On June 12, 2014, the United States Supreme Court overturned a ruling of the Ninth Circuit Court of Appeals and allowed POM Wonderful LLC (‘POM”) to proceed in its deceptive labeling litigation against the Coca-Cola Company (“Coca-Cola”). The lawsuit concerns Coca-Cola’s Minute Maid brand “pomegranate blueberry” drink that, despite the presence of only 0.3% pomegranate juice and 0.2% blueberry juice, prominently advertises the presence of both ingredients on its labeling. Pursuant to the Lanham Act, POM, as a competitor of Coca-Cola, is permitted to bring a private right of action alleging deceptive and misleading labeling of Coca-Cola’s product.
POM May Sue Coca-Cola for Deceptive Labeling
The Ninth Circuit Court of Appeals previously upheld a district court ruling dismissing POM’s deceptive labeling litigation against Coca-Cola. The respective California courts reasoned that the Federal Food, Drug, and Cosmetic Act (“FDCA”) precluded a private litigant from suing under the Lanham Act for deceptive labeling. However, in allowing POM to continue its litigation against Coca-Cola, a near unanimous Supreme Court held that “[q]uite to the contrary, the FDCA and the Lanham Act complement each other in the federal regulation of misleading food and beverage labels. Competitors, in their own interest, may bring Lanham Act claims like POM’s that challenge food and beverage labels that are regulated by the FDCA.” Despite arguments from both Coca-Cola and the United States Department of Justice, the Supreme Court ultimately held that “[t]he Lanham Act creates a cause of action for unfair competition through misleading advertising or labeling. Though in the end consumers also benefit from the [Lanham] Act’s proper enforcement, the cause of action is for competitors, not consumers.”
POM Has Deceptive Labeling Issues of its Own
As we previously reported, the Federal Trade Commission (“FTC”) recently issued an order against POM for similar advertising violations. (February 2013 Newsletter). The FTC held that POM marketers made false or deceptive claims in 36 marketing instances concerning disease prevention and treatment claims. The FTC alleged that POM’s heart disease claims were false and unsubstantiated because many of their studies failed to demonstrate benefits in connection with using POM’s products for treating or preventing heart disease. The FTC further alleged that POM’s prostate cancer claims were false and unsubstantiated because the study on which POM relied was neither “blinded” nor controlled. Finally, the FTC alleged that POM’s erectile dysfunction claims were false and unsubstantiated because the study on which the company relied did not show that the POM product was any more effective than a placebo. The FTC’s final order barred POM from making any claim that a food, drug or dietary supplement achieves certain health advantages unless the claim is supported by two (2) randomized, well-controlled human clinical trials. The order also prohibits POM from making any misrepresentation regarding any method of testing, study or research, and further requires competent and reliable scientific evidence to support any health-related benefits.
The Supreme Court’s ruling may open a Pandora’s Box of litigation among competitors concerning false and/or deceptive labeling and advertising of food and beverage products. In light of this fact, it is critical that both producers and marketers proceed with caution when advertising the ingredients of products featured in marketing creative.