It's a good thing you're tasty: Pom's losing streak continues

POM Wonderful LLC v. F.T.C., -- F. Supp. 2d --, 2012 WL 4475698 (D.D.C.)

Pom sued the FTC seeking a declaratory judgment that the FTC's allegedly new rule governing disease claims in food advertising (as set forth in its consent judgments with Iovate and Nestle) exceeded the FTC's statutory authority, violated POM's rights under the First and Fifth Amendments of the U.S. Constitution, violated the rulemaking procedures of the FTC and the Administrative Procedure Act (“APA”), and was arbitrary and capricious.  To no one’s surprise, the court declined to exercise its jurisdiction and dismissed the case.

The FTC filed an administrative complaint against POM shortly after POM filed this case, and won it (though not on its most aggressive theory), a decision that is under appeal and under PR assault by POM.  In that proceeding, POM asserted the same statutory and constitutional defenses.  Nonetheless, POM argued that its complaint in the district court was not attempting to adjudicate anticipatory defenses, but only whether the FTC was improperly applying a new standard.

The relevant factors counseled against the exercise of jurisdiction.  First, a ruling wouldn’t finally settle the controversy between the parties: there would still remain the question of whether POM’s ads were false, misleading, or unsubstantiated, regardless of the proper standard.  Second, other proceedings were pending, and the FTC forum was perfectly capable of deciding statutory and constitutional issues.  The enforcement action might not fully resolve POM’s argument that the FTC had violated the law by adopting a new standard through consent orders, but POM would still have a full opportunity to challenge any FTC final action against it.  Third, granting declaratory relief would require resolving anticipatory defenses, which isn’t ordinarily a proper use of declaratory judgment.  Courts shouldn’t allow declaratory judgments as a form of forum shopping, and the FTC pointed out that POM was well aware of the administrative complaint about to be filed against it.  POM apparently sued to get tactical leverage, even as the enforcement action continues to proceed.