POM Wonderful LLC v. Coca-Cola Co.

POM Wonderful LLC v. Coca-Cola Co.

Argued April 21, 2014
Decided June 12, 2014
Full case name POM Wonderful LLC v. The Coca-Cola Company
Docket nos. 12-761
Citations

573 U.S. ___ (more)

134 S.Ct. 2228, 189 L.Ed.2d 141 (2014)
Argument Oral argument
Opinion announcement Opinion announcement
Prior history 679 F.3d 1170 (May 17, 2012), cert. granted, 571 U. S. ___ (2014)
Holding
Reversed and remanded. Neither the Lanham Act nor the Food, Drug, and Cosmetic Act, in express terms, forbids or limits private Lanham Act claims challenging labels that are regulated by the other Act.
Court membership
Chief Justice
John G. Roberts
Case opinions
Majority Kennedy J., for a unanimous Court
Breyer J. took no part in the consideration or decision of the case.
Laws applied

POM Wonderful LLC v. Coca-Cola Co., 573 U.S. ___, 134 S.Ct. 2228, 189 L.Ed.2d 141 (2014), (see No. 12-761 slip opinion)[1] is a landmark case of the United States Supreme Court which holds that a statutory private right of action under the Lanham Act is not precluded by regulatory provisions of the Food, Drug, and Cosmetic Act.

Background

Regulation of food and drug labeling

In 1938, the United States Congress passed the Food, Drug, and Cosmetic Act, in order to regulate the safety of food, drugs, and cosmetics. Under the Act, the Food and Drug Administration has issued regulations governing food and beverage labeling, including the labeling of mixes of different types of juice into one juice blend. In particular, if a juice blend does not name all the juices it contains and mentions only juices that are not predominant in the blend, then it must either declare the percentage content of the named juice or "[i]ndicate that the named juice is present as a flavor or flavoring."[2]

Private parties are not allowed to bring enforcement actions under the Act.[3] In addition, Congress amended it in order to provide for preemption of certain State laws dealing with product misbranding.[4]

Lanham Act claims

In 1946, Congress enacted the Lanham Act in order to govern the use of trademarks. Among its stated aims was the regulation of "commerce within the control of Congress by making actionable the deceptive and misleading use of marks in such commerce,"[5] and provision was made for civil enforcement actions to be available for private parties in the federal courts.[6]

The case at hand

POM Wonderful was a grower of pomegranates and a distributor of pomegranate juices, including a pomegranate-blueberry juice blend. The Coca-Cola Company, through its Minute Maid division, created a pomegranate-blueberry juice product that in reality was 99.4% apple and grape juices. The front label of its package carried the words "pomegranate blueberry" in capital letters, below which the phrase "flavored blend of 5 juices" appeared in much smaller type, followed in still smaller type by "from concentrate with added ingredients and other natural flavors" (presented over two lines).

POM brought suit under the Lanham Act in the United States District Court for the Central District of California, alleging that the name, label, marketing, and advertising of Coca-Cola's juice blend misled consumers as to its actual content, thereby causing POM to lose sales.

The courts below

The District Court granted partial summary judgment to Coca-Cola, ruling that the FDCA and its regulations preclude challenges to the name and label of Coca-Cola's juice blend.[7] On appeal, the United States Court of Appeals for the Ninth Circuit affirmed in relevant part.[8]

At the Supreme Court

The Ninth Circuit ruling was reversed and remanded.[9][10] In a unanimous decision, Justice Kennedy held:

  • The case was not one of preemption, but of preclusion, and therefore any "presumption against pre-emption" has no force.[11] "Although the Court's pre-emption precedent does not govern preclusion analysis in this case, its principles are instructive insofar as they are designed to assess the interaction of laws that bear on the same subject."
  • As this is a statutory interpretation case, the Court relies on traditional rules of statutory interpretation. That does not change because the case involves multiple federal statutes, nor does it change because an agency is involved.[12]
  • "When two statutes complement each other, it would show disregard for the congressional design to hold that Congress nonetheless intended one federal statute to preclude the operation of the other."[13]
  • "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."
  • "Even if agency regulations with the force of law that purport to bar other legal remedies may do so,[14][15] it is a bridge too far to accept an agency's after-the-fact statement to justify that result here. An agency may not reorder federal statutory rights without congressional authorization."

Impact

The Court's decision was foreshadowed by Ginsburg J at the close of arguments:

“

I would like you to respond to this question: In the real world, the FDA has a tremendous amount of things on its plate, and labels for juices are not really high on its list. It has very limited resources. You are asking us to take what it 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. It’s really very hard to conceive that Congress would have done that.[16]

 ”

It was generally agreed that the ruling will have a broad impact on the food industry,[17] and food companies will need to be more diligent with their product labeling.[18][19] Together with its ruling in the same term in Lexmark Int'l v. Static Control Components, it is likely that there will a significant expansion in competitors bringing Lanham Act claims against each other over false or misleading statements.[20]

