June 12, 2014
The Supreme Court today released an 8-0 decision (Justice Breyer did not take part) that allows companies to bring Lanham Act claims against competitors for claims regulated by the Federal Food, Drug and Cosmetic Act (FCDA). This decision reverses the Ninth Circuit Court of Appeals and opens the way for a potential wave of new Lanham Act claims that many had previously thought were barred.
POM Wonderful LLC (“Pom”) sued Coca-Cola Company ("Coca-Cola") based on claims that Coca-Cola had made on the label of its Minute Maid pomegranate blueberry juice blend. The juice at issue prominently displayed the words “pomegranate blueberry” when it contained 0.3% pomegranate and 0.2% blueberry juice. Pom sued Coca Cola under the Lanham Act, alleging that the label was misleading and that it drew customers away from its own pomegranate juice products, some of which contain 100% pomegranate juice. Coca Cola’s label complied, however, with the labeling requirements of the FDCA; thus, Coca Cola argued that Lanham Act claims were precluded by the FDCA. The trial court and the Ninth Circuit Court of Appeals agreed with Coca Cola and held that Pom’s claim could not proceed.
The Supreme Court, however, unanimously reversed the Ninth Circuit and held that the FDCA does not preclude Lanham Act claims in this area and that Pom’s claim against Coca Cola could proceed. The Supreme Court determined that barring the claim was improper for the following reasons:
- This is not an issue of a federal law preempting a state law because there is no state law at issue in the case; instead there are two federal laws.
- Neither federal law expressly limits claims based on the other law even though the two laws have existed together for more than seventy years-- “powerful evidence that Congress did not intend FDA oversight to be the exclusive means’of ensuring proper food and beverage labeling.”
- 73 U. S. ____ , 2 (2014)
- The FDCA took particular care to preclude certain state laws, which indicates that Congress intended the FDCA not to preclude all other laws.
- The two laws are complementary in having separate scopes, purposes, and remedies and precluding all Lanham Act claims in this area would result in “less effective protection [for businesses and consumers] in the food and beverage labeling realm than in other less regulated industries.”
- 73 U. S. ____ , 3 (2014)
- There is no indication that both statutes cannot be fully enforced concurrently.
This decision opens wide a range of claims many previously believed to be off limits. Strict compliance with the FDCA will no longer provide protection from a Lanham Act claim when the labeling at issue is otherwise unfair or deceptive. Combined with the Supreme Court’s Lexmark decision from earlier this year allowing a wider range of entities to bring Lanham Act claims, litigation around potentially misleading advertising on food and beverage labels is poised to become a more interesting and active area in the near future.