Recall the case that I wrote about in April in which Coca-Cola was being sued by a pomegranate juice maker POM Wonderful because it was prominently advertising a drink as ‘pomegranate blueberry’ when it contained only 0.5% of those ingredients, the rest being apple and grape juice. This subterfuge enabled it to sell its product for a mere fraction of the cost of its competitor that consisted of only those juices.
Lower courts ruled that the company POM had no right to sue as long as the Coca Cola was truthful in its FDA-required ingredients labeling which is what you see in fine print. But yesterday, in a unanimous verdict, the US Supreme Court rejected that and said that POM has the right to sue them. According to the syllabus of the verdict:
This case involves the intersection of two federal statutes. The Lanham Act permits one competitor to sue another for unfair competition arising from false or misleading product description. The Federal Food, Drug, and Cosmetic Act (FDCA) prohibits the misbranding of food and drink. To implement the FDCA’s provisions, the Food and Drug Administration (FDA) has promulgated regulations regarding food and beverage labeling, including one concerning juice blends. Unlike the Lanham Act, which, relies in large part for its enforcement on private suits brought by injured competitors, the FDCA and its regulations give the United States nearly exclusive enforcement authority and do not permit private enforcement suits. The FDCA also pre-empts certain state misbranding laws.
Basically the court said that the rules under the FDA statutes merely provided a floor for adequate compliance and meeting those standards did not exempt a manufacturer from penalties for false or misleading advertising under the Lanham Act.
The case will now be heard in a lower court before a jury and it remains to be seen whether the POM will win and if so, how much damages they get.