Supreme Court — Lanham Act Claims Not Preempted by FDCA Labeling Requirements

The Supreme Court issued a decision today addressing the question of whether a private party may bring a Lanham Act claim against a competitor challenging as deceptive advertising information contained in a food label that is regulated by the FDCA. POM Wonderful LLC v. Coca-Cola Co. (No. 12-761) (June 12, 2014). The case should cause branding professionals in the food and beverage industries to review their labels and advertisements for compliance with the Lanham Act—reliance on compliance with the FDCA is not enough.

The facts present a fairly straight-forward false advertising claim: Coca-Cola’s Minute Maid brand sold a juice product with a label bearing the words “pomegranate blueberry” in all capital letters, on two separate lines. Below those words, was the phrase “flavored blend of 5 juices,” but in much smaller type. According to the Court, POM alleged that the label “misleads consumers into believing the product consists predominantly of pomegranate and blueberry juice when it in fact consists predominantly of less expensive apple and grape juices.” Slip Op. at 6. The trial court granted partial summary judgment to Coca-Cola, finding that compliance with the FDCA labeling requirements precluded challenges to the label. The Court of Appeals for the Ninth Circuit affirmed in relevant part.

The Supreme Court, in a unanimous opinion (Justice Breyer took no part), reversed and remanded for several reasons. First, the Court found that the courts below were wrong to rely on preemption. The preemption aspects of the FDCA are, by their terms, limited to state laws and do not reach competing federal laws such as the Lanham Act and its false advertising provisions.

Second, the Court found that the text of the Lanham Act and the FDCA do not evidence a Congressional intent to bar POM’s claims:

By its terms, the Lanham Act subjects to suit any person who “misrepresents the nature, characteristics, qualities, or geographic origin” of goods or services. 15 U.S. C. §1125(a). This comprehensive imposition of liability extends, by its own terms, to misrepresentations on labels, including food and beverage labels. No other provision in the Lanham Act limits that understanding or purports to govern the relevant interaction between the Lanham Act and the FDCA. And the FDCA, by its terms, does not preclude Lanham Act suits. In consequence, food and beverage labels regulated by the FDCA are not, under the terms of either statute, off limits to Lanham Act claims.
Slip Op. at 9. The Court found support for this conclusion in the complementary aspects of the scope and purpose of the statutes.

Third, the Court found that the defendant’s claim that preemption is proper given Congressional desire for national uniformity in food labeling was belied by the limited nature of the FDCA’s preemption language, which expressly limited preemption to state, not federal, laws. In addition, the Court dismissed uniformity concerns as illusory. Slip Op. at 13-14 (“The variability about which Coca-Cola complains is no different than the variability that any industry covered by the Lanham Act faces.”).

Finally, the Court was not persuaded by the Government’s implicit claim that the FDCA regulations may be a “ceiling on the regulation of food and beverage labeling” for the same reasons that Coca-Cola’s preemption arguments fail: the statutes are complementary.

The Court’s decision is important because it identifies a potential new front in false advertising litigation. Companies that sell products governed by FDCA labeling requirements and have relied solely on compliance with the FDCA in their pre-marketing review run a significant risk of similar litigation. Branding professionals need to review their labels (and any other marketing) to assure compliance with the Lanham Act separate from compliance with FDCA regulations. It is highly likely that in competitive and mature markets participants will be reviewing competitors’ labeling with renewed and increased scrutiny.