While POM Wonderful’s Supreme Court victory over Coca-Cola doesn’t have any direct impact on the wave of consumer class action lawsuits over false advertising engulfing the trade, it still makes uncomfortable reading for regulatory affairs bosses at food and beverage companies, say attorneys.
David Biderman, a partner in Perkins Coie’s Consumer Class Action Defense practice, was speaking to FoodNavigator-USA after the Supreme Court said POM can sue Coke under the Lanham Act (unfair competition) for allegedly misleading consumers with its Minute Maid pomegranate blueberry juice labels - even if they comply with FDA regs (click HERE ).
It was pretty stunning really
He said: “This means that you have no safe harbor, no protection from this type of competitor lawsuit, even if your labels are fully compliant with very specific FDA labeling regulations, as was the case here [Coke complied with federal regulations governing juice labels].
“It was pretty stunning really. They basically said, FDA [compliant] or not, you’re fair game.”
Arnold Friede, senior food and drug law attorney with Sandler, Travis & Rosenberg, P.A in Miami, added: "Wow. I've hardly ever seen a Supreme Court Opinion that was so clear, direct, and conclusive. Compliance with FDA labeling requirmements becomes, in effect, a floor, and in no sense a ceiling.
"One key implication is that food companies must take care to consider the overall message communicated by the label as a whole and not merely stand on isolated aspects that might be compliant with FDA rules."
The decision is surprising and monumental
Peter A. Arhangelsky, a principal in the Arizona office of law firm Emord & Associates, said the opinion created uncertainty for manufacturers, adding: “The decision is surprising and monumental because the unanimous Court rejected limitations on Lanham Act claims even where the FDA has spoken directly to the issue.
“Industry members can now be subject to private competitor claims even for labeling statements required by FDA regulation, particularly where those regulations create room for consumer confusion. The federal courts therefore become venues to collaterally challenge FDA regulations through private litigation.”
On the flip side, the opinion is obviously good news for firms wishing to sue rivals, said Tim Kelly, partner and chair of the trademark practice group at Fitzpatrick, Cella, Harper & Scinto LLP.
"It establishes that at least in the false advertising/unfair competition context, manufacturers cannot hide behind one federal statute in order avoid liability under another.”
Some perspective: Decision does not address or alter state consumer protection law or consumer suits
To put this all in perspective, however, it’s worth pointing out that manufacturers are far more likely to be sued over false advertising by consumers (under state consumer protection laws) than by competitors (under the Lanham Act, which covers unfair competition), said Dale Giali, partner in the LA office of law firm Mayer Brown.
“The decision does not make any direct rulings altering the much larger legal landscape regarding consumer protection class action lawsuits dogging the food and beverage industry. The Supreme Court is quite careful to limit the decision to federal v. federal law (Lanham Act v. FDCA) and competitor (not consumer) suits.”
“It makes clear that the decision does not address or alter state consumer protection law or consumer suits, and does not in any way undermine preemption principles that would apply to state-law claims against labels regulated by FDA.
“Indeed, it specifically recognizes the chaos and uncertainty that would be unleashed if state-law claims were allowed to proceed with respect to certain of the regulated aspects of FDA-regulated food labels.
POM: This is a real victory for consumers
So what happens next?
Despite POM's success at the Supreme Court, it hasn’t actually won its false advertising case (yet), but has merely been granted the right to pursue it, so it is a little premature to claim victory at this stage, noted attorneys.
But POM has been celebrating nonetheless, adding: “[This] is a real victory for consumers. The unanimous court ruling will translate into higher assurance for consumers that the labels on beverage and food are accurate.”