On June 12, the U.S. Supreme Court issued an 8-0 ruling in favor of Pom Wonderful in a longstanding false advertising dispute against rival beverage company The Coca-Cola Co. The Supreme Court held that competitors can bring Lanham Act claims like Pom Wonderful’s challenging food and beverage labels regulated by the U.S. Food and Drug Administration (FDA).
At issue in the case was Coca-Cola’s “Pomegranate Blueberry Flavored Blend of 5 Juices,” which is 99% apple and grape juice. Pom Wonderful (Pom), who has a competing pomegranate-blueberry juice blend, sued Coca-Cola. It alleged that the juice’s name and other labeling features were misleading under the federal Lanham Act—a statute that allows competitors to sue based on the false or misleading description of goods (15 U.S.C. § 1125(a)).
Coca-Cola asserted that its label complied with the federal Food, Drug, and Cosmetic Act (FDCA) and, as such, Pom’s claims were barred. The Supreme Court was not persuaded. It held that the two statutes complement each other in the federal regulation of misleading food and beverage labels, and one statute should not be read to preclude operation of the other.
What does this mean for food and beverage manufacturers going forward? The Supreme Court has paved the way for more competitor false advertising disputes. The Court made clear that compliance with the FDCA and FDA regulations does not immunize a company from a lawsuit, at least one based on a competitor-to-competitor federal Lanham Act claim. Food and beverage manufacturers now have new ammunition to go after their competitors for labeling they believe is misleading and harmful to their business. To avoid potential claims by competitors, food and beverage companies will now need to review their labels for more than just compliance with FDA regulations.
This ruling does not, however, subject companies to broader claims based on state law. The Supreme Court made clear that Pom does not address the preemption of state law claims. The Justices stated plainly: “this is not a pre-emption case.” They also made clear that the case did “not raise the question whether state law is pre-empted by a federal law.” Therefore, companies are less likely to face additional consumer class actions based on this decision in light of the strong arguments that the decision does not apply to state consumer protection claims.
Claudia M. Vetesi and Lisa A. Wongchenko, Litigation Associates
Morrison & Foerster LLP