Thursday, June 12, 2014

Ginned Up Juice

Two federal statutes directly regulate food labeling in the United States.  In essence, the Food, Drug and Cosmetic Act ("FCDA") prohibits misbranding of food, which can include false or misleading ingredient labeling (21 U. S. C. §§331 and 343), while the Lanham Act creates a private cause of action for unfair competition, such as false advertising (15 U. S. C. §1125).  On June 12, 2014, the Supreme Court unanimously (sans Justice Breyer) decided POM Wonderful LLC v. Coca-Cola Company, a case about whether or not the labeling provisions of the FCDA precluded PM Wonderful from suing Coca-Coca for false advertising under the Lanham Act.

The facts of the case are summarized in the decision's syllabus:
Petitioner POM Wonderful LLC, which produces, markets, and sells, inter alia, a pomegranate-blueberry juice blend, filed a Lanham Act suit against respondent Coca-Cola Company, alleging that the name, label, marketing, and advertising of one of Coca-Cola’s juice blends mislead consumers into believing the product consists predominantly of pomegranate and blueberry juice when it in fact consists predominantly of less expensive apple and grape juices, and that the ensuing confusion causes POM to lose sales.
Justice Kennedy, who wrote for the Supreme Court, described specific dispute over ingredient labeling as follows:
Coca-Cola’s Minute Maid Division makes a juice blend sold with a label that, in describing the contents, displays the words “pomegranate blueberry” with far more prominence than other words on the label that show the juice to be a blend of five juices. In truth, the Coca-Cola product contains but 0.3% pomegranate juice and 0.2% blueberry juice.
Both the District Court for the Central District of California and the Ninth Circuit Court of Appeals sided with Coca-Cola, precluding POM Wonderful from suing Coca-Cola for unfair competition.  The Supremes decisively disagreed:
The ruling that POM’s Lanham Act cause of action is precluded by the FDCA was incorrect. There is no statutory text or established interpretive principle to support the contention that the FDCA precludes Lanham Act suits like the one brought by POM in this case. Nothing in the text, history, or structure of the FDCA or the Lanham Act shows the congressional purpose or design to forbid these suits. Quite to the contrary, the FDCA and the Lanham Act complement each other in the federal regulation of misleading food and beverage labels. Competitors, in their own interest, may bring Lanham Act claims like POM’s that challenge food and beverage labels that are regulated by the FDCA.
The Supremes have now clarified that food labeling can be policed by two separate actors at the federal level.  Naturally, the Food and Drug Administration may continue to play a dominant role in enforcing labeling requirements of the FDCA.  However, private firms may also enforce sound labeling practices by bringing suits in federal courts to combat inaccurate or misleading food labeling by competitors.

There is considerable irony in POM Wonderful's victory in the Supreme Court.  The company is currently embroiled in litigation with the Federal Trade Commission over whether or not POM Wonderful impermissibly exaggerated the health benefits of its products.

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