Supreme Court reinstates POM Wonderful juice lawsuit against Coca-Cola over unfair competition

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by Jay Pate

POM Wonderful makes and sells pomegranate juice products, including a pomegranate-blueberry juice blend. One of POM’s competitors, Coca–Cola, makes a juice blend sold with a label that 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. The Coca–Cola product contains only 0.3% pomegranate juice and 0.2% blueberry juice.

The Lanham Act permits one competitor to sue another for unfair competition arising from false or misleading product descriptions. 15 U.S.C. § 1125. Though in the end consumers also benefit from the Lanham Act’s proper enforcement, the cause of action is for competitors, not consumers.

Claiming that Coca–Cola’s label deceives consumers, POM brought suit under the Lanham Act. POM alleged that Coca–Cola’s deceptive label caused POM to lose sales. POM sought damages and injunctive relief.

The district court and court of appeals agreed with Coca-Cola that POM’s Lanham Act claims were barred a different statute, the Federal Food, Drug, and Cosmetic Act (FDCA). The FDCA forbids the misbranding of food, including by means of false or misleading labeling, but is enforced by the government and not by private litigation. The lower courts reasoned that Congress decided “to entrust matters of juice beverage labeling to the FDA”; the FDA has promulgated “comprehensive regulation of that labeling”; and the FDA “apparently” has not imposed the requirements on Coca–Cola’s label that are sought by POM. Thus, POM’s Lanham Act claims were dismissed.

The Supreme Court has now reversed:

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.

POM Wonderful LLC v. Coca-Cola Co., No. 12-761 (U.S. June 12, 2014):

In short, the Supreme Court found that the two statutes and regulatory regimes merely complement each other:

Enforcement of the FDCA and the detailed prescriptions of its implementing regulations is largely committed to the FDA. The FDA, however, does not have the same perspective or expertise in assessing market dynamics that day-to-day competitors possess. Competitors who manufacture or distribute products have detailed knowledge regarding how consumers rely upon certain sales and marketing strategies. 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. By “serv[ing] a distinct compensatory function that may motivate injured persons to come forward,” Lanham Act suits, to the extent they touch on the same subject matter as the FDCA, “provide incentives” for manufacturers to behave well.… Allowing Lanham Act suits takes advantage of synergies among multiple methods of regulation. This is quite consistent with the congressional design to enact two different statutes, each with its own mechanisms to enhance the protection of competitors and consumers.

Id. Thus, competitors may bring Lanham Act claims like POM’s challenging food and beverage labels regulated by the FDCA. The Supreme Court reversed the court of appeals and reinstated POM’s suit.

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* Michael Heygood, James Craig Orr, Jr. and Eric Pearson are all Board Certified in Personal Injury Trial Law — Texas Board of Legal Specialization.

** Michael Heygood, James Craig Orr, Jr. and Eric Pearson were selected to the Super Lawyers List, a Thomson Reuters publication, for the years 2003 through 2014.