Supreme Court Holds Federal Unfair Competition Claim Not Precluded by FDA’s Food and Beverage Labeling Regulations

06/13/2014

The U.S. Supreme Court has ruled that competitors may bring private suits alleging unfair competition under the Lanham Act based on misleading and deceptive food and beverage labels that are regulated by the U.S. Food and Drug Administration (“FDA”), overruling a Ninth Circuit decision. Companies in the food and beverage industry should be aware that, even if a label complies with FDA regulations, it may still be attacked by competitors alleging that the labeling is somehow misleading or deceptive.

In September 2008, POM Wonderful LLC (“POM”), makers of the eponymous pomegranate juice beverage, brought suit under Section 43 of the Lanham Act, 15 U.S.C. § 1125(a), alleging that The Coca-Cola Company (“Coca-Cola”) had deceptively named, labeled, and advertised its “Pomegranate Blueberry” juice product. POM claimed that such naming and labeling caused consumers to mistakenly believe Coca-Cola’s product consisted primarily of pomegranate and blueberry juices when, in fact, the beverage contained only 0.3 percent pomegranate juice and 0.2 percent blueberry juice.

Coca-Cola successfully argued at the district court and Ninth Circuit levels that the Federal Food, Drug, and Cosmetic Act’s (“FDCA”) comprehensive regulation of food and beverage naming and labeling foreclosed the possibility of a Lanham Act claim arising out of the same naming and labeling practices covered by the FDCA. According to the Ninth Circuit, in light of the FDCA regulations, allowing a Lanham Act claim would disrupt the balance Congress sought to achieve by entrusting matters of juice beverage labeling to the FDA.

The Supreme Court overruled the Ninth Circuit in a unanimous decision authored by Justice Anthony Kennedy, with Justice Breyer recusing himself. Firmly rejecting the Ninth Circuit’s reasoning, the Court ruled that the FDCA’s food and beverage labeling regulations do not preclude private actions under the Lanham Act. The Court stated that neither statute explicitly, or even implicitly, calls for the Lanham Act to stand down in the face of specific regulations promulgated under the FDCA.

The Court’s ruling that a Lanham Act claim may be brought against an allegedly misleading food or beverage label regulated under the FDCA does not mean that the FDCA is inoperative. Instead, the Court found that, while the Lanham Act and the FDCA both touch on food and beverage labeling, they are complementary federal statutes serving very different purposes - the Lanham Act protects commercial interests through private actions, whereas the FDCA protects public health and safety.

The case will now return to the lower courts for resolution.

POM Wonderful LLC v. Coca-Cola Co., 12-761, slip op. (S. Ct. June 12, 2014).

If you have any questions regarding these matters, please contact us.

Jeffrey M. Becker
214.651.5066
jeff.becker@haynesboone.com

 

Kenneth G. Parker
949.202.3014
kenneth.parker@haynesboone.com

 

Richard D. Rochford
212.659.4984
richard.rochford@haynesboone.com

 

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