POM Wonderful LLC v. Coca-Cola Co., No. 12–761, 573 U.S. -- (June
12, 2014)
POM sued Coca-Cola for falsely advertising a “pomegranate
blueberry” juice blend with 0.3% pomegranate juice and 0.2% blueberry juice. The
Ninth Circuit found this claim precluded by the FDA’s extensive juice labeling
regulations, and the Supreme Court reversed in a broad opinion that nonetheless
leaves room for preclusion arguments, certainly in pharmaceutical cases. Examining
text, history, and structure of both laws showed no congressional purpose to
forbid private suits in cases of this type, but the Court left room to fight
about just what POM’s “type” is. (E.g., does this ruling have any bearing at
all on a case in which at least part of the plaintiff’s evidence of falsity is use
of a term that is inconsistent with a FDA definition thereof, such as “generic”?
Consider in this regard what the Court says below about the FDA’s area of
expertise ….)
We know that Congress, in the Lanham Act, intended to
protect competitors from deceptive advertising/unfair competition. (The Court
uses “competitor” as a shorthand for people with standing under Lexmark.)
The FDCA “is designed primarily to protect the health and
safety of the public at large.” It prohibits misbranding of food and drink,
which includes false or misleading labeling. The FDA promulgated extensive
regulations about juice labeling to implement this mandate. Under these
regulations, “[i]f a juice blend does not name all the juices it contains and
mentions only juices that are not predominant in the blend, then it must either
declare the percentage content of the named juice or ‘[i]ndicate that the named
juice is present as a flavor or flavoring,’ e.g., ‘raspberry and cranberry
flavored juice drink.’” The FDA does not preapprove juice labels, unlike drug
labels, “consistent with the less extensive role the FDA plays in the
regulation of food than in the regulation of drugs.” The FDCA may not be privately enforced, and
the NLEA preempted many non-identical requirements from a state or political
subdivision of a state.
“Despite the minuscule amount of pomegranate and blueberry
juices in the blend,” “pomegranate blueberry” is prominent and set-off on the
label, with “flavored blend of 5 juices” in much smaller type, then “from
concentrate with added ingredients,” in still smaller type, then “and other
natural flavors.” There’s also a vignette of blueberries, grapes, and
raspberries in front of a halved pomegranate and a halved apple. The Ninth
Circuit held that the FDA’s extensive regulation precluded a Lanham Act claim
against these elements.
Minute Maid Pomegranate Blueberry ... |
The court began by distinguishing preemption, which involves
a state-federal balance and a resulting presumption against preemption. Nonetheless, preemption principles were
instructive “insofar as they are designed to assess the interaction of laws
that bear on the same subject.”
But at the core, this was a statutory interpretation
case. POM argued that two statutes must
be given full effect unless they are in “irreconcilable conflict.” Coca-Cola
argued that a more specific law, the FDCA, narrowed the scope of a more general
law, the Lanham Act. Even if the Court’s
task were to reconcile the two laws, Coca-Cola was wrong that the best way to
harmonize them was to bar the Lanham Act claim.
The Lanham Act, by its own terms, has a “comprehensive
imposition of liability” extending to food and beverage labels. And the FDCA, by its own terms, doesn’t bar
Lanham Act suits. The absence of textual preclusion is especially significant
because the Lanham Act and the FDCA have coexisted since the passage of the
Lanham Act in 1946. Congress has amended
both during the last 70 years, and could’ve addressed interference by the
Lanham Act with the FDA if it had concluded that there was any, for example
when it enacted the express preemption provision in the NLEA. “This is ‘powerful evidence that Congress did
not intend FDA oversight to be the exclusive means’ of ensuring proper food and
beverage labeling.” If anything,
applying expressio unis to the NLEA suggests
that Lanham Act suits are not precluded:
It is significant that the complex
pre-emption provision distinguishes among different FDCA requirements. It
forbids state-law requirements that are of the type but not identical to only
certain FDCA provisions with respect to food and beverage labeling. Just as
significant, the provision does not refer to requirements imposed by other
sources of law, such as federal statutes…. By taking care to mandate express
pre-emption of some state laws, Congress if anything indicated it did not
intend the FDCA to preclude requirements arising from other sources.
Structure reinforced text.
“When two statutes complement each other, it would show disregard for
the congressional design to hold that Congress nonetheless intended one federal
statute to preclude the operation of the other.” So here: each statute has its own scope and
purpose. “[T]he Lanham Act protects
commercial interests against unfair competition, while the FDCA protects public
health and safety.” They complement each
other more fundamentally, in that the FDA is largely responsible for enforcing
the FDCA, but it doesn’t have “the same perspective or expertise in assessing
market dynamics that day-to-day competitors possess.” Those competitors have detailed knowledge
about consumer reaction to “certain sales and marketing strategies,” and “[t]heir
awareness of unfair competition practices may be far more immediate and
accurate than that of agency rulemakers and regulators.” The Lanham Act allows this market expertise
to be brought to bear on a case-by-case basis.
