court, which noted that each statute “has its own scope and purpose.”  To hold that the FDCA precludes Lanham Act challenges to food and beverage labels “would not only ignore the distinct functional aspects” of the statutes, it would also “lead to a result that Congress likely did not intend,” the Supreme Court warned.

“Unlike other types of labels regu­lated by the FDA, such as drug labels, see 21 U. S. C.§355(d), it would appear the FDA does not preapprove food and beverage labels under its regulations and instead relies on enforcement actions, warning letters, and other measures.  . . .  Because the FDA acknowledges that it does not necessarily pursue enforcement measures regarding all objectionable labels, ibid., if Lanham Act claims were to be precluded then commercial interests — and indirectly the public at large — could be left with less effective protection in the food and beverage labeling realm than in many other, less regulated industries.  It 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,” the Supreme Court wrote.

Practical Concerns

Regarding Coca-Cola’s claim that the FDCA’s delegation of enforcement authority to the federal government demonstrates congressional intent to achieve “national uniformity” in labeling, the Supreme Court noted that “POM seeks to enforce the Lanham Act, not the FDCA or its regulations,” adding “the centralization of FDCA enforce­ment authority in the Federal Government does not indi­cate that Congress intended to foreclose private enforce­ment of other federal statutes.”  Similarly, the Supreme Court was not persuaded by arguments made by the federal government in briefing and at oral argument that a Lanham Act claim is precluded to the extent that the FDCA or FDA regulations specifically require or authorize the challenged aspects of the label. 

“Applying that standard, the government argues that POM may not bring a Lanham Act challenge to the name of Coca-Cola’s product, but that other aspects of the label may be chal­lenged.  That is because, the government argues, the FDA regulations specifically authorize the names of juice blends but not the other aspects of the label that are at issue.  In addition to raising practical concerns about drawing a distinction between regulations that ‘specifically . . .authorize’ a course of conduct and those that merely tolerate that course, the flaw in the Govern­ment’s intermediate position is the same as that in Coca­-Cola’s theory of the case.  The Government assumes that the FDCA and its regulations are at least in some circumstances a ceiling on the regulation of food and beverage labeling.  But, as discussed above, Congress intended the Lanham Act and the FDCA to complement each other with respect to food and beverage labeling,” the Supreme Court wrote.

“Coca-Cola and the United States ask the Court to ele­vate the FDCA and the FDA’s regulations over the private cause of action authorized by the Lanham Act.  But the FDCA and the Lanham Act complement each other in the federal regulation of misleading labels.  Congress did not intend the FDCA to preclude Lanham Act suits like POM’s.  The position Coca-Cola takes in this Court that because food and beverage labeling is involved it has no Lanham Act liability here for practices that allegedly mislead and trick consumers, all to the injury of competi­tors, finds no support in precedent or the statutes.  The judgment of the Court of Appeals for the Ninth Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion,” the Supreme Court concluded.

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

Pom is represented by Seth P. Waxman, Randolph D. Moss, Brian M. Boynton, Felicia H. Ellsworth and Francesco Valentini of Wilmer Cutler Pickering Hale and Dorr in Washington, Craig B. Cooper of Roll Law Group in Los Angeles and Andrew S. Clare of Loeb & Loeb in Los Angeles. Kathleen M. Sullivan, Faith E. Gay, Sanford I. Weisburst, Todd Anten and Yelena Konanova of Quinn Emanuel Urquhart & Sullivan in New York and Steven A. Zalesin, Sarah E. Zgliniec and Travis J. Tu of Patterson Belknap Webb & Tyler in New York represent Coca-Cola.

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