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Supreme Court Holds That Complying with FDA Regulations Does Not Preclude Lanham Act Claim

The Supreme Court on June 12, 2014, unanimously held that competitors may bring Lanham Act claims challenging food and beverage labels that are regulated by the Food Drug and Cosmetics Act (FDCA). POM Wonderful LLC v. The Coca-Cola Company, U.S., No. 12-761, 6/12/2014.  As a matter of statutory construction, nothing in the Lanham Act or the FDCA forbids or limits Lanham Act claims challenging labels regulated by the FDCA, according to the Court. 

The Court's decision is consistent with the AIPLA amicus brief filed in this case.

Background

Pom Wonderful sued Coca-Cola under Section 43(a)(1) of the Lanham Act, 15 U.S.C. 1125, for false advertising.  It alleged that Coca-Cola's product label, "Pomegranate Blueberry Flavored Blend of 5 Juices,” is misleading because the beverage contains only 0.3% pomegranate juice and over 99% apple and grape juice. Coca-Cola responded that the Lanham Act claim was barred because the label complied with regulations of the Food and Drug Administration.  The district court agreed, and the Ninth Circuit affirmed after finding the FDA labeling regulations to be "comprehensive."

FDCA Does Not Limit Lanham Act Claims

The Ninth Circuit's decision was reversed by a unanimous Court (Justice Breyer did not participate in the case).  Writing for the Court, Justice Kennedy said that the decision here must be based on statutory interpretation, not on preemption.  He observed that this case concerns the alleged preclusion of a cause of action under one federal statute by the provision of another federal statute, explaining that the balance between state and federal laws is not an issue.

The Court acknowledged POM's argument that both statutes should be given full effect unless there is an "irreconcilable conflict," and Coca-Cola's argument that the statutes must be reconciled in favor of the more specific FDA regulation.  The Court saw no need to resolve these competing arguments, pointing out that nothing in the text of the FDCA requires that the Lanham Act claim be barred, and that the two statutes complement each other. Justice Kennedy explained as follows:

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.
* * * The Lanham Act and the FDCA complement each other in major respects, for each has its own scope and purpose.  Although both statutes touch on food and beverage labeling, the Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety.  * * *

The two statutes complement each other with respect to remedies in a more fundamental respect.  Enforcement of the FDCA and the detailed prescriptions of its implementing regulations is largely committed to the FDA.  The FDA, however, does not have the same perspective or expertise in assessing market dynamics that day-to-day competitors possess. * * * Lanham Act suits draw upon this market expertise by empowering private parties to sue competitors to protect their interests on a case-by-case basis.  By "serv[ing] a distinct compensatory function that may motivate injured persons to come forward," Lanham Act suits, to the extent they touch on the same subject matter as the FDCA, "provide incentives" for manufacturers to behave well.

To read the Court's opinion, click here.