Supreme Court Rules That Food and Beverage Mislabeling Claims Do Not Foreclose Competitor's Unfair Competition Claims Under §43(a) of the Lanham Act

by Orrick, Herrington & Sutcliffe LLP
Contact

On Thursday, June 12, 2014, Justice Anthony Kennedy delivered an opinion for a unanimous United States Supreme Court in POM Wonderful LLC v. The Coca-Cola Co., No. 12-761, in which the Court ruled that the Federal Food, Drug, and Cosmetic Act (FDCA) does not preclude a private company from bringing unfair competition claims against a competitor arising from false or misleading product descriptions under §43(a) of the Lanham Act.  In so ruling, the Court reversed the Ninth Circuit Court of Appeals and allowed POM to continue with its claim that Coca-Cola's pomegranate-blueberry juice blend is mislabeled.  According to the Court, Congress intended the FDCA and the Lanham Act to be complementary, not in conflict as argued by both Coca-Cola and the Federal Government in its amicus brief. 

The Supreme Court's decision in POM imposes an obligation on companies to ensure not only that their product labels conform to relevant agency regulations, but also that their labels are not deceptive and misleading in potential violation of the Lanham Act.  As such, companies will no longer be able to rely on compliance with Food and Drug Administration (FDA) regulations as a safe harbor.  Meeting FDA label requirements previously gave companies a relatively clear path to compliance.  By adding the obligation that labels must also be compliant with Lanham Act precedent against false advertising, companies will be confronted with greater uncertainty and increased risk of lawsuits by private parties.

Facts in POM

POM produces, markets and sells pomegranate-based products, including a pomegranate-blueberry juice blend.  Coca-Cola's Minute Maid division also sells a product that is marketed as a pomegranate-blueberry juice blend, but consists of only 0.5% pomegranate and blueberry juices and over 99% apple and grape juices.  The label on Coca-Cola's juice is FDA approved, but POM nevertheless alleges that the branding is deceptive and misleading, including the words "pomegranate blueberry" displayed prominently on the label.  POM, as a competitor in the pomegranate-blueberry juice market, brought unfair competition claims against Coca-Cola under §43 of the Lanham Act.

Procedural History

POM claims that Coca-Cola's juice blend misleads consumers into believing that its product consists predominantly of pomegranate and blueberry juices, when in fact it consists predominantly of apple and grape juices, which are significantly less expensive.  POM further alleges that this consumer confusion has resulted in Coca-Cola's juice taking sales away from POM in violatation of §43(a) of the Lanham Act.  The District Court, however, granted partial summary judgment in favor of Coca-Cola, ruling that the FDCA and its regulations, which prohibit the misbranding of food or drink, precluded POM's Lanham Act claims because the FDA had directly spoken on the issues relating to naming and labeling.  The Ninth Circuit affirmed, reasoning that Congress had entrusted the FDA with all matters related to juice beverage labeling.

Supreme Court Decision

The Supreme Court, utilizing plain language statutory interpretation principles, held that there is no language in the text of the FDCA to support preclusion of a competitor's claims under the Lanham Act.  As such, competitors like POM may bring Lanham Act claims that challenge food and beverage labels that are regulated by the FDCA.  The Court also echoed its recent sentiment from Lexmark International, Inc. v. Static Control Components, Inc. that Lanham Act claims are for competitors, not consumers, although consumers ultimately benefit as well through a reduction in misleading marketing.  The Court explained that the FDCA and Lanham Act complement each other, reasoning that "[a]lthough both statutes touch on food and beverage labeling, the Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety."

Conclusion

Taken together with Lexmark, the POM decision affords competitors in the food and beverage industry the right to challenge FDCA-compliant labeling.  The key takeaway from POM is that, although a food or beverage product's label may be approved by the FDA, compliance does not necessarily shield the maker from false advertising claims brought by competitors under §43(a) of the Lanham Act.  Because Congress intended the FDCA and the Lanham Act to complement one another, labels and advertising should be evaluated under the requirements of each Act.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Orrick, Herrington & Sutcliffe LLP | Attorney Advertising

Written by:

Orrick, Herrington & Sutcliffe LLP
Contact
more
less

Orrick, Herrington & Sutcliffe LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!