Aquafina bottled water’s image seems designed to evoke purity. The label features an orange sun peeking out from behind a mountain range, the product description reads “purified drinking water” and the back states that it is “bottled at the source.”

So it came as a surprise to some customers when they found out that the source in question is no pristine mountain stream but a public water source. In other words, Aquafina is purified tap water, as its manufacturer, PepsiCo Inc., announced in 2007.

Customers, claiming they felt betrayed, filed several class action lawsuits, which were consolidated into one case in the U.S. District Court for the Southern District of New York. The plaintiffs alleged unfair and deceptive trade practices under state consumer laws. PepsiCo filed a motion to dismiss the lawsuit, citing the Food and Drug Administration’s express pre-emption provision in the Federal Food, Drug and Cosmetic Act (FDCA) and the state laws’ implied conflict with the federal statutes.

In December, Judge Cathy Seibel granted the motion to dismiss In re PepsiCo Inc. Bottled Water and Sales Practices Litigation. Ruling that the FDCA governs the matter, Seibel found that “the FDA never intended or required” companies selling purified water to disclose that the water comes from a municipal water supply, as is required of some other types of water.

The judge’s ruling backs up PepsiCo’s belief that the case had no merit, according to Bart Casabona, a spokesman for the beverage company. “We focused on the primary argument that the federal laws pre-empted the plaintiff’s claims, which proved to be a key deciding factor in this case,” he says.

The judge ruled that pre-emption bars the claims because “federal law is not silent” on the subject and because “plaintiffs’ state law claims by necessity are premised on requirements that are not parallel to those imposed by federal law.”

Jeffrey A. Klafter, a partner at Klafter, Olsen & Lesser who served as lead counsel for the plaintiffs, did not return phone calls seeking a comment. At press time, no appeal had been filed, according to Casabona.

Irrelevant Sourcing

The FDA’s rule regarding purified water is quite clear, according to Seibel. She pointed to a response the FDA published in 1995, when the issue of potentially misleading graphics on bottled water was raised during the rule’s comment period. The FDA pointed to a section of the law that “explicitly exempts” purified water from the source disclosure requirement. The agency was not concerned with potentially misleading graphics on bottles of purified water because it concluded that consumers bought the water because it was purified, not because it came from a particular source, and Aquafina met the FDA’s definition of purity.

“Indeed, the final rule is replete with evidence that, in contrast to spring water, the FDA concluded that because purified water, from whatever source, has been treated to meet purity standards, its source is immaterial to reasonable consumers,” Seibel wrote.

Because this was a pre-emption case, the court’s reasoning was correct even if the case conflicts with advertising law precedent, according to Thomas M. Hughes, a partner at Hunton & Williams in Washington, D.C.

“This is inconsistent with principles of advertising law, which generally finds that express claims, especially those on a product’s label or packaging, are material to consumers,” Hughes says. But in a pre-emption case, he says the federal legislation trumps state law and court precedent in other areas.

Turning Point

The Supreme Court has visited pre-emption several times in recent years, generally finding for the federal law. In one notable 2008 case, Riegel v Medtronic, the court ruled 8-1 that FDA pre-market approval of medical devices pre-empts state claims (see “The Year in Review,” December 2008).

While several of these recent high-profile cases have revolved around drug and device regulations, pre-emption is an important topic in other industries such as food. “It’s a cross-cutting issue,” says Ricardo Carvajal, of counsel at Hyman, Phelps & McNamara in Washington, D.C.

The Bush administration was a driving force behind the pre-emption cause, injecting pre-emption language into 50 federal rules related to product liability. But the tide may be about to turn. With Democrats in control of the White House and Congress, many expect to see legislative efforts to minimize pre-emption.

“There is a lot at stake on both sides,” Carvajal says. “Plaintiff’s lawyers would like to see as little pre-emption as possible, while business would like to see as much as possible.”

In-house counsel should be watching the issue carefully because legislative efforts to minimize pre-emption could drastically increase the litigation exposure of many companies protected by federal regulations, says Bert W. Rein, a partner at Wiley Rein. “The situation is, ‘If you win in court [on a pre-emption claim], we’ll come back and change the legislation.’”