Friday, April 14, 2006

FDA preemption of Lanham Act claims: a change is in the water

Vermont Pure Holdings, Ltd. v. Nestlé Waters North America, Inc., 2006 WL 839486 (D. Mass.)

This case concerns claims about the source, nature, and purity of Poland Spring bottled water. FDA regulations define "spring water" as "water derived from an underground formation from which water flows naturally to the surface of the earth" and detail the method of extraction to be used for acquiring spring water.

Though Poland Spring has a long history of bottling spring water, Vermont Pure alleged that the “Poland Spring” water Nestlé began marketing in 1994 has never been extracted from the Poland Spring, and does not even come from the same aquifer as the original source. Instead, the ground or well water in Poland Spring comes not from "some of the most pristine and protected sources deep in the woods of Maine," as advertised, but from other sources, including, on occasion, water trucked in from out of state. Thus, Vermont Pure alleged that the very name was misleading.

With respect to the purity of Poland Spring water, Vermont Pure alleged that Nestlé's production well techniques and methods for withdrawing groundwater cause actual or potential contamination of ground and well water.

The court earlier dismissed plaintiff’s state-law false advertising claim that Poland Spring was not “spring water” because FDA regulations explicitly define the term, preempting any private cause of action since adjudicating Vermont Pure’s claim would require interpreting the regulations. The court allowed separate origin and purity claims to proceed. But, given the intervening Supreme Court decision in Bates v. Dow Agrosciences, the court granted reconsideration. Bates allowed a state law claim against a pesticide maker to proceed despite FIFRA’s preemption provision, on the theory that the state law claims would enforce the substantive standards set forth by FIFRA and thus would not violate FIFRA’s preemption provision. The FDCA’s preemption language is similar to that of FIFRA, barring states from establishing any requirement for a food subject to FDA-established standards that isn’t identical to the FDA’s requirements.

After Bates, the preemption test is not whether plaintiff’s claim would require interpreting FDA regulations but whether the state-law standard differs from the FDA standard. At least six states whose laws Vermont Pure alleged were violated incorporate the FDA definition of “spring water” into their laws, so the court allowed the claim to proceed under the relevant state laws, despite Nestlé’s argument that they were implicitly preempted.

The court recognized that following Bates “arguably threatens the goal of uniform interpretation,” since judges and juries in 50 states may interpret the FDA’s definition differently. But, the court reasoned, Congress and the FDA have made a conscious choice to allow state regulation of bottled water so long as state standards are identical to FDA standards, which allows additional resources to be allocated to consumer protection. This careful and useful discussion of FDA preemption of state consumer protection law post-Bates, the first of its kind of which I’m aware, will undoubtedly be of use to other courts.

Vermont Pure’s other quality claims proceeded under the Lanham Act. Allegedly, Nestlé falsely or misleadingly markets Poland Spring water as “pure,” “pristine,” “straight from nature” and “unspoiled” even though it’s aware of actual and potential contamination. Test samples of Poland Spring revealed excessive levels of HPC bacteria (though the significance of that is debated) and other contaminants.

These claims, which did not require interpreting the FDCA – indeed, the FDA expressly declined to define “pure” – were not preempted either, despite Nestlé’s field preemption arguments.

The other legal holding of note in the case was that disgorgement of profits is an available remedy in a non-comparative false advertising case, as long as disgorgement is consistent with principles of equity and the discretion of the court, which, under First Circuit precedent, allows disgorgement in the presence of (1) actual harm and direct competition or (2) fraudulent conduct, unjust enrichment, or willful misconduct in need of deterrence. Vermont Pure adequately alleged (1) and could proceed even though the advertising at issue didn’t mention Vermont Pure.


Anonymous said...

My wife has been buying the 24 bottle 24oz sports pac of poland spring water for a few years now. After a 3 week period of no avaiability low and behold a new design bottle comes out. Looks bigger, taller but....23.7 fluid ounces not 24.... Just another step down the road.....

Anonymous said...

Not to mention that it flops around inside any vehicle cup holder... Thinking green is cool but I like the old ones