Supreme Court Reinstates False Advertising Suit Against Coca-Cola

In Pom Wonderful v. Coca-Cola, Co. (decided on June 12, 2014), the United States Supreme Court weighed in on a false advertising dispute between two soft drink heavyweights. Coca-Cola sells a juice under the Minute Maid brand labeled as pomegranate blueberry flavor. Despite its name, the Minute Maid branded drink contains only 0.3% and 0.2% pomegranate and blueberry juices, respectively. Pom Wonderful, seller of a competing pomegranate-blueberry drink, challenged Coca-Cola for false advertising under the Lanham Act. Coca-Cola responded that misbranded food and drink are prohibited under the Federal Food, Drug and Cosmetic Act (FDCA), and since that statute does not afford a private right of action, only the government can sue over product mislabeling.

The dispute centered on Coca-Cola’s packaging. Despite the minuscule amount of pomegranate and blueberry juices in the blend, the front label of the Minute Maid branded product displays the words “pomegranate blueberry” in all capital letters, on two separate lines. Below those words were placed the phrase “flavored blend of 5 juices” in much smaller type. And below that phrase, in still smaller  type, were the words “from concentrate with added ingredients”—and, with a line break before the final phrase—“and other natural flavors.”

POM sued under the Lanham Act, claiming Coca-Cola tricked and deceived consumers, thereby injuring POM as a competitor. Consumer confusion, alleged POM, caused it to lose sales.

The district court and the Ninth Circuit Court of Appeals held that POM was precluded from suing under the FDCA. But the Supreme Court has now reversed that ruling, holding that 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... 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 Supreme Court continued, “a holding that the FDCA precludes Lanham Act claims challenging food and beverage labels would not only ignore the distinct functional aspects of the FDCA and the Lanham Act but also would lead to a result that Congress likely did not intend... if Lanham Act claims were to be precluded then commercial interests—and indirectly the public at large—could be left with less effective protection in the food and beverage labeling realm than in many other, less regulated industries… The position Coca-Cola takes in this Court, that because food and beverage labeling is involved it has no Lanham Act liability here for practices that allegedly mislead and trick consumers, all to the injury of competitors, finds no support in precedent or the statutes. The judgment of the Court of Appeals for the Ninth Circuit is reversed.”

Take Away - The Supreme Court’s decision may have a significant impact on competitor disputes involving products under the Food and Drug Administration’s jurisdiction. These include foods, beverages, dietary supplements, cosmetics, medical devices, and drugs. Manufacturers of such products should not rely only on FDA compliance as a basis to avoid potential false advertising claims.

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