Recent years have seen an explosion in food-based litigation. Although most of the litigation has been brought by consumers, on Thursday the Supreme Court opened the door to more litigation among competitors when it ruled that POM Wonderful’s Lanham Act challenge against Cola-Cola was not precluded by the Food Drug and Cosmetic Act (FDCA).
POM alleged that the labeling of Coca-Cola’s blueberry-pomegranate juice blend was false and misleading—the amounts of blueberry and pomegranate in the blend are small. Coca-Cola responded that the FDCA, which regulates food and beverage labeling, precluded POM’s Lanham Act challenge. The Court disagreed. The Court held that the FDCA and the Lanham Act are complementary and the FDCA is not a ceiling on food label regulation. Accordingly, competitors may bring their own actions to police false or misleading labels.
The decision could have implications for consumer class actions, although the Court’s analysis was limited to the preclusive effect of the FDCA on Lanham Act claims. A separate provision of FDCA, not at issue here, is the basis for partial preemption of state law claims, such as those often made in consumer class actions. (Neither the FDCA, FTC Act, nor Lanham Act affords standing to consumers.) In addition, the Court provided no discussion for or against “primary jurisdiction,” a principle often advanced by defendants in these consumer class actions; Coca-Cola did not seek dismissal on that basis.
More directly, the Court may have signaled that competitor litigation is a new battleground for the food wars. It is clear that compliance with FDA guidance no longer provides a safe harbor with regard to labeling. Companies must consider whether, apart from those rules, their labeling could be viewed by competitors as false or misleading. And competitors can recover damages under the Lanham Act without the hurdles, such as preemption and class certification, facing class plaintiffs. While there are risks in this new frontier, there are also opportunities. Companies that are more conservative in labeling may sue to eliminate the market advantage of those who make more aggressive label claims. It could be these actions, and not FDA rules, that establish market standards going forward.