Monday, September 06, 2010

Pom Wonderful avoids unclean hands dismissal

POM Wonderful LLC v. Welch Foods, Inc., 2010 WL 3368430 (C.D.Cal.)

Pom sued Welch for false advertising over Welch’s sales of mixed fruit drinks prominently labeled as containing pomegranate juice, but mostly containing fruits not in the name. Welch moved for summary judgment on its unclean hands defense.

In 2006, Welch developed Welch's 100% White Grape Pomegranate, which discloses as ingredients white grape, apple, and pomegranate juices (from concentrate), but doesn’t list percentages on the label. To succeed on an unclean hands defense, the defendant must show that the plaintiff’s inequitable conduct relates in some way to the subject matter of the litigation, and that conduct must have continued to the time the suit was begun.

Welch alleged the following in support of its unclean hands defense: (1) Pom failed to disclose that its 100% pomegranate juice at one point contained elderberry; (2) Pom sold juice blends that, at one point, contained juices other than those identified in the product name; (3) Pom failed to list water as an ingredient in its juices, which contain approximately ¾ water; (4) Pom obscured “from concentrate” on its bottles and in its ads; (5) Pom used an ad purporting to show its juice going straight from whole fruit into bottles, when in fact the juice goes through many more steps. (Oh, Pom. There’s actually a case saying that this is a literally false image! Though on investigation Pom’s ads, at least now, seem to say that Pom controls the whole process from tree to bottle, unlike other juice sellers, which is not the same thing at all.)

Some of these didn’t relate sufficiently to the same conduct at issue in the present suit. Factual similarity between the parties’ misconduct isn’t sufficient; the misconduct must be directly related to the plaintiff’s use or acquisition of the right it claims. So, Welch needed to show that Pom misled consumers into believing that its juice products contain more pomegranate juice than they actually do or that its products misrepresented the amount of juice in them.

Claims (3)-(5) were therefore not sufficiently related: they deal with whether Pom misleads consumers to believe that its juices aren’t from concentrate. Welch argued that the issue was whether Pom deceived consumers to believe that the juices had characteristics they don’t, but the unclean hands doctrine isn’t that broad. Pom’s theory is that consumers view pomegranate juice as superior to the cheap filler juices (grape and apple) that make up most of Welch’s product. The concentrate/not from concentrate issue is premised on a different deception.

The court denied Welch’s motion for summary judgment on the remaining two claims, (1) Pom's 100% Pomegranate Juice product contains undisclosed trace amounts of elderberry, and (2) Pom's Pom Blueberry, Pom Cherry, and Pom Tangerine products contain juices not disclosed in the label.

As to the first, Welch argued that Pom’s 100% Pomegranate Juice was previously made of at least 1% elderberry juice, starting in 2004 or earlier and continuing until 2008. When questioned by consumers what the "other natural flavors" were in the juice, Pom did not identify elderberry juice by name, instead disclosing only "botanical sources." Pom characterized these as “trace amounts” for “flavoring purposes,” and Pom’s VP of operations testified that the amount of elderberry juice was 0.2-0.4%. (By way of comparison, that’s about how much pomegranate and blueberry juice is in Minute Maid’s Pomegranate Blueberry Juice, according to Pom.) Based on shelf life, this product was still available for purchase when Pom filed its complaint in January 2009.

Welch didn’t demonstrate by clear and convincing evidence that this misleading labeling was “egregious,” as required. It didn’t show that Pom’s deception was material. One customer called Pom asking whether "the plain pomegranate juice [has] any other ingredients in it" and another customer stated to a Pom CSR: "I noticed on the bottle it says pomegranate juice from concentrate with added natural flavors. This implies that it is not 100 percent pomegranate juice ..." This was anecdotal and didn’t show that any appreciable number of consumers were confused. The extent of actual harm is highly relevant to the unclean hands defense. (Pom also argued that its label complied with FDA regulations, but didn’t explain how or why this would affect the alleged deception; Welch makes the same argument about its own product name and label.)

Juice blends containing juices other than those identified in the product name: Prior to reformulation around August 2008, Pom Blueberry contained 50% pomegranate juice, 13% red plum juice, 11.5% clarified pineapple juice, 10% apple juice, 8% blueberry juice, 4% blackberry juice, and 2% wild blueberry juice, and under 1% each of various other natural flavors, while Pom Cherry contained 50% pomegranate juice, 24.5% red sour cherry juice and 5% dark sweet cherry juice, 7% apple juice, 5% clarified pineapple juice, 5% plum juice, and under 5% each of various other fruit concentrates and natural flavors.

Pom argued that these were percentages of concentrate, which differ from the actual percentage of juice once reconstituted, and that measured that way the Blueberry and Cherry blends contained more pomegranate and blueberry or cherry juice than any other juice and were thus not deceptively labeled. Welch argued that Pom’s conduct in including non-named juices in its blends was no different than Welch’s. But Pom didn’t argue that Welch should have mentioned every juice in the blend in its name; it argued that it was deceptive to name the product after a juice that isn’t one of the primary ingredients and that only makes up a small percentage of the blend.

Pom also sold Pom Tangerine, which at one point contained 54.89% pomegranate juice, 42.91% clarified orange juice, 2% clarified tangerine juice from concentrate, and .1% each of two natural flavors. Pom contended that this formulation was used in only one production run resulting from a particularly bitter tangerine harvest one season. Pom also contended, and Welch didn’t dispute, that tangerines and oranges are “functional equivalents” within the juice industry. I didn’t know that approximately 10% of orange juice is actually “tangerine juice (as well as other juices from sources such as clementines, mandarins, and murcotts or honey tangerines).” Also, orange juice concentrate is generally more expensive than tangerine juice concentrate, twice as expensive during that one production run—a fact that I take it should mkae Pom’s explanation more plausible.

The court thought the relevance of these undisputed facts was questionable:

Pom argues that they show that its use of orange juice in the Pom Tangerine blend is unlike the conduct of which it accuses Welch, because (it claims) Welch uses "cheap filler juices" that are nothing like the expensive and distinct pomegranate juice that dominate Pom's product name and label. However, even though orange juice concentrate is more expensive than tangerine juice concentrate, and even though the two juices are "functional equivalents," consumers may still be confused and misled by the product's label, which could lure consumers away from products that do contain primarily pomegranate and tangerine juice.

Again, consumers are entitled to get what they think they want, even if there's no functional difference between the thing that they think they like and the thing they think they don't. However, the court couldn’t conclude that this was egregious because Welch offered no evidence that Pom’s labeling misled or confused consumers.

Final note: While Pom may have dodged a bullet (or a thrown piece of fruit?) here, the court’s perspective on the anecdotal evidence of consumer inquiries suggests a skepticism that is generally plaintiff-hostile. Trademark and false advertising law have traditionally taken the perspective that consumers are unlikely to spontaneously express confusion, such that even small numbers of actual reports can be persuasive evidence. It may be the case that these particular inquiries suggested only uncertainty, not material deception—but I take it that, at least, by leaving it for the jury, the court left open the possibility that the inquiries could be understood in several ways.

1 comment:

Anonymous said...

".. It argued that it was deceptive to name the product after a juice that isn’t one of the primary ingredients and that only makes up a small percentage of the blend."

Is that a fair argument? Consumers are very familiar with products being named after an ingredient which gives a distinctive flavor -without it being one of the primary ingredients.

Consumers are happy enough with Salt & Vinegar crisps without thinking that they are at least 30% vinegar.