What does the Federal Food, Drug, and Cosmetic Act (“FDCA”) have to do with false advertising under the Lanham Act? The answer provided by the Ninth Circuit Court of Appeals in Pom Wonderful LLC v. Coca-Cola Co., No. 10-55861, slip op. 5245 (9th Cir. May 17, 2012), is instructive for false advertising plaintiffs in industries regulated by the United States Food and Drug Administration (“FDA”).
The Factual and Procedural Background of Pom
The false advertising claim at issue in Pom was directed at Coca-Cola’s Minute Maid Pomegranate Blueberry juice. Pom, slip op. at 5248. Coca-Cola’s juice “contains about 99.4% apple and grape juices, 0.3% pomegranate juice, 0.2% blueberry juice, and 0.1% raspberry juice.” Id. By contrast, plaintiff Pom’s competing pomegranate blueberry beverage, as indicated on its website, is a blend of only pomegranate and blueberry juice.
Pom’s theory of recovery was straightforward. Pom alleged that Coca-Cola’s marketing of a beverage consisting mostly of apple and grape juices as a pomegranate blueberry juice materially misled consumers in violation of 15 U.S.C. § 1125(a), the false advertising provision of the Lanham Act, and California state law. Id. at 5249–50. Pom asserted it was losing sales of its own authentic pomegranate blueberry beverage to Coca-Cola. Id. at 5249.
The district court denied Pom’s Lanham Act claims. See id. at 5251–52. The court held that FDA regulations governing juice labeling permitted Coca-Cola’s labeling. Id. at 5251. As a result, since Coca-Cola’s labeling conformed to FDA standards, “Pom’s claim challenging the name and labeling of [Coca-Cola’s] Pomegranate Blueberry was barred.” Id. Pom appealed. Id. at 5252.
The Ninth Circuit’s Pom Decision
The Ninth Circuit affirmed the district court’s Lanham Act decision. Id. at 5255. The court started its analysis by noting that “the Lanham Act and the FDCA can conflict with each other.” Id. at 5253. While the court recognized that it is important to construe both the Lanham Act and the FDCA to give both statutes the broadest possible effect, it emphasized “Congress’s decision to entrust to the FDA the task of interpreting and enforcing the FDCA.” Id. Thus, “[w]here the FDA has not concluded that particular conduct violates the FDCA, we have held that a Lanham Act claim may not be pursued if the claim would require litigating whether the conduct violates the FDCA.” Id. at 5253–54 (citing PhotoMedex, Inc. v. Irwin, 601 F.3d 919, 924 (9th Cir. 2010)).
Applying these principles to the facts of Pom, the court held that the FDCA barred Pom’s false advertising claim. Id. at 5255. FDA regulations, the court explained, permit juice manufacturers to “name a beverage using the name of a flavoring juice that is not predominant by volume.” Id. (citing 21 C.F.R. § 102.33(c), (d)). The same is true for the beverage’s label. See id. at 5256. “Congress and the FDA have thus considered and spoken to what content a label must bear . . . so as not to deceive,” the court explained. Id. The court continued: “If the FDA believes that more should be done to prevent deception, or that Coca-Cola’s label misleads consumers, it can act. But, under our precedent, for a court to act when the FDA has not―despite regulating extensively in this area―would risk undercutting the FDA’s expert judgments and authority.” Id. at 5256–57.
The court did not go as far as to “suggest that mere compliance with the FDCA or with FDA regulations will always (or will even generally) insulate a defendant from Lanham Act liability.” Id. at 5258. Instead, it indicated that it was deferring to “Congress’s decision to entrust matters of juice beverage labeling to the FDA.” Id. It affirmed the district court’s Lanham Act ruling and remanded Pom’s state law claims to determine, among other things, whether they are preempted by the FDCA. Id. at 5259.
Implications of Pom for False Advertising Plaintiffs
Pom illustrates the barriers facing false advertising plaintiffs in industries subject to regulation under the FDCA, namely the food, drug, medical device, and cosmetic industries. By dismissing Pom’s Lanham Act claim, the Pom court told Pom that its remedy was at the FDA and not with the court. Id. at 5258. The court’s missive likely gave Pom little comfort. The reason is that the FDCA has no private right of action. See 21 U.S.C. § 337(a). The decision of whether and when to enforce the FDCA is committed to the discretion of the FDA. See Heckler v. Chaney,470 U.S. 821, 837–38 (1985) (holding that the FDA’s decision not to take action is not reviewable under the Administrative Procedure Act). This means that even if Pom could show Coca-Cola was violating the FDCA, it would have to wait for the FDA to take action while Pom absorbed the effects of Coca-Cola’s alleged unfair competition.
Pom underscores the importance of carefully studying the FDCA and related FDA regulations prior to bringing a false advertising claim in an industry regulated by the FDA. At least in the Ninth Circuit, if an allegedly false statement in an advertisement is addressed by the FDCA and FDA regulations then it might be futile to bring a false advertising claim under the Lanham Act. In other words, litigation may not be the answer.
One alternative to litigation may be to pursue action before the National Advertising Division (“NAD”) of the Better Business Bureau, a private organization that adjudicates false advertising claims. The NAD’s decisions do not have the force of law, but the NAD does publish the results of its cases. It may also decide to refer an advertiser that refuses to comply with its decision to the appropriate state and federal regulatory authorities.
Bringing a NAD proceeding may also be more cost effective than litigation. For companies with less than $400 million in annual revenue, the filing fee is $6,000. Decisions are rendered within 60 days of filing a complaint. Compared to the years parties can spend litigating a Lanham Act claim in federal court, pursuing action before the NAD is at the very least something for a potential false advertising plaintiff to consider.