POM had a less than wonderful week. Over the course of just a few days, a federal court judge dismissed the pomegranate product maker’s suit against the Federal Trade Commission and a U.S. district court judge on the opposite side of the country certified a nationwide class in a false advertising suit against the company.
The FTC case has a lengthy history. POM filed suit against the FTC in September 2010 after the agency entered into consent agreements with two other companies that the FTC claimed had overstated their products’ effect on disease prevention, mitigation, and treatment. According to POM, the requirements in the agreements – that all disease-based health representations be preapproved by the Food and Drug Administration and that future health claims required at least two human clinical studies – constituted a new rule.
POM sought a declaratory judgment that the alleged new rule violated statutory and constitutional law. In response, the FTC filed an administrative complaint against POM, alleging that the company engaged in deceptive and false advertising with respect to health claims regarding its pomegranate products.
Earlier this year, an administrative law judge ordered POM to cease and desist making health and benefits claims after finding that it lacked competent and reliable scientific evidence for a number of its ad claims that promised pomegranate juice can treat or prevent heart disease, prostate cancer, and erectile dysfunction. However, the Administrative Law Judge (ALJ) rejected the FTC’s proposed order which would have required that POM obtain FDA preapproval for its health claims. The ALJ also rejected the FTC’s claim that studies must comply with the same double-blind, randomized, placebo-controlled requirements imposed on pharmaceuticals.
Noting that the administrative action against POM is ongoing, U.S. District Court Judge Richard W. Roberts said a number of factors led him to dismiss the declaratory judgment suit.
“Generally, in the interest of judicial efficiency, courts decline to hear declaratory judgment actions that would not fully resolve the parties’ claims. Here, if the court resolved the issues POM raised in its declaratory judgment action, the parties would still have to litigate whether POM’s health claims about its products were false, misleading, and unsubstantiated in violation of the FTC Act,” he wrote.
“POM will have a full opportunity to challenge any FTC final action against it upon the conclusion of the administrative action with a fully developed administrative record available.”
In the second suit, a California federal court judge certified a nationwide class of plaintiffs that claim the company falsely advertised the health benefits of its pomegranate juice.
Despite POM’s argument that California law could not be applied to consumers nationwide, the court said the company’s ties to the state were strong enough to ensure that California’s consumer protection law could be constitutionally applied.
“POM is headquartered and located solely in California, developed its marketing strategies in California, and produced all of its pomegranate juice products in California,” U.S. District Court Judge Dean D. Pregerson wrote. POM “fails to carry its burden to demonstrate that the interests of any foreign jurisdiction outweigh California’s interest in applying its own consumer protection laws to the facts of this case.”
Judge Pregerson also shot down POM’s contention that because the class members viewed different ads, their reliance and motives for purchase were too individualized for class proceedings.
“The mere fact that POM used several different advertisements to convey its health message is not dispositive,” the court said. “A false or misleading advertising campaign need not ‘consist of a specifically-worded false statement repeated to each and every [member] of the plaintiff class.’ ”
The court certified a nationwide class of persons who purchased a POM juice product between October 2005 and September 2010.
To read the court’s order in POM Wonderful v. FTC, click here.
To read the class certification order in In re: POM Wonderful Marketing and Sales Practices Litigation, click here.
Why it matters: POM’s tough week in court leaves the company facing two legal challenges: its ongoing battle with the FTC as well as a nationwide class action suit, both involving allegations that the company made false and misleading health claims about its pomegranate products.