On 21 April 2014, the U.S. Supreme Court heard the arguments in POM Wonderful LLC v. The Coca-Cola Company, a case involving whether deceptive advertising claims under the Lanham Act can be brought to challenge product labels regulated by the Food and Drug Administration ("FDA"). This article addresses the issues framed for the Court's review and summarizes the oral arguments.

Background

Pom Wonderful produces and sells pomegranate juice and pomegranate juice blends. Coca-Cola also sells a pomegranate juice blend, "Pomegranate Blueberry Flavored Blend of 5 Juices", which is comprised of only 0.3% pomegranate juice and 0.2% blueberry juice.

In September 2008, Pom Wonderful sued Coca-Cola in the Federal District Court, claiming that Coca-Cola's juice blend violated the false-advertising provision of the Lanham Act, 15 U.S.C. §1125(a), as well as California state law. Pom alleged that Coca-Cola, through the name, labeling and advertising of its juice, misled consumers into believing that the juice consists primarily of pomegranate and blueberry juices, whereas it actually consists mainly of apple and grape. Pom specifically took issue with the labeling of Coca-Cola's juice, which features "Pomegranate Blueberry" in large font, and "Flavored Blend of 5 Juice" underneath in a much smaller font.

The federal district court granted summary judgment to Coca-Cola on the Lanham Act claim, finding the claims barred by the Food, Drug, and Cosmetic Act ("FDCA") and its implementing regulations. The district court further concluded that the FDCA expressly pre-empted Pom's state law claims and that Pom lacked statutory standing to pursue its state law claims.

Pom appealed the question "whether the Food, Drug, and Cosmetic Act bars a Lanham Act claim alleging that the name and labeling of a juice beverage are deceptive."1 The Ninth Circuit acknowledged the tension between the two statutes. The Lanham Act authorizes any person "'whobelieves that he or she is or is likely to be damaged by' the use of that false description or representation" to bring a suit "against those who use a false or misleading description or representation 'in connection with any goods"' (15 U.S.C. § 1125(a)). The FDCA regulates the naming and labeling of juice beverages and may only be enforced by the federal government. In a previous case, the Ninth Circuit held that "[w]here the FDA has not concluded that particular conduct violates the FDCA…a Lanham Act claim may not be pursued if the claim would require litigating whether that conduct violates the FDCA."2 From there, the Ninth Circuit derived the "general principle" that "the Lanham Act may not be used as a vehicle to usurp, preempt, or undermine FDA authority".

Applying this principle to the instant case, the Ninth Circuit concluded "that the FDCA and its regulations bar pursuit of both the name and labeling aspects of Pom's Lanham Act claim."  As the Ninth Circuit saw things, "If the FDA believes…that Coca-Cola's label misleads consumers, it can act. But, under our precedent, for a court to act when the FDA has not, despite regulating extensively in this area, would risk undercutting the FDA's expert judgments and authority."

The Ninth Circuit emphasized that it was not finding that Coca-Cola's label was "non-deceptive."  Rather, the court concluded that, as best it could tell, the label "abides by the requirements the FDA has established," and declined to disturb the FDA's judgments. 

Pom petitioned the Supreme Court for review of the Ninth Circuit's decision, presenting the question "Whether the court of appeals erred in holding that a private party cannot bring a Lanham Act claim challenging a product label regulated under the Food, Drug, and Cosmetic Act." The Supreme Court granted the case for review. 

Pom's petition frames multiple issues for the Court to consider.

Overlapping Statutes

Under the Supreme Court precedent, "courts must give full effect to allegedly competing federal statutes unless they are in 'irreconcilable conflict', or where the latter Act covers the whole subject of the earlier one and 'is clearly intended as substitute.'" Pom asserts that the FDCA and the Lanham Act are "fully capable of coexisting" and that the two acts have distinct requirements and serve distinct purposes. The questions that the Supreme Court will consider here are the following:

  1. whether these two statutes are in "irreconcilable conflict";
  2. how to give full effect to both the Lanham Act and the FDCA if they are not in conflict; and
  3. which statute governs if the conflict cannot be overcome?

