Friday, July 24, 2009

Joining the Pom squad

Pom Wonderful LLC v. Ocean Spray Cranberries, Inc., 2009 WL 2151355 (C.D. Cal.)

Pom Wonderful, that punning advertiser and occasional false advertising plaintiff, sued Ocean Spray for false advertising of its pomegranate and cranberry juice blend. Cran-Pomegranate is allegedly comprised almost entirely of apple and grape juice, with cranberry the third-ranking juice and pomegranate fifth. Further, Ocean Spray allegedly falsely markets its product as high in antioxidants, like pomegranate juice, and made other similar misrepresentations. As a result, Pom Wonderful alleged, Ocean Spray can compete at lower prices, tricking consumers into switching.

Ocean Spray argued FDA preclusion. The court distinguished between private causes of action attempting to determine preemptively how the FDA will interpret and enforce its own regulations and falsity claims that merely touch on an area dealt with by the FDA. The key is whether truth can be “easily verified” without an FDA determination. In a sister case against Coca-Cola, the district court granted in part Coca-Cola’s motion to dismiss, but stated that it was largely unpersuaded by FDA preclusion arguments because the Lanham Act claims extended beyond name and packaging to advertising and marketing, where the FDA doesn’t regulate. The court here, however, found that the essential claim—that Ocean Spray’s label misrepresents its primary ingredients—didn’t rely on an interpretation of FDA regulations or on FDA determinations.

Determining the primary ingredients, and whether Ocean Spray’s representations are misleading, would not be contingent on FDA factfinding or enforcing FDA regulations. Indeed, the FDA regulations don’t define “misleading.” It’s possible for a product to be both mislabeled and falsely advertised, as for example when a party misrepresents FDA approval where there is none. Moreover, an FDA-compliant label may be subverted, and the Lanham Act violated, through advertising.

The FDA has a bunch of requirements for multi-juice beverages; where the named juice isn’t predominant, the common/usual name for the product has to say that the named juice is a flavor or flavoring. And if the juice’s “organoleptic properties” aren’t recognizable, or its “nutrient profile” is diminished below the normal range, the source fruits can’t be depicted on the label pictorially. But the complaint doesn’t try to enforce those requirements. Instead, the argument is that the name and the pictures of the fruit constitute false advertising. It’s theoretically possible that a court decision might conflict with FDA regulations, but on its face the complaint doesn’t. Ocean Spray can bring up any conflict with FDA regulations or the FDCA that develops later.

Likewise, the state law claims were not preempted by the FDCA’s express preemption provision as long as they didn’t attempt to establish requirements for labeling that weren’t identical to federal regulations. Nor was field preemption applicable. There was no indication that the FDCA and the FDA regulations intend to occupy the field of beverage labeling. Consumer protection, after all, is historically a state power.

Next, the court rejected Ocean Spray’s primary jurisdiction argument that the FDA should handle the problem in the first instance. This case didn’t require technical expertise in food product labeling or implicate uniformity in administration. And there was no evidence the FDA has taken any interest in investigating the claims or issues presented.

And finally, Ocean Spray argued that Pom Wonderful hadn’t satisfied Rule 9(b)’s heightened pleading standards. The 9th Circuit hasn’t applied 9(b) to Lanham Act claims, though some district courts have done so, and the court agreed that false advertising claims are “grounded in fraud” (even though the Lanham Act imposes strict liability). “All of Plaintiff’s allegations deal with the same underlying issue, which is Defendant’s intent to mislead consumers by mischaracterizing the primary ingredients of the Beverage.” Interestingly, the portions of the complaint quoted don’t go to intent: Ocean Spray “has confused and misled consumers” and the ads are “false and misleading,” which is a description of result and not intent—a claim can be false without being intentionally false. But anyway, the court required pleading with particularity, and found the 9(b) standard satisfied.

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