On a broader theme, POM Wonderful dealt with issues that were also being considered by the Supreme Court in Erica P. John Fund, Inc. v. Halliburton Co., concerning privately originated securities litigation.[lower-alpha 1][22] In addition, it shows a degree of skepticism on the capabilities of administrative agencies, reflected in a dissenting opinion in the Court's 2013 decision in City of Arlington, Texas v. Federal Communications Commission, which Kennedy J had joined.[20]

Subsequent jury outcome

The case went back to the California federal district court and eventually proceeded to jury trial. At trial it was established that Coca Cola Co.'s Minute Maid “Enhanced Pomegranate Blueberry Flavored 100% Juice Blend” consisted of 99.4% apple and grape juices, and only 0.3% pomegranate juice, 0.2% blueberry juice, and 0.1% raspberry juice.[23]

On March 18, 2016, POM made its closing arguments and the case went to the jury with POM claiming losses of $10 million per year from 2007 to 2014 (totaling more than $77 million) caused by Coca-Cola's Minute Maid pomegranate and blueberry juice drink misleading labeling and advertising.[24] On March 21, 2016, the California jury unanimously rejected POM's claim that the labeling of Minute Maid's pomegranate-blueberry juice (which did comply with FDA labeling requirements) was misleading, rejected that it was unfair competition, specifically found that the labeling did not misled a substantial portion of consumers, and found in favor of Coca-Cola, ending eight years of litigation.[23]

Notes

  1. ↑ in Erica P. John Fund, Inc. v. Halliburton Co., No. 09-1403, ___ U.S. ___ (2010), in which further proceedings on connected issues took place in March 2014.[21]

See also

References

  1. ↑ POM Wonderful LLC v. Coca-Cola Co., 12-761 slip opinion (SCOTUS June 12, 2014).
  2. ↑ 21 C.F.R. 102.33d
  3. ↑ 21 U.S.C. § 337
  4. ↑ 21 U.S.C. § 343-1(a)
  5. ↑ 15 U.S.C. § 1127
  6. ↑ 15 U.S.C. § 1125(a)
  7. ↑ POM Wonderful LLC v. Coca-Cola Co., 727 F. Supp. 2d 849 (C.D. Cal. 2010) (“The FDA has directly spoken on the issues that form the basis of Pom's Lanham Act claim against the naming and labeling of the Juice, and has therefore, reached a conclusion as to what is permissible.”).
  8. ↑ POM Wonderful LLC v. Coca-Cola Co., 679 F.3d 1170 (9th Cir. 2012) (“But, under our precedent, for a court to act when the FDA has not—despite regulating extensively in this area—would risk undercutting the FDA's expert judgments and authority.”).
  9. ↑ Adam Liptak (June 12, 2014). "Coke Can Be Sued by Rival Over Juice Claim, Court Says". The New York Times.
  10. ↑ Brent Kendall (June 12, 2014). "Supreme Court Allows False-Advertising Suit Against Coca-Cola". The Wall Street Journal.
  11. ↑ Crosby v. National Foreign Trade Council, 530 U.S. 363, 565 (2000).
  12. ↑ Food and Drug Administration v. Brown & Williamson Tobacco Corporation, 529 U.S. 120, 137–139 (2000).
  13. ↑ J. E. M. Ag Supply, Inc., dba Farm Advantage, Inc. v. Hi-Bred International, Inc., 534 U.S. 124, 144 (2001) (“Here we can plainly regard each statute as effective because of its different requirements and protections.”).
  14. ↑ Geier v. American Honda Motor Co., 529 U.S. 861, 874 (2000).
  15. ↑ Wyeth v. Levine, 555 U.S. 555, 576 (2009).
  16. ↑ Ronald Mann (April 22, 2014). "Argument analysis: Justices skeptical of Coke's right to 'cheat consumers'". SCOTUSblog.
  17. ↑ David G. Savage (June 12, 2014). "Supreme Court rules against false advertising on food, drink labels". Los Angeles Times.
  18. ↑ Nina Totenberg (June 12, 2014). "POM Wonderful Wins A Round In Food Fight With Coca-Cola". National Public Radio.
  19. ↑ Michael Bobelian (June 12, 2014). "POM's High Court Victory Over Coca-Cola Opens The Door To New Litigation". Forbes.
  20. 1 2 John Duffy (June 13, 2014). "Opinion analysis: The triumph of the Lanham Act (and of federal private rights of action)". SCOTUSblog.
  21. ↑ "Halliburton Co., et al., Petitioners v. Erica P. John Fund, Inc., fka Archdiocese of Milwaukee Supporting Fund, Inc."., discussed in Ronald Mann (March 7, 2014). "Argument recap: Justices not quite ready to jettison landmark securities decision, seeking middle ground". SCOTUSblog.
  22. ↑ Noah Feldman (June 12, 2014). "Supreme Court Laps Up POM Wonderful's Case". Bloomberg View.
  23. 1 2 Arnold & Porter LLP (March 25, 2016). "Coca-Cola Defeats POM Wonderful's Misleading Labeling Claims: A Key Takeaway For Food and Beverage Manufacturers Blog Seller Beware". Lexology.
  24. ↑ Cozen O'Connor (April 7, 2016). "POM Wonderful LLC v. Coca Cola Co.: legal battle nearly over, but industry litigation landscape forever changed". Lexology.
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