In considering the overlapping statutes issue, the Supreme Court will likely have to address its recent decision in Wyeth v. Levine, 555 U.S. 555 (2009). Wyeth involved the question whether state drug labeling statutes were pre-empted by the FDCA's federal scheme. The Supreme Court there concluded that "Congress did not intend FDA oversight to be the exclusive means of ensuring drug safety and effectiveness" in enacting the FDCA, but instead, Congress "cast federal labeling standards as a floor upon which States could build." Analogously, Pom alleges that the Lanham Act does not create an "irreconcilable conflict" with the FDCA. Rather, Pom claims, the FDCA sets a floor for federal food labeling on which the Lanham Act builds, "provid[ing] a layer of consumer and competitor protection that the FDCA does not address.

The Preclusive Effect Of FDA Regulation

The Ninth Circuit held that the FDCA and its regulations barred pursuit of both the name and labeling aspects of Pom's Lanham Act claim. Pom characterizes the Ninth Circuit as "allow[ing] the FDA's mere authority to regulate juice labeling to bar application of the Lanham Act to any label falling within that authority." The Supreme Court will review the extent to which FDA regulation of juice naming and labeling precludes lawsuits challenging allegedly misleading juice names and labels. 

The issue of the preclusive effect of FDA labeling regulation goes well beyond juice labeling. Pom's petition also frames for review the issue of whether false labeling or advertising claims are actionable under the Lanham Act notwithstanding federal regulation in all areas. The Ninth Circuit held that Pom's Lanham Act claims were precluded by the FDA's existing "comprehensive" regulation of juice labeling in the FDCA. The Ninth Circuit's reasoning appears to conflict with three other circuit courts of appeals, which have held that Lanham Act claims regarding other products are not precluded by federal regulation, as long as the claims do not require the court to interpret the federal regulation or seek to enforce the regulation.

Oral Argument Recap

Oral argument was held on 21 April 2014.

Positions of the Parties

Representing Pom Wonderful, Seth Waxman argued that Coca-Cola's label was not authorized by FDA regulations, "but even if it were consistent with FDA regulations, that would not strip POM of its right to prove a willful Lanham Act violation." Waxman emphasized that the FDCA and Lanham Act were not in conflict; it is "entirely easy for Coke to comply with both statutory obligations." The FDCA and FDA regulations, according to Waxman, "supply a floor and not a ceiling."

Melissa Sherry, on behalf of the United States, argued that "if the FDA or the FDCA provisions have specifically permitted something," a Lanham Act claim is precluded. To the extent, however, "the FDCA or the FDA has not spoken to the particular issue with any degree of specificity, we don't see a problem with the Lanham Act claim going forward, because in that case you're not really second-guessing any judgment" of the FDA. The Government's position thus is that Pom's challenge to Coke's product name is precluded, because the FDA has specifically permitted such juice naming, but the challenges to Coke's label are not precluded.

Representing Coca-Cola, Kathleen Sullivan argued that "if POM's suit had been brought as a state law lawsuit, it would be precisely preempted by" the Nutrition Labeling and Education Act ("NLEA")'s preemption provision. According to Sullivan, "it cannot be that Congress meant to preempt these claims if brought as State law claims designed to go above the Federal floor," but yet did not intend to pre-empt similar federal claims. Even if the Court were to find that the pre-emption provision did not apply, Sullivan maintained that Coke would still win under the Court's "more general approach to preclusion by one Federal statute of another, because the FDA regulations as to misbranding here are far more specific…than the general misrepresentation provisions of the Lanham Act."

The Justices discussed a number of different issues at oral argument. 

Whether an Advertisement Violates an FDA Regulation

Justice Sotomayor was concerned with how courts should go about deciding whether an ad comports with FDA regulations, when the courts themselves cannot interpret those regulations. She asked counsel for Pom about this, and later asked counsel for the Government whether it is acceptable for district courts to determine whether labels comply with FDA regulations. 

