When a Supreme Court Justice suggests your product’s label “cheats consumers” it is probably not a good sign for your position on the merits. When your brand is famous for slogans like “Can’t Beat the Real Thing” the observation likely carries a special sting.
During oral arguments yesterday, the Supreme Court appeared poised to breathe new life into POM Wonderful’s false advertising claim against Coca-Cola’s Minute Maid pomegranate blueberry juice. The Justices expressed varying degrees of skepticism that Coca-Cola’s compliance with the Federal Food, Drug, and Cosmetic Act (“FDCA”) could insulate it from Lanham Act liability.
Coca-Cola argued that the FDCA precludes POM’s Lanham Act claim. Coca-Cola pointed to provisions in a 1990 amendment to the FDCA that preempt state laws related to food labeling. The goal of that preemption provision, Coca-Cola counsel Kathleen Sullivan argued to the Court, was to create uniform national food labeling standards. Coca-Cola explained that “it cannot be that Congress meant to preempt these [state law] claims” that require more than just compliance with the federal standard while leaving similar theories based on federal law untouched. In Coca-Cola’s view, since its label complies with the FDCA, POM’s false advertising claims are barred as a matter of law.
In a telling exchange, Justice Kennedy pushed Coca-Cola’s attorney on her client’s preemption rationale. “Is it part of Coke’s narrow position that national uniformity consists in labels that cheat the consumers like this one did?” he asked Sullivan. After Sullivan explained “[t]here is no [evidentiary] record” in the case, Justice Kennedy responded that if “Coca-Cola stands behind this label as being fair to consumers, then I think you have a very difficult case to make.” He then expressed concern about how Coca-Cola’s position is that even if the label is misleading to consumers, “there’s nothing we can do about it.”
Justice Ginsburg put her finger on POM’s competitive plight. “The consumer is able to buy the Coke product much cheaper and the POM product costs more; the consumer thinks that they are both the same, so they’ll buy the cheaper one,” she said.
Coca-Cola tried to diminish the impact on consumers by hinting at how an adverse ruling could open a Pandora’s box. Sullivan explained that allowing Lanham Act claims against labeling like Coca-Cola’s would create “burdens and inefficiencies of having constantly shifting labeling standards imposed by juries, which will ultimately cost more to the consumer.”
Justice Sotomayor pressed Coca-Cola on how this case is any different from Wyeth v. Levine, 555 U.S. 555 (2009). In Wyeth, the Supreme Court held that FDA approval of a medication and its label did not automatically insulate a drug manufacturer from liability under state tort law.
“How is Wyeth any different?” Justice Sotomayor asked. “The FDA here—it’s even worse, this case. The FDA doesn’t approve the [juice] labels. It never looks at them and says they are okay or not okay unless they decide to enforce the statute.”
Coca-Cola offered two potentially unconvincing reasons why Wyeth does not apply. First, while Coca-Cola admitted the FDA did not preapprove the juice labels at issue in this case, “they couldn’t have gotten closer here” with the specificity of the regulations. How this distinguishes Wyeth from this case is unclear.
Second, Coca-Cola maintained Wyeth was an implied preemption case. By contrast, “the express preemption provision here . . . says that Congress wanted nationally uniform labeling regulations.” The trouble with this position is that earlier in its argument Coca-Cola conceded that its case is not based on express preemption. Coca-Cola earlier explained that since the “express preemption provision would make POM’s claims expressly preempted under State law, it follows a matter of inference from the national uniform scheme that Congress set up, that Lanham Act claims are precluded . . . to the extent the state claims would have been preempted.”
The Court may be unwilling to draw that inference. “You are asking us to take what [the FDA] has said about juice as blessing this label, saying it’s not misbranding, when its regulations aren’t reviewed by the Court, when there is no private right of action, and say that that overtakes the Lanham Act,” Justice Ginsburg said. “[I]t’s really very hard to conceive that Congress would have done that.”
Justice Kennedy echoed Justice Ginsburg. “[Y]ou want us to write an opinion that . . . Congress enacted a statutory scheme because it intended that no matter how misleading or how deceptive a label it is, it if it passes the FDA . . . there can be no liability,” he said.
Another of Coca-Cola’s arguments backfired. In attacking POM’s false advertising claim, Coca-Cola appealed to the ability of ordinary consumers to determine the content of its juice. “[W]e don’t think that consumers are quite as unintelligent as POM must think they are,” Coca-Cola’s counsel explained.
“Don’t make me feel bad because I thought that this was pomegranate juice,” Justice Kennedy quipped.
“He sometimes doesn’t read closely enough,” Justice Scalia jokingly added.
The Court will issue an opinion in the case this summer.