Tuesday, May 22, 2012

Pom takes another pounding

Pom Wonderful LLC v. Coca-Cola Co., --- F.3d ----, 2012 WL 1739704, (9th Cir. May 17, 2012)

Pom sued Coca-Cola over its “Pomegranate Blueberry” or “Pomegranate Blueberry Flavored Blend of 5 Juices” product.  (Coca-Cola argued that the latter was the product’s name, as if any consumer in the entire world would call it that.)  Pomegranate Blueberry contains about 99.4% apple and grape juices, 0.3% pomegranate juice, 0.2% blueberry juice, and 0.1% raspberry juice.

The front label displays the product’s name and a vignette depicting each of those fruits:

The district court ruled that the Lanham Act claim against the name and fruit vignette was barred by FDA regulations, though Pom could challenge other advertising and marketing of the product.  Also, Pom’s state law claims were preempted to the extent they would impose requirements not identical to federal ones on Coca-Cola.  Also, the court held that Pom lacked statutory standing to pursue its state law claims because it hadn’t not shown that it was entitled to restitution.

Pom appealed, and the court of appeals largely affirmed.  “[T]he Lanham Act may not be used  as  a vehicle to usurp, preempt, or undermine FDA authority. That teaching, however, operates as a presumption or a general principle—not as an automatic trump or a firm rule.”  Courts must attempt to give as much effect to both statutes as possible.

Here, the naming aspect of Pom’s claim was barred “because, as best we can tell, FDA regulations authorize the name Coca-Cola has chosen.”  Under the regs, a manufacturer can name a beverage using a name of a flavoring juice that is not predominant by volume.  For example, a  raspberry-and-cranberry-flavored product whose predominant juice is not raspberry or cranberry can be called “‘Raspcranberry’; raspberry and cranberry flavored juice drink.”  If the juices provide the characterizing flavor, and if Coca-Cola states that the juices aren’t predominant, then the name is ok.  Thus, allowing Pom’s claim to proceed would conflict with the FDA’s apparent authorization of names like “Pomegranate Blueberry Flavored Blend of 5 Juices.”  The same went for the labeling component of Pom’s claim, which focused on the presentation of the words on the label (Pom didn’t spend meaningful time on the fruit vignette on appeal).  Pom apparently sought to make Coca-Cola change the size of the words on its labeling so that the words “Pomegranate  Blueberry” no longer appeared in larger, more conspicuous type on Coca-Cola’s label than “Flavored Blend of 5 Juices.”   But that too would undermine the FDA’s regulations, which specify what words must or may be included on labels and how prominently and conspicuously they  must appear: in such a way “as to render [them] likely to be read and understood by the ordinary individual.”  Despite this, the FDA hasn’t required that all words in a juice blend’s name appear on the label in particular sizes; if the FDA thought that such a regulation were necessary, “it could have said so. If the FDA believes that more should be done to prevent deception, or that Coca-Cola’s label misleads consumers, it can act.”  But here, to act when the FDA hasn’t would risk undercutting its expertise and authority.

Previous district court decisions allowing similar Lanham Act claims to proceed, on the ground that the claims didn’t require the court to interpret or apply FDA regulations, couldn’t be harmonized with governing 9th Circuit precedent.  “Although these courts were right to recognize that a Lanham Act claim is barred when it would require a court to interpret ambiguous FDA regulations, that is not the only circumstance in which such a claim is barred…. [C]ourts must generally prevent private parties from undermining, through private litigation, the FDA’s considered judgments.” 

How do we know when the FDA has made a considered judgment, as opposed to not making a judgment?  Good question, to which you will not find a great answer here!  The court reiterated that the FDA could determine that Coca-Cola’s label is misleading, but that it hasn’t to date done so, “even though it has acted extensively and carefully in this field. (The FDA has not established a general mechanism to review juice beverage labels before they reach consumers, but the agency may act if it believes that a label in the market is deceptive.)  As best we can tell, Coca-Cola’s label abides by the requirements the FDA has established.”  However, “mere compliance with the FDCA or with FDA regulations will [not] always (or will [not] even generally) insulate a defendant from Lanham Act liability.”  Compliance with FDA’s regulations alone was not enough, but rather the court found compelling “Congress’s decision to entrust matters of juice beverage labeling to the FDA and by the FDA’s comprehensive regulation of that labeling.”  The FDA apparently didn’t impose the requirements Pom wants, and the court lacked the FDA’s expertise in guarding against deception in the context of juice beverage labeling.  (Does the FDA have expertise in assessing likely deception, as opposed to scientific evidence on safety and efficacy?  I don’t think the D.C. Circuit thinks it does.)

Turning to the state law claims, the district court dismissed on standing grounds: it found that Pom hadn’t lost money or property because it wasn’t entitled to restitution directly from Coca-Cola.  But the California Supreme Court has made clear that standing doesn’t depend on eligibility for restitution, so the court remanded for further proceedings, which would restart the preemption issue and also raise the question whether California’s safe-harbor doctrine for regulatory compliance insulated Coca-Cola from liability.  So it seems unlikely that Pom can get much traction on state-law claims either.

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