Whether FDA Regulations Regarding Labeling are "Requirements" or "Authorizations"

A number of Justices asked questions about how to conceptualize FDA Regulations on juice labeling such as are they requirements, are they permissive authorizations, do they establish a floor or a ceiling? Justice Kagan was the most active interrogator of Pom about this point. Justice Kennedy asked Waxman whether he conceded that "under the Lanham Act, plaintiff could not challenge aspects of a food label that the FDA said is required?" Justice Kagan followed up asking whether if a company was required to use "this label and only this label," there would be an "impossibility issue."  Justice Kagan also asked counsel for Pom why there is not an irreconcilable conflict here, because the FDA said that certain names are permitted and are not misbranding, but Pom's Lanham Act claim asserts misbranding. 

The Inapplicability of NLEA Express Pre-emption

A number of Justices seemed interested in, but reluctant to accept, Coke's argument that NLEA's express preemption provision should be read to apply to federal claims in addition to state law claims. Justices Kagan, Ginsburg, Kennedy and Sotomayor all questioned counsel for Coke in a way that challenged this express pre-emption argument. 

"FDA-Permitted Naming Can Still Be Misleading"

A number of Justices challenged Coke's contention that because Coca-Cola complies with the FDA's authorizations, it cannot be challenged for misbranding under the Lanham Act. Justices Ginsburg, Sotomayor, Kennedy and Chief Justice Roberts all touched on the idea that a name permitted by the FDA could nevertheless be misleading to consumers.

The Government's Half-Measure Position

Justices Kennedy and Kagan especially did not seem entirely to accept the Government's position. Justice Kennedy opined that the position of the U.S., as he understood it, that "if the label is specifically authorized, then the Lanham Act is precluded, but if the FDCA has just simply failed to forbid it then it's not" would be "very hard to work with."  Justice Kagan had trouble understanding why a Lanham Act claim would be considered as supplanting the FDA's regulatory judgment as opposed to complementing the FDA's regulatory efforts, if the FDA regulations were understood as setting a floor.

An Enforcement Mechanism: Protecting Consumers, The FDA's Insufficient Resources

Justices Kennedy and Ginsburg were particularly interested in protecting consumers and making sure that they were not lacking a way to challenge misleading product labeling. For example, Justice Kennedy was particularly concerned that FDA pre-emption could shield a label that cheats consumers. He went as far as to ask counsel for Coke whether it's "part of Coke's narrow position that national uniformity consists in labels that cheat the consumers like this one did?".  Justice Ginsburg was also concerned that there was an enforcement mechanism to combat misleading labels for the sake of consumers; she posed a hypothetical query to counsel for Coke that supposing "the reality is that consumers are misled," what would happen?  Both Justices were concerned whether the FDA has "sufficient resources to police food and beverage labeling" and ventured that, in light of such limited resources, it was unlikely that Congress intended for FDA regulations to preclude Lanham Act claims. 

The FDA's Expertise

Various Justices questioned the FDA's role in promulgating juice labeling regulations and seemed to imply that the FDA did not have expertise in the field of consumer confusion and, therefore, its regulations on the issue should not preclude Lanham Act claims. Justice Alito, for example, asked counsel for the Government "What public health benefit is served by this regulation?" Chief Justice Roberts asked Government counsel whether the FDA took "into account purely commercial confusion when it issued its regulations governing the label" or whether it was limited to "the health and well-being concerns?" Upon being informed that the FDA took into account consumer confusion, the Chief Justice responded "I don't know that the FDA has any expertise in terms of consumer confusion apart from any health issues."

The bottom line is that it seems unlikely that the Supreme Court will affirm the Ninth Circuit decision in its entirety; the majority of the Justices seemed reluctant to hold that the FDCA and FDA regulations on juice naming/labeling preclude Lanham Act suits. Many seemed concerned that if a product name/label seemingly permitted by the FDA misled consumers, those misleading companies would be unfairly shielded by pre-emption. From comments made during the argument, the Court seems favorably inclined to hold that the FDA regulations establish a floor above which Lanham Act claims may contribute to further impede misleading marketing practices.