Perhaps Coca-Cola should stick to soda. A unanimous Supreme Court held this month that competitors may bring false advertising claims under the federal Lanham Act – even if the challenge is to food and beverage labels regulated by the Food and Drug Administration under the federal Food, Drug, and Cosmetic Act (“FDCA”) (which prohibits the misbranding of food and drinks).
See POM Wonderful LLC v. Coca-Cola Co., No. 12-761.
POM Wonderful LLC makes and sells pomegranate juice products, including a pomegranate-blueberry blend. Coca-Cola’s Minute Maid division makes and markets a juice blend bearing the label “POMEGRANATE BLUEBERRY” in all capital letters above smaller lettering that reveals the juice is a blend of five different juices. Minute Maid’s product contains 0.3% pomegranate juice and 0.2% blueberry juice (which the Court described as “a minuscule amount”).
POM sued Coca-Cola under the Section 43 of the federal Lanham Act, which allows competitors to sue one another for unfair competition arising from false or misleading product descriptions. POM alleged that Coca-Cola’s label tricked consumers into believing the product was made mainly of pomegranate and blueberry juices, while the juice blend actually contained mostly apple and grape juices. POM claimed that this confusion hurt their sales.
Coca-Cola successfully overcame the suit at the District Court level: the Court found that the FDCA, comprised of regulations aimed at protecting the health and safety of the public by prohibiting the misbranding of food and drinks, precluded challenges to the name and label of the Minute Maid juice blend. The District Court reasoned that because the FDA had already evaluated the language of Minute Maid’s label and had not prohibited any of it (and actually specifically authorized some aspects of it), POM’s Lanham Act claim was precluded.
The Ninth Circuit affirmed, reasoning that Congress had decided “to entrust matters of juice beverage labeling to the FDA” and that here, the FDA had declined to impose on Coca-Cola the labeling specificity POM now sought. The Ninth Circuit opinion stated that “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.”
But perhaps the Supreme Court was too bothered by the “minuscule” amount of pomegranate and blueberry juice in Minute Maid’s blend to agree. Justice Kennedy explained that this case “concerns the intersection and complementarity of these two federal laws.” The purpose of the Lanham Act, as set forth in the act itself, “is to regulate commerce…by making actionable the deceptive and misleading use of marks in such commerce… [and] to protect persons engaged in such commerce against unfair competition…” Unlike the Lanham Act, “which relies in substantial part for its enforcement on private suits brought by injured competitors,” the FDCA gives enforcement authority to the government, not private parties. Finding that the case was not a matter of preemption but how the statutes can be harmonized, Justice Kennedy wrote that “when two statutes complement each other, it would show disregard for the congressional design to hold that Congress nonetheless intended one federal statute to preclude the operation of the other.” Instead, the Court found that “Congress did not intend the FDCA to preclude Lanham Act suits like POM’s.”
As a result of the Court’s rulings, we can expect to see an increase in the number of unfair competition claims under the Lanham Act. In the meantime, it would be wise to remove pomegranate blueberry juice blends from the Supreme Court vending machine.
Sources and for additional information:
Duffy, John. “Opinion Analysis: The triumph of the Lanham Act (and of federal private rights of action). SCOTUSblog, June 13, 2014. http://www.scotusblog.com
Liptak, Adam. “Coke Can Be Sued by Rival Over Juice Claim, Court Says.” New York Times, June 12, 2014.