On Friday, the Supreme Court granted the certiorari petition of Pom Wonderful in its Lanham Act false advertising case against Coca-Cola. Pom Wonderful LLC v. Coca Cola Co., 679 F.3d 1170 (9th Cir. 2012), cert granted, ___ S.Ct.____, 2014 WL 92350 (Mem), 81 USLW 3372 (U.S. Jan. 10, 2014) (No. 12-761).
Pom Wonderful, which produces, markets, and sells pomegranate juice and juice blends and is a frequent litigant, sued Coca Cola in 2008 for alleged violations of the Lanham Act and California’s false advertising and unfair competition statutes. Pom Wonderful claimed that Coca Cola’s pomegranate blueberry juice blend was falsely named, labeled, and advertised because apple and grape juice made up 99.4 percent of its contents. (Pom Wonderful makes a competing juice with a larger percentage of pomegranate and blueberry juices.) The District Court for the Central District of California granted partial summary judgment for Coca-Cola on the grounds that the name and labeling of Coca Cola’s juice blend complied with Food and Drug Administration regulations, and therefore Pom Wonderful’s Lanham Act claims as to the beverage’s name and label (but not the marketing or advertising) were preempted by the federal Food, Drug, and Cosmetic Act (“FDCA”). The court allowed Pom Wonderful’s state claims to proceed, but ultimately determined that Pom Wonderful had not established standing under the state statute because it had not shown that it had lost money or property to Coca Cola. The court permitted Pom Wonderful to go forward on the Lanham Act advertising and marketing claims that did not relate to the name and label, but Pom Wonderful felt the summary judgment order as to the naming and labeling claims prevented it from meeting its burden on the advertising and marketing claims.
In May 2012, the 9th Circuit affirmed the Lanham Act portion of the district court decision, relying on prior cases holding that courts in Lanham Act cases should not interpret ambiguous FDA rules, decide what the FDA would do if faced with possible rule-breaking, or allow private litigants to use the Lanham Act as a vehicle to enforce the FDCA. According to the 9th Circuit, the FDA had comprehensively regulated the labeling and naming of juices and juice blends. “Congress and the FDA have thus considered and spoken to what content a label must bear, and the relative sizes in which the label must bear it, so as not to deceive… If the FDA believes that [Coca-Cola’s label] misleads consumers, it can act.” The 9th Circuit did not determine whether Pom Wonderful’s Lanham Act claims as to the advertising or marketing of the juice could go forward since the parties did not challenge that aspect of the district court’s decision. The 9th Circuit vacated the district court’s holding as to the state law claims because recent California Supreme Court precedent had made clear that standing under the state statutes did not depend on eligibility for restitution from the defendant.
Pom Wonderful filed its petition for certiorari with the U.S. Supreme Court on Dec. 21, 2012, arguing that the 9th Circuit was obligated to give full effect to both the FDCA and the Lanham Act because they are not in irreconcilable conflict in this case. Pom Wonderful argued that the 9th Circuit’s decision conflicts with decisions of the Supreme Court and other courts of appeals about how to reconcile overlapping federal statutes, and will foreclose Lanham Act challenges to misleading food and beverage labels, even though the FDA’s regulation efforts are not “comprehensive,” as the 9th Circuit described them, but contain significant gaps.
In March 2013, the Supreme Court invited the Solicitor General to file a brief. The Solicitor General’s brief, filed on Nov. 27, 2013, argued that the Ninth Circuit erred in taking a too-expansive view of FDCA preemption, and should have allowed Pom Wonderful’s claims to proceed to the extent that they concerned aspects of the label not specifically regulated by the FDCA. Even so, the Solicitor General argued, the Supreme Court should not grant cert because there is no circuit split on the issue. The Court clearly disagrees, and will hear the case before the current term ends in June 2014.
Take Away: Federal preemption represents an important defense for food, beverage, over-the-counter drug, and cosmetic companies (whether under the FDCA, the Nutrition Labeling and Education Act (“NLEA”), or other statutes). A decision by the Supreme Court in favor of Pom Wonderful could impact not only those companies, but makers of other products whose labeling and advertising are regulated by federal agencies (such as pesticides regulated by the Environmental Protection Agency or wireless devices regulated by the Federal Communications Commission).
The decision may not, however, have much effect on class action litigation (which is generally not brought pursuant to the Lanham Act because consumers lack standing to sue under that statute). Although defendants in class actions brought under California false advertising law have tried to interpret the Pom Wonderful holding to mean that private parties are foreclosed from using false advertising claims to enforce FDA labeling violations, district courts have largely rejected this argument. The courts’ reasoning is that the state claims have been brought not to enforce the FDCA but to enforce California’s parallel Sherman Food, Drug and Cosmetic Law, and federal law does not preempt such parallel state claims as long as the state statutes do not impose requirements additional to or different from those required by the FDCA. Only when the FDA has provided no guidance on a particular issue will the court apply the primary jurisdiction doctrine and dismiss or stay the claim rather than attempt to determine what the FDA’s position might be. For instance, the FDA has provided guidance about the word “natural” in the context of food and beverages, but not in the context of cosmetic labels, so cases regarding the former can go forward, while cases regarding the latter will likely be dismissed. See, e.g., Astiana v. Hain Celestial Group, Inc., 2012 WL 5873585 (N.D. Cal. Nov. 19, 2012).