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POM Wonderful Victory for Consumers

POM Wonderful Victory for Consumers

photo credit: Fruitnet.com via photopin cc

By Leslie A. Brueckner, Senior Attorney

Leah Nicholls, Kazan-Budd Attorney

It’s clear that the U.S. Supreme Court is about as pro-business as one can imagine. But something strange happened recently: The Court issued a unanimous ruling that will actually help to protect consumers from being ripped off in the marketplace by misleading labels on food and drink.

Perhaps unsurprisingly, that result took a case that didn’t directly involve any consumers at all; instead, it was a fight between two corporations about fruit juice. But the Court’s ruling in POM Wonderful v. Coca Cola Co. is important for consumers because it affirmed that corporations can be held liable for lying to the public about the contents of their products.

The plaintiff in the case—POM Wonderful—markets a “Pomegranate Blueberry” juice made entirely of pomegranate and blueberry juice. Much to its dismay, POM Wonderful discovered that one of its competitors, the Coca-Cola Company, uses the words “POMEGRANATE BLUEBERRY” on the label of a beverage that actually contains only 0.3 percent pomegranate juice, 0.2 percent blueberry juices, and over 99 percent apple and grape juices. POM Wonderful sued Coke under a federal antitrust statute, the Lanham Act, that allows companies to recover damages from competitors who use misleading labels. 

In response, Coke did something radical. It argued that the Court couldn’t even consider the Lanham Act claim because the Food Drug and Cosmetic Act gives the U.S. Food and Drug Administration exclusive authority to regulate food labeling. According to Coke, because its label wasn’t technically prohibited by the FDA regulations, it couldn’t be found liable for violating any other law.

If the Supreme Court had bought Coke’s argument, consumers would have been in deep trouble. Under Coke’s radical theory, the FDA’s authority to regulate food labeling means that no one has the right to sue a company over a deceptive food label—not its competitors and not consumers either. If this view had carried the day, it would have swept away dozens of pending consumer class actions involving deceptively labeled consumables.

Here’s where the good news comes in. Ultimately, the Supreme Court resoundingly rejected Coke’s theory and held in favor of POM Wonderful, concluding that the FDCA doesn’t trump the Lanham Act. The Court held that companies can be sued for misleading labels even if they have technically complied with FDA regulations—in other words, the regulations are a floor, but not a “ceiling,” and other law can require a higher standard.

So, why is this decision—which, after all, only lets companies sue other companies—good for consumers? For starters, by confirming that companies can use the Lanham Act to go after other companies for misleading consumers, the Court’s ruling creates a financial incentive for companies to tell the truth on their product labels. That’s good for consumers right off the bat. But even more importantly, the Court’s ruling is good for consumers because of what it did not do: accept Coke’s invitation to wipe consumer labeling class actions off the litigation map.  

In short, POM Wonderful means that companies cannot lie and mislead about their products with impunity. For now, we can all breathe a collective sigh of relief. This case could have been a disaster for consumers; but this time around at least, the Supreme Court got it exactly right.