On June 12 the Supreme Court held that private parties may sue competitors under the Lanham Act for false advertising in the form of misleading labeling, even though policing labeling is a regulatory function delegated exclusively to the FDA.
Coca-Cola’s Minute Maid Division sells a beverage with the words “pomegranate blueberry” displayed prominently on the label. The product contains 0.3% pomegranate juice and 0.2% blueberry juice. POM Wonderful LLC sells three pomegranate juice blends. None of them include blueberry juice, but they contain 40%, 50%, and 60% pomegranate juice. POM Wonderful decided Coca-Cola was not being truthful in its labeling, and sued under the Lanham Act, a federal law that allows one competitor to sue another if “in commercial advertising or promotion, [he or she] misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities.” Another federal law, the Federal Food, Drug, and Cosmetic Act (FDCA) forbids the misbranding of food, including if “its labeling is false or misleading.” The FDCA pre-empts private parties and a “State or political subdivision of a State” from enforcing its terms; that job fall almost exclusively to the Food and Drug Administration (FDA).
Coca-Cola argued, and the Court of Appeals for the Ninth Circuit agreed, that the FDCA’s pre-emption language precluded POM’s private lawsuit under the Lanham Act. A unanimous panel of the Supreme Court (Justice Breyer abstaining) disagreed. Justice Kennedy wrote that the Lanham Act and the FDCA are complementary – not conflicting – federal statutes. The FDCA, by its express terms, pre-empts state law, not other federal laws. Furthermore, the two statutes serve different purposes. The Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety. Furthermore, they have different enforcement mechanisms, which are not necessarily in conflict. The FDCA’s enforcement is largely committed to the FDA, while the Lanham Act empowers private parties to sue competitors to protect their interests on a case-by-case basis.
The Court noted that competitors who manufacture or distribute products have detailed knowledge of how consumers rely on sales and marketing strategies, which the FDA lacks. “Their awareness of unfair competition practices may be far more immediate and accurate than that of agency rulemakers and regulators. Lanham Act suits draw upon this market expertise by empowering private parties to sue competitors to protect their interests on a case-by-case basis.”
POM Wonderful may thus maintain its suit against Coca-Cola. If the parties do not reach settlement, it will be up to a jury to decide whether a label proclaiming “pomegranate blueberry” juice misrepresents a beverage containing less than half of one percent of either.