Pom Wonderful LLC v. Coca-Cola Company

Facts

The Coca-Cola Company (“Coca-Cola”) introduced a new beverage called “Pomegranate Blueberry” in September 2007. Pom Wonderful LLC (“Pom”), a producer of pomegranate juice products, sued the Coca-Cola Company in September 2008 for deceptive labeling under the Lanham Act. Coca-Cola’s product contains 99.4% apple and grape juices, 0.3% pomegranate juice, 0.2% blueberry juice, and 0.1% raspberry juice. Based on the “Pomegranate Blueberry” name and an illustration of a pomegranate, blueberries, and raspberries on the product’s label, Pom argued that Coca-Cola misled its consumers through false representation of its product, thereby violating 15 U.S.C. § 1125(a).

The U.S. District Court for the Central District of California partially granted Coca-Cola’s motion to dismiss for failure to state a claim because Pom’s allegation of false advertisement potentially challenged Food and Drug Administration (“FDA”) regulations permitting the “Pomegranate Blueberry” labeling. The district court also held that the Food, Drug, and Cosmetic Act (“FDCA”) preempted Pom’s state law claims under California’s Unfair Competition Law (“UCL”) and False Advertising Law (“FAL”). However, the district court allowed the parts of Pom’s case that stood outside of FDA’s regulatory realm to proceed.

Ultimately, the district court granted Coca-Cola summary judgment because the FDA permits beverage makers to label their beverages based on non-primary components. The district court also held that the FDCA barred both Pom’s Lanham Act and state law claims. The United States Court of Appeals for the Ninth Circuit ruled that although compliance with the FDCA or the FDA may not always insulate a party from Lanham Act liability, it would respect Congress’s judgment to place regulation of food labeling in the hands of the FDA.

The Supreme Court granted certiorari on January 10, 2014.

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Discussion

This case examines whether the FDCA and FDA bar claims under the Lanham Act for false representation. Those who side with Pom argue that limiting companies from bringing suits for misleading advertising will harm consumers and fair competition. Those who side with Coca-Cola counter that permitting such suits will undermine the FDA and create confusion around the limits of permissible language in advertising.

CONSUMER PROTECTION

Several consumer advocacy groups in support of Pom argue that the FDA lacks the resources to monitor food labeling. These groups, including Public Citizen and AARP, argue that because of limited resources, the FDA focuses its enforcement on violations of specific statutory requirements, like the format of nutrition panels. According to these groups, these limitations make it difficult for the FDA to enforce more general policies against misleading labels.

The International Trademark Association (“INTA”) argues that depriving businesses of the right to bring Lanham Act claims of false advertisement removes a measure of consumer protection because of a lack of enforcement of FDA regulations for food labels. Dr. Donald Kennedy, the former Commissioner of the FDA, also argues that removing a private right of action in food labeling will harm consumers because the FDA acknowledges that it does not generally address misleading food labeling because it lacks resources. As a result, Kennedy argues that the standards of accurate labeling in food under only the FDA is essentially reliant on voluntary compliance companies, which ultimately suggests that without private action by competitors, false claims by food producers go virtually unchallenged.

Coca-Cola counters that FDA regulations, which are more specific than the general trademark protection under the Lanham Act, introduce order and uniformity in labeling, which helps consumers. Coca-Cola asserts that the FDA has noted the food labeling issues that Pom has raised in bringing a Lanham Act suit. Coca-Cola further points out that Congress postponed the preemption clause of the FDCA, which prevented state law mislabeling suits, until the FDA determined that it “adequately implemented” the portions of the Act pertaining to misbranding. Coca-Cola asserts that the FDA has enforced the food labeling provisions by issuing numerous warning letters, with 90% of firms following up on those letters. Lastly, Coca-Cola argues that even if the FDA lacked resources, it does not mean that the Lanham Act is Congress’s intended solution.

