While the Supreme Court has been busy this term fencing in patent protection (see our blog posts here: Nautilus, Inc. v. Biosig Instruments, Inc., Limelight Networks v. Akamai Technologies Decision Handed Down by the Supreme Court), it has thrown the door open wider to claims of false advertising. After holding in Lexmark v. Static Control that direct competition was not necessary for standing to sue for false advertising, the Court held yesterday in the Pom Wonderful v. Coca-Cola case that the labelling requirements of the Food, Drug, and Cosmetic Act (FDCA) do not preempt or conflict with the false advertising prong of the Lanham Act, and that compliance with FDCA requirements is not essentially a per se defense to false adverting claims.
As explained in our previous post on this case, Pom sued Coca-Coca for false advertising, alleging that Coca-Cola’s “Pomegranate Blueberry” drink contained negligible amounts of pomegranate juice, and that its labeling did not make that clear to consumers. Coca-Cola moved to dismiss the false advertising claim on the basis that its product labelling was regulated by the Food and Drug Administration under the FDCA, which Coca-Cola contended preempted any false advertising claim. Both the district court and the Ninth Circuit agreed.
The Supreme Court looked at it differently, and found that the two acts were complementary. While the FDCA does explicitly preempt much state law, the Court found Congress’ failure to include anything about federal law preemption counseled against such a finding (and indeed questioned whether there can ever be “preemption” between two federal laws). The Court found instead that the two acts could work in tandem, for while both touch on food labelling, the Lanham Act’s false advertising prong protects commercial interests against unfair competition, while the FDCA protects public health and safety. The FDCA is largely enforced by the federal government, while the Lanham Act is largely enforced by private parties. Further, the Court largely rejected the FDA’s argument that at least where it had regulated and required or authorized the challenged aspects of the label, Lanham Act liability should not lie. “The Government asks the Court to preclude private parties from availing themselves of a well-established federal remedy because an agency enacted regulations that touch on similar subject matter . . . [a]n agency may not reorder federal statutory rights without congressional authorization.”
This is the second unanimous decision by the Court in the area of false advertising this term. Underlying both decisions is strong support for the “private attorney general” function served by the Lanham Act’s false advertising prong. As stated by the Court, “[i]t is unlikely that Congress intended the FDCA’s protection of health and safety to result in less policing of misleading food and beverage labels than in competitive markets for other products.” For the business litigator, a false advertising claim is now an even more powerful arrow in the litigation quiver.