High Court Allows Competitors to Bring Suit Against One Another for Unfair Competition Arising from Mislabeled Products


The U.S. Supreme Court has just made things easier to litigate deceptive labeling lawsuits. In Pom Wonderful LLC v. The Coca Cola Company, the Supreme Court unanimously held that companies could bring lawsuits against their competitors for mislabeling products under the Lanham Act even if the labels are regulated by the Federal Food, Drug, and Cosmetic Act (FDCA).

Justice Anthony Kennedy, who authored the opinion, found the case focused on the "intersection of two federal statutes" – the Lanham Act and the FDCA. Under the Lanham Act, a competitor could sue another "for unfair competition arising from false or misleading product descriptions," while the FDCA "prohibits the misbranding of food and drink."

Pom Wonderful LLC ("Pom") a manufacturer of various juices including a pomegranate-blueberry juice blend, sued The Coca Cola Company ("Coca Cola") under the Lanham Act. Pom alleged that Coca Cola mislabeled one of its juice blend product to mislead consumers into believing that the product predominantly contained pomegranate and blueberry juice when it actually contained apple and grape juices. Specifically, Coca Cola's label displayed the words "pomegranate blueberry" more prominently than other words indicating that the product was a blend of five juices. Pom further alleged that this mislabeling caused Pom to lose sales.

Coca Cola brought a summary judgment motion, arguing that it complied with the FDCA's specific regulations regarding the labeling of juices. Both the District Court and Court of Appeals for the Ninth Circuit agreed, finding that Pom's claims were preempted under the FDCA.

However, the Supreme Court disagreed on two main grounds. First, the Supreme Court found that Pom's claims were not preempted because the lawsuit did not "raise the question whether state law is pre-empted by a federal law," but rather, "the alleged preclusion of a [claim] under one federal statute by the provisions of another federal statute." Second, the Supreme Court found that neither the Lanham Act nor the FDCA expressly "forbids or limits Lanham Act claims challenging labels that are regulated by the FDCA." In support, the Court noted that although the FDCA expressly exempted certain state law claims, the FDCA's silence with respect to requirements arising from other sources in conjunction with the fact that both the Lanham Act and the FDCA had coexisted for over 70 years, indicated Congress' intent that the FDCA and Lanham Act complement one another rather than "preclude the operation of the other."

Despite this decision, most analysts agree that the decision will not affect the ability of manufacturers to assert preemption defenses available under the FDCA as to state law claims. Among other things, the Supreme Court limited its decision to claims brought by competitors under the Lanham Act while specifically noting Congress' express intent to preempt certain state laws under the FDCA.

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