Compliance With FDA Labeling Requirements Does Not Bar False Advertising Claims By Competitors

June 12, 2014

Today, the Supreme Court issued its unanimous decision in POM Wonderful LLC v. Coca-Cola Co., holding that the federal Food, Drug and Cosmetic Act (“FDCA”) does not preclude unfair competition actions under the Lanham Act against competitors’ misleading food and beverage labels. POM Wonderful LLC v. Coca-Cola Co., No. 12-761, slip op. at 2 (June 12, 2014). The Court found that the Lanham Act’s purpose to “protect persons engaged in [commerce within the control of Congress] against unfair competition” complements the FDCA’s primary purpose “to protect the health and safety of the public at large." Id. at 12, citing Lexmark Int’l, Inc. v. Static Control Components, Inc., No. 12-873, slip op. at 4 (March 25, 2014). In view of today’s decision, competitors, whose “awareness of unfair competition practices may be far more immediate and accurate than that of agency rulemakers and regulators,” may bring Lanham Act claims involving food and beverage labels regulated by the FDCA. Id. at 11-12.

POM alleged that the labeling of a popular Coca-Cola Minute Maid brand juice beverage constituted unfair competition under Section 43(a) of the Lanham Act. The beverage at issue prominently featured the words "Pomegranate Blueberry" on the label, but was more than 99% apple and grape juices, with less than 1% of blueberry and pomegranate juices. POM alleged that the labeling harmed POM’s sales by misleading POM’s potential consumers as to the actual content of Coca-Cola’s juice.

Reversing the Ninth Circuit, the Supreme Court addressed Coca-Cola’s argument that regulations issued by the FDA under the FDCA preempted POM’s action under the Lanham Act. The Court stated its decision was not one to be founded on "pre-emption" principles because the two statutes involved were both federal statutes. Rather, the decision was properly determined based upon traditional rules of statutory interpretation, with the Court’s task to harmonize the complementary purposes of the FDCA and Lanham Act with respect to misleading labels. Doing so properly defers to Congress’ intent that private causes of action under the Lanham Act and the government enforcement provisions of the FDCA could coexist, as shown by the nearly 70 years of the statutes’ coexistence without modifications or reenactments to the contrary. The Solicitor General argued that FDA or FDCA- regulated aspects of labels, such as the names of juice blends, cannot be the basis of Lanham Act claims, while other aspects not subject to FDA or FDCA regulations can be the basis of Lanham Act claims. The Court also rejected this position, finding that the FDA/FDCA regulations are a floor, not a ceiling, on the regulation of food and beverage labeling.

The decision might have broad implications regarding competitors’ unfair competition claims under the Lanham Act where product labeling is federally regulated.

If you have questions related to this decision, please contact Maureen Beacom Gorman or Jeremy R. Kriegel or another attorney at the Firm.

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