The Generic Pharmaceutical Association (“GPhA”) argues that second-guessing the FDA through private suits undermines its regulatory authority and renders its consumer guidance unhelpful. Therefore, GPhA argues that private businesses cannot use the Lanham Act and allegations of false advertising to debate the “expert determinations” made by the FDA. The United States also argues that allowing Lanham Act challenges to labels that conform with FDA judgments could upset regulatory language and should not be permitted where Lanham Act claims prohibit what the FDCA or FDA regulations allow.

FAIR COMPETITION

INTA argues that subordinating the Lanham Act to the FDA and FDCA threatens the ability of private businesses to promote fair business practices by bringing claims against blatantly misleading advertising. INTA argues that private businesses better understand the nuances of labeling than regulatory agencies like the FDA and are also better equipped with the resources to combat false labels. According to INTA, subordinating these private business concerns to the FDA’s regulations deprives businesses of a course of action to promote fair competition. Several states also argue that the FDA’s oversight over labeling should not preclude states from protecting its consumers and promoting fair business practices. These states point out that many state laws continue to be effective in regulating food and drink.

However, GPhA counters that allowing businesses to challenge labels that the FDA has not disapproved actually introduces confusion into the marketplace by bringing into question all FDA regulations. GPhA also points out that FDA standards for advertising language vary from that of the “plain meaning” of terms in standard advertising claims. According GPhA, this introduces the potential for private claims of inaccurate advertising based on trademark law for products within the FDA’s oversight, which could confuse companies who rely on FDA standards in their food product labels. Coca-Cola also argues that uniform standards for labeling provided by the FDA is essential for food distribution and should not be undermined by other state and federal laws.

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Analysis

The parties in this case disagree about the interplay between the FDCA, NLEA, and the Lanham Act. Pom argues that it has a private right of action against Coca-Cola under the Lanham Act, and that neither the FDCA nor the Nutrition Labeling and Education Act (“NLEA”) should be read to eliminate this right. However, Coca-Cola claims that allowing a private right of action under the Lanham Act for food labeling would defeat the aim of the FDCA and the NLEA to create a uniform system for food labeling and that the NLEA implicitly narrows the scope of the Lanham Act.

CONFLICTING PROVISIONS OF THE NLEA AND LANHAM ACT

Pom argues that there is no conflict in the aims of the FDCA and the Lanham Act; instead, the two statutes work in tandem. Pom argues that Coca-Cola can easily satisfy the mandates of both statutes: Coca-Cola can sell a product that is not misbranded (pursuant to the FDCA) and it can refrain from harming competitors at the same time through deceptive product labeling (pursuant to the Lanham Act). While the FDCA provides some specific guidance on the labeling requirements for food products, the FDCA does not require Coca-Cola to craft a label that will mislead consumers. Furthermore, Pom argues that the Lanham Act complements the FDCA because it ensures that food labels are both safe to consumers and not unfair to competitors. Pom states that the remedial measures granted by each statute—the FDCA’s criminal and public sanctions and the Lanham Act’s civil sanctions for private parties—reflect the purpose of each statute. According to Pom, the FDCA and FDA regulations only set a “floor” for food labeling that does not necessarily address misleading labels, which the Lanham Act supplements. Furthermore, Pom argues that laws that prohibit false or misleading labeling generally do not create inconsistent technical regimes from one jurisdiction to another. Contrary to Coca-Cola’s claim that the Lanham Act would disrupt the national uniformity in food labeling, Pom argues that courts would apply a single, uniform standard for misleading conduct.

Coca-Cola responds that the purpose of the FDCA and the NLEA was to have national uniformity in food labeling, and that allowing Lanham Act claims would defeat this purpose. Coca-Cola points to the legislative history of the NLEA, including sponsor Senator Hatch’s statement that inconsistent state and local laws result in higher prices and frustrate food safety. Coca-Cola argues that uniform treatment in food labeling is difficult when juries and courts decide the standards for misleading or false labeling. Furthermore, Coca-Cola argues that the FDCA and NLEA have greater specificity regarding food and juice labeling than the Lanham Act, and this specificity provides further evidence that Lanham Act claims regarding labeling for food and juice should be precluded.

