The U.S. Supreme Court last month reversed the Ninth Circuit’s ruling that federal regulations preclude Pom Wonderful LLC’s Lanham Act claim against The Coca-Cola Co. It had been alleged that Coca-Cola had misleadingly named a competing juice product. The Supreme Court found that U.S. Food and Drug Administration (FDA) rules can coexist with the federal false advertising statute. In a unanimous opinion, Justice Anthony Kennedy wrote that neither the Lanham Act nor the Federal Food, Drug and Cosmetic Act (FDCA) explicitly restrict claims under the Lanham Act over labels regulated by the FDCA. Justice Stephen Breyer, who recused himself from the case, did not participate in the opinion.
The high court pointed out that the two statutes have coexisted since the passage of the Lanham Act in 1946. Justice Kennedy wrote for the court in the opinion:
In consequence, food and beverage labels regulated by the FDCA are not, under the terms of either statute, off-limits to Lanham Act claims. No textual provision in either statute discloses a purpose to bar unfair competition claims like Pom’s.
There has been a long-running disagreement between the FDA and that agency’s technical rules on how a product should be labeled and the Lanham Act. This federal false advertising law can offer more protection to companies from their competitors’ advertising claims and that’s what led to this dispute between the beverage giants.
The high court notably also disagreed with the U.S. government’s argument that the Lanham Act is precluded where federal regulations authorize the disputed aspects of the label. In its amicus brief, the government argued that FDA regulations specifically permit the names of juice blends, but do not necessarily bless the other disputed aspects of the label, including the relative sizes of the wording on the label. The court rejected that argument, saying the FDA did not make any explicit policy decision that conflicts with Pom’s Lanham Act claims. Justice Kennedy, writing for the court, said:
The government asks the court to preclude private parties from availing themselves of a well-established federal remedy because an agency enacted regulations that touch on similar subject matter but do not purport to displace that remedy or even implement the statute that is its source. Even if agency regulations with the force of law that purport to bar other legal remedies may do so, it is a bridge too far to accept an agency’s after-the-fact statement to justify that result here.
In this case, Pom argued that Coca-Cola misleadingly labeled a product that is more than 99 percent apple and grape juice as a pomegranate-blueberry blended juice. The Ninth Circuit found that no matter how misleading Coca-Cola’s marketing might be, Pom’s claims under the Lanham Act are precluded by the FDCA. Coca-Cola argued that the Nutrition Labeling and Education Act (NLEA) of 1990 narrows the scope of the Lanham Act, which bars misleading advertising claims. The NLEA, which is more specific than the Lanham Act as to food and juice naming and labeling, overrides the Lanham Act, the company said.
The high court in January granted Pom’s request to review the case. Pom filed the suit in 2008 accusing Coca-Cola of falsely naming and labeling its “Minute Maid enhanced pomegranate blueberry flavored 100 percent juice blend” to misleadingly suggest that the drink contained mostly pomegranate and blueberry. A California federal district court judge rejected Pom’s claims, and a three-judge Ninth Circuit panel said that FDA regulations authorized the name of the product and allowed Coca-Cola to describe the beverage using the name of a flavored juice, even when it contained only a small amount. The U.S. Supreme Court reversed the appeals court and now the Lanham Act will have much broader authority.
Source: Law360.com
