A federal court in the District of Columbia has dismissed the declaratory judgment action that POM Wonderful filed against the Federal Trade Commission (FTC) shortly before the Commission brought an enforcement action against the pomegranate product producer. POM Wonderful LLC v. FTC, No. 10-1539 (U.S. Dist. Ct., D.D.C., decided September 30, 2012). More information about the complaint and FTC’s motion to dismiss appears in Issues 364 and 373 of this Update. According to the court, “[t]he balance of relevant factors counsels against exercising jurisdiction over this action.”
Among other matters, the court found that (i) the declaratory judgment action would not fully resolve the parties’ claims because they would “still have to litigate whether POM’s health claims about its products were false, misleading, and unsubstantiated in violation of the FTC Act”; (ii) “other overlapping proceedings are pending” and POM can raise arguments in those proceedings that it has raised in the declaratory judgment action; and (iii) “granting declaratory relief would require the resolution of an anticipatory defense.” As to the latter, the court determined that “[a]t least two of the four causes of action asserted in POM’s declaratory judgment action are properly considered anticipatory defenses.”
The court also observed that by filing its action just two weeks before FTC brought its enforcement action, POM “leaves the disfavored appearance that [it] hastily filed the instant case, in part, to secure tactical leverage from proceedings in this forum.” The essence of POM’s dismissed claims was that FTC had adopted new substantiation requirements, i.e., heightened scientific evidence and pre-approval from the Food and Drug Administration, without notice-and-comment proceedings, when it entered agreements setting forth these requirements with two companies “whose advertisements overstated their products’ effect on disease prevention, mitigation, and treatment.” The company will now have to litigate these claims in the enforcement action.