Pom also points out that although Congress has amended the FDCA since the enactment of the Lanham Act in 1946, Congress has not enacted provisions that limit the effect of the Lanham Act. Pom argues that while Congress has provided detailed provisions that limit the scope of state laws regarding food labeling, Congress has not spoken on the interaction between the FDCA and other federal statutes such as the Lanham Act. Pom claims that Congress was well aware of the use of the Lanham Act to combat deceptive labeling for food products.

Despite the lack of any explicit text in the FDCA or NLEA, Coca-Cola argues that this emphasis on national uniformity is evident from Congress’s decision to delegate enforcement authority exclusively to the federal government rather than providing for a right of action for private parties. Furthermore, Coca-Cola points to the FDCA provision that preempts state law regulations on food labeling, and Coca-Cola argues that the Court has previously inferred that when Congress enacts provisions preempting state laws, it also intends to extend the principle of national uniformity to federal laws even when there is no explicit proviso.

THEORY FOR OVERLAPPING STATUTES

Pom argues that the Ninth Circuit erred when it did not give full effect to the Lanham Act. Pom also argues that the Ninth Circuit should not have applied the field preemption doctrine, which infers that the statute comprehensively addresses a field in question and therefore preempts the use of any other statute in that field. Pom states that the Court has criticized using the doctrine of field preemption to infer that an agency’s regulations will be exclusive whenever it steps into a field. Instead, Pom argues that the Court’s precedent establishes that courts must give full effect to federal statutes unless the states are in “irreconcilable conflict” with each other. Pom argues that the Court has stated that an irreconcilable exists when the latter statute is “clearly intended as a substitute” for the former. Pom argues that courts should not be able to pick and choose between federal statutes when there is no irreconcilable conflict; when courts have that discretion, it may result in a separation of powers issue between the courts and Congress.

Coca-Cola argues that when a more specific law clarifies or narrows the broad scope of an earlier law, the Court has not applied the irreconcilable conflict doctrine. Coca-Cola argues that the Court has never required Congress to explicitly address the impact of each statute on every other statute. Coca-Cola cites the Court’s decision in United States v. Fausto, which states that courts frequently interpret statutes in light of subsequently enacted texts in order to ensure that statutes make sense in combination. Coca-Cola argues that courts take this approach especially when the prior statute is broad and the latter statute more specifically addresses the issue at hand.

COCA-COLA’S NON-COMPLIANCE WITH FDCA

Pom argues that Coca-Cola has not complied with the FDCA. Even if Coca-Cola has complied with the specific labeling requirements, under the FDCA’s catchall provision, Pom states that Coca-Cola is not in compliance with the FDCA’s requirements if the label is “misleading in the aggregate.” Therefore, according to Pom, Coca-Cola’s choice to color the beverage is not acceptable under the FDCA. Additionally, Pom argues that Coca-Cola has not complied with the specific FDA regulations pertaining to font sizes, the product name, and the fruit vignette on the bottle.

Coca-Cola argues that it complies with the FDA regulations on food labeling for juices. Coca-Cola argues that it has followed all FDA regulations: namely, it complies with the requirements for using a juice name when the juice is not the predominant one in the blend, it complies with the font-size label requirements set by the FDA, and it may use a vignette of its choosing because the FDA rejected a proposal to regulate the relative size and quantities of fruits in the vignette. Lastly, Coca-Cola argues that the FDA also regulates the color of the beverage by requiring producers to declare the color additives that were used in the statement of ingredients, and private plaintiffs cannot impose different standards.

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Conclusion

The Court will clarify the relationship between the scope of the FDA’s authority under the FDCA and NLEA and a private litigant’s right of action under the Lanham Act. While Pom argues that the Lanham Act complements the goals of the FDA, Coca-Cola argues that allowing Lanham Act claims for food labeling would disrupt the FDCA’s goal of national uniformity. The Court’s decision will affect a private party’s ability to address unfair competition and misleading food labeling. In a broader sense, the Court may clarify its own role in statutory construction: it can choose a more flexible rule that allows it to coordinate the impact of a newer or narrower statute on older statutes, or it can choose to impose a bright line rule like the irreconcilable conflict doctrine.

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