Interpreting the U.S. Supreme Court's decision in Pom Wonderful LLC v. Coca-Cola Co., the Ninth Circuit Court of Appeals ruled that Lanham Act claims against a competitor were not precluded by the Food, Drug & Cosmetic Act (FDCA).
Dietary supplement manufacturer ThermoLife International filed suit against competitor Gaspari Nutrition (GNI), challenging its advertising claims for its testosterone boosters as "safe," "natural," "legal," and compliant with the FDCA as amended by the Dietary Supplement Health Education Act (DSHEA). Gaspari's claims constituted false advertising in violation of the Lanham Act, ThermoLife alleged.
Gaspari responded with a motion for summary judgment, arguing that the FDCA preempted the plaintiff's claims and that ThermoLife could not establish falsity, materiality, or injury. A federal district court agreed.
But in an unpublished opinion, the Ninth Circuit reversed and remanded. The panel first noted that the district court did not have the benefit of the Supreme Court's 2014 decision in Pom Wonderful, where the justices established that the FDCA generally does not preclude Lanham Act claims for false labeling of food. That case "squarely controls the issue," the court said. "Indeed, Pom Wonderful expressly rejected most of GNI's arguments on preclusion."
The defendant attempted to distinguish the Supreme Court opinion by arguing that ThermoLife's allegations would require litigation of the alleged underlying FDCA violation. The Ninth Circuit disagreed, "ThermoLife's claims that GNI falsely advertised its products as 'safe' and 'natural' require no interpretation of the FDCA," the court said, nor would ThermoLife need to demonstrate a FDCA violation to prevail on its claims that GNI falsely advertised its products as "legal" or "DSHEA-compliant."
Similarly, the plaintiff's unfair competition claims were not preempted, the panel added, particularly "where, as here, 'the state-law duty "parallels" the federal-law duty.'"
Turning to the other elements of ThermoLife's Lanham Act claims—falsity, materiality, and injury—the court again reached the opposite conclusion to that of the district court judge. GNI's claims that its products were "legal" and "DSHEA-compliant" would generally be inactionable because they purport to interpret the meaning of a statute or regulation, the court said. But an exception exists for an opinion expressed by a speaker who lacks a good faith belief in the truth of the statement.
"ThermoLife points to numerous emails indicating GNI was aware its products were not DSHEA-compliant," the panel wrote. "Therefore there is a triable issue of falsity."
The defendant's statements that its products were "safe" and "natural" were both actionable as statement of fact, not opinion, the court said, and the advertiser's claims were likely to influence consumers' purchasing decisions, making them material.
As for injury, a reasonable jury could infer that ThermoLife established a presumption of commercial injury based on evidence of direct competition and a likelihood of consumer deception, the court found. "GNI does not dispute it directly competed with ThermoLife in the market for testosterone booster products and GNI's literally false statements necessarily misled consumers," the panel said.
"[T]he district court … erred in granting summary judgment on ThermoLife's six Lanham Act claims and unfair competition claim," the court concluded. "Because the FDCA neither precludes nor preempts those claims and factual issues preclude summary judgment, we vacate the judgment and remand for further proceedings."
To read the memorandum in ThermoLife International, LLC v. Gaspari Nutrition Inc., click here.
Why it matters: The Ninth Circuit's decision reinforces the importance of the U.S. Supreme Court's holding in the Pom Wonderful decision that Lanham Act suits by competitors can peacefully coexist with FDCA claims. It also demonstrates that predictions about an increase in brand wars were not unfounded.