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Private enforcement of government regulations can serve a useful function. Unleashing an army of “private attorneys general,” especially in an environment of scarce public resources, can promote deterrence and better secure compliance with the law. But that rosy view of such lawsuits can be diminished when they are wielded by business competitors as one of many tools of competition. It is further eroded when those private lawsuits invade a subject-matter area that is already carefully regulated by the government.
These theoretical concerns will undergird the U.S. Supreme Court’s consideration in April whether a private litigant can sue a company for violating federal restrictions on labeling food and beverage products. The lawsuit on appeal was filed by POM Wonderful LLC against its competitor, Coca-Cola Co. POM sells various fruit juice products, including pomegranate juice and pomegranate-blueberry juice. It competes in the beverage market with juice products sold by Coca-Cola’s Minute Maid business unit.
In 2008, POM believed that its juice sales were being negatively impacted by Minute Maid’s “Pomegranate Blueberry” juice blend. Minute Maid’s product contained about 99.4 percent apple juice and only 0.3 percent pomegranate juice and 0.2 percent blueberry juice. Seeking to reverse its decline in market share, POM filed a lawsuit claiming that Coca-Cola violated the Lanham Act’s false-advertising language, as well as California’s Unfair Competition Law and False Advertising Law, in its naming, labeling, marketing and advertising of Minute Maid’s Pomegranate Blueberry juice blend.
It seems only right that, in a substantive dispute concerning mixtures, the legal case focused on how to blend POM’s attempt to invoke the Lanham Act (which permitted a private right of action) to challenge product-labeling with more specific regulations of product-labeling (which did not permit a private right of action). It is true that the Lanham Act covers product labels and provides a broad private right of action for false advertising; in theory, it would cover misleading product labels. But product-labeling is also regulated—and in greater depth—by the Federal Food, Drug, and Cosmetic Act (FDCA). The FDCA, which governs and has implementing rules regarding appropriate labels for food, beverages and drug products, limits proceedings for enforcement of its regulations to the U.S. Food and Drug Administration (FDA). The FDCA does not explicitly provide for a private right of action. POM claimed that the Lanham Act’s general prohibition should be allowed to co-exist with—and bolster—the FDCA’s more detailed standards and procedures.
Two lower courts disagreed with POM’s argument. The district court granted Coca-Cola’s motion for summary judgment on the ground that the Lanham Act challenge interfered with FDA regulations permitting Coca-Cola’s name and labeling of its “Pomegranate Blueberry” juice blend. The district court reasoned that, because FDA regulations directly deal with fruit juice labels, the FDA had spoken on the issues that comprise POM’s Lanham Act claim, and that it was up to the FDA to determine the proper content of a label. (With regard to POM’s state-law claims, the district court ultimately ruled that POM lacked statutory standing to bring such claims as it had not shown, as required under its state-law claims, that it was entitled to restitution.)
The U.S. Court of Appeals for the Ninth Circuit affirmed the grant of summary judgment. The appellate court held that the FDA was the appropriate forum for POM’s complaints based on “Congress’s decision to entrust matters of juice beverage labeling to the FDA and by the FDA’s comprehensive regulation of that labeling.” The judges feared that private lawsuits would undermine the FDA’s considered judgment about the appropriate content of labels. Summarizing its reasoning, the Ninth Circuit held, “To give as much effect to Congress’s will as possible, we must respect the FDA’s apparent decision not to impose the requirements urged by POM. And we must keep in mind that we lack the FDA’s expertise in guarding against deception in the context of juice beverage labeling.”
Supreme Court Review
The U.S. Supreme Court chose to review the Ninth Circuit’s decision over the objections of both Coca-Cola and the solicitor general (representing the FDA, among other agencies). The justices are set to hear argument in the case in April and likely render a decision before July. The battle at the Supreme Court will likely reflect both parties’ efforts to embrace or distinguish recent Supreme Court decisions on preemption.
In particular, POM’s argument may focus on two recent cases. The first is Wyeth v. Levine, 555 U.S. 555 (2009). In that case, the justices stated that there was a “presumption against preemption” and allowed state tort claims to proceed against a pharmaceutical manufacturer based on warning labels specifically approved by the FDA. Moreover, the justices unanimously held in Williamson v. Mazda Motor of America, 131 S. Ct. 1131 (2011), that state tort claims could proceed against an automaker alleging faulty seatbelts even though the seatbelts complied with a Federal Motor Vehicle Safety Standard squarely addressing safety requirements for seatbelts.
By contrast, Coca-Cola will likely rely on Supreme Court cases like RadLAX Gateway Hotel v. Amalgamated Bank, 132 S. Ct. 2065, 2071 (2012), in which the justices held that specific statutory provisions trump general provisions for preemption purposes. Coca-Cola will point out that the comprehensive FDCA provisions at issue in this case post-date the Lanham Act, which should afford the FDCA even greater “trumping power.” (See, e.g., Food and Drug Administration v. Brown & Williamson Tobacco, 529 U.S. 120, 143 (2000) (“A specific policy embodied in a later federal statute should control our construction of the [earlier] statute, even though it has not been expressly amended.”)) Finally, Coca-Cola will also likely rely on a series of lower-court cases rejecting attempts “to use the general proscriptions of the Lanham Act to challenge a statement that the FDA has specifically determined to be truthful and “not misleading.” (See, e.g., American Home Products v. Johnson & Johnson, 672 F. Supp. 135 (S.D.N.Y. 1987) (holding that the defendant’s compliance with FDA regulations for the marketing of aspirin products was a “complete defense” to plaintiff’s Lanham Act claims); see also, e.g., Wyeth v. Sun Pharmaceutical Industries, No. 09 Civ. 11726, 2010 U.S. Dist. LEXIS 18180, at **11, 18 (E.D. Mich. Mar. 2, 2010) (holding that “the FDA is a governmental agency, and its decisions” may be challenged administratively but not “under the Lanham Act.”))
Finally, both sides will marshal compelling policy arguments in support of their positions. POM will argue that, without a private right of action under the Lanham Act, the policing of false and misleading labels will be left solely to an FDA that is grossly underfunded, understaffed, and “woefully” lacking in the necessary resources to adequately perform its tasks. Moreover, POM will argue that the court of appeals decision sweeps broadly and impacts the ability to bring a Lanham Act claim (or other claims under state and/or federal law) against products regulated by agencies other than the FDA. Coca-Cola will counter those arguments by emphasizing the superior expertise of FDA regulators and the precise tools they employ to regulate a complicated area. Coca-Cola will argue that regulating complexity with dull instruments by sometimes-dull plaintiffs—or competitors seeking an unfair advantage—would unfairly harm manufacturers.
The court’s eventual decision in this case will not be its last word on preemption. Or the scope of the Lanham Act, or the preclusive effect of complex regulatory schemes, for that matter. There are simply too many variables at play in these types of preemption cases. Nonetheless, much like the fruit juices that are the subject of this litigation, it should be interesting to see how the justices respond to this particular blend of relevant factors.
Stephen A. Miller practices in the commercial litigation group at Cozen O’Connor’s Philadelphia office. Prior to joining Cozen O’Connor, he clerked for U.S. Supreme Court Justice Antonin Scalia and served as a federal prosecutor for nine years in the Southern District of New York and the Eastern District of Pennsylvania.
David M. Albert practices in the intellectual property department at the firm’s Philadelphia office. He received degrees from Emory University, Columbia University and the University of Pennsylvania Law School.