August 10, 2016 Articles

Squeezing the Market Share: Corporate False Labeling Actions in POM and Beyond

By Sarah B. Miller

Food and beverage companies have long faced legal battles from competitors, consumers, and the government, but health-related claims have come under increasing scrutiny in recent years. A series of recent cases involving POM Wonderful, LLC (POM) shows the struggle companies may face in promoting the benefits of their products while complying with federal regulations and keeping their market share. While the judiciary is strengthening the power of federal agencies and expanding the sources of attacks against manufacturers, one new case suggests that juries may be becoming increasingly skeptical of Lanham Act claims based on false labeling. Counsel for food and beverage companies must remember that the case they are defending, or bringing, may be just one piece of a successful litigation strategy. And, increasingly, findings and guidance by federal agencies are becoming outcome-determinative. 

Jurisprudence Aiding False Advertising in Labeling Claims Ripens
On the heels of its decision in Lexmark International, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014), holding that a plaintiff can sue another party for unfair competition even if they are not direct competitors, the Supreme Court decided POM Wonderful LLC v. Coca-Cola Co., 134 S. Ct. 2228 (2014) in June 2014. The Court held in POM that competitors are not precluded from bringing Lanham Act claims related to labels governed by the Food and Drug Administration (FDA) under the Federal Food, Drug and Cosmetic Act (FDCA). Originally, POM’s Lanham Act claim was dismissed by a California district court, which found that claims based on labeling regulated by the FDA under the FDCA are precluded because they were “within the FDA’s purview.” POM Wonderful LLC v. Coca Cola Co., 727 F. Supp. 2d 849, 874 (C.D. Cal. 2010). The district court referenced its prior finding that, because the FDCA and the FDA’s implementing regulations detailed the “acceptable ‘common or usual name’ and appropriate labeling for a multiple-juice beverage,” the court could not interpret the FDA’s regulations as applied to the Coca-Cola’s “Minute Maid® Enhanced Pomegranate Blueberry Flavored 100% Juice Blend” because such an analysis would require the court to “usurp the FDA’s discretionary role in the application and interpretation of its regulations.” POM Wonderful LLC v. Coca Cola Co., No. CV 08-06237, 2009 WL 7050005, at *3 (C.D. Cal. Feb. 10, 2009). (citation omitted). 

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