By providing compensation that may motivate injured parties to come forward,
the Lanham Act provides additional incentives for manufacturers to behave well. Allowing Lanham Act suits “takes advantage of
synergies among multiple methods of regulation.” Each statute thus has its own mechanisms to
enhance the protection of competitors and consumers.
(As I wondered after oral argument, I wonder how this
conclusion about competitor expertise plays out in First Amendment challenges
to FDA regulations. There’s room here,
especially given the Court’s reference to “synergies,” to argue that the FDA
may underidentify misleading behavior, but still has expertise to determine a
minimum blanket rule for what’s false/misleading—but I worry the DC Circuit won’t
go for that.)
A preclusion finding for food and beverage labels would cut
a hole in consumer protection. The FDA
doesn’t preapprove such labels, as it does for drugs, and the FDA acknowledges
that it doesn’t pursue enforcement against all objectionable labels. If Lanham Act claims weren’t allowed, then
competitors, and indirectly the public, “could be left with less effective
protection in the food and beverage labeling realm than in many other, less
regulated industries. It is unlikely that Congress intended the FDCA’s
protection of health and safety to result in less policing of misleading food
and beverage labels than in competitive markets for other products.”
Coca-Cola argued that preclusion was appropriate because
Congress wanted national uniformity in food and beverage labeling. But that desire wasn’t enough. Congress did delegate FDCA enforcement to the
feds, but POM wasn’t trying to enforce the FDCA. Preemption of a possible patchwork of state standards
was different:
Although the application of a
federal statute such as the Lanham Act by judges and juries in courts
throughout the country may give rise to some variation in outcome, this is the
means Congress chose to enforce a national policy to ensure fair competition.
It is quite different from the disuniformity that would arise from the
multitude of state laws, state regulations, state administrative agency
rulings, and state-court decisions that are partially forbidden by the FDCA’s
pre-emption provision.
Congress often allows variability “even in areas of law
where national uniformity is important.”
(Citing Bonito Boats’ statement
about the importance of national uniformity in IP, then noting the private
right of action for patent infringement, and noting that the FDCA contemplates
that federal juries will resolve most misbranding claims.) The Lanham Act is uniform in the sense that
it protects an entire class against unfair competition; it varies only in being
enforced on a case-by-case basis. That’s
no different than the variability to which any industry is subject.
Coca-Cola argued that the FDCA regulations were much more
specific than the Lanham Act. That’s
true. But that specificity would matter “only
if the Lanham Act and the FDCA cannot be implemented in full at the same time.” However, there was no structural or empirical
reason to see “any difficulty in fully enforcing each statute according to its
terms.”
The Court then rejected the government’s confusing halfway
approach, which wouldn’t have allowed POM to challenge the name but would have
allowed other challenges to the configuration of the label. The government wanted preclusion “to the extent
the FDCA or FDA regulations specifically require or authorize the challenged
aspects of [the] label.” The Court was
concerned about the practical difficulty of distinguishing between regulations
that “specifically . . . authorize” a course of conduct and those that merely
tolerate that course. Also, this
position had the same problem of treating the FDCA as a ceiling on regulation
of food and beverage labeling, but that was inconsistent with the Lanham Act’s
complementarity. (It’s pretty clear that
requirements would not be subject to
this analysis—if someone challenged a label that said “zero fat” even though it
had a tiny detectable amount of fat, the obvious defense is that the FDA requires the use of “zero fat” under such
circumstances, and the Court doesn’t suggest that preclusion would be
unavailable then.)
The FDA had not, despite what the government said, fully
balanced the competing interests at issue. While the rule mentioned
“provid[ing] manufacturers with flexibility for labeling products while
providing consumers with information that they need,” it didn’t discuss or even
cite the Lanham Act. Plus, the FDA explicitly encouraged manufacturers to
include material on labels that wasn’t required by the regulations, which was
inconsistent with the idea that the regulations were comprehensive. “A single isolated reference to a desire for
flexibility is not sufficient to transform a rulemaking that is otherwise at
best inconclusive as to its interaction with other federal laws into one with
preclusive force, even on the assumption that a federal regulation in some
instances might preclude application of a federal statute.”
This was distinguishable from Geier v. American Honda Motor
Co., 529 U. S. 861 (2000), in which the agency’s regulation deliberately
allowed manufacturers to choose between options to encourage diversity in the
industry. A subsequent lawsuit against
one of the choices was barred because it directly conflicted with the agency’s
policy choice. But the FDA hadn’t made a
policy judgment inconsistent with POM’s suit, “and in any event the FDA does
not have authority to enforce the Lanham Act.” “Even if agency regulations with
the force of law that purport to bar other legal remedies may do so, it is a
bridge too far to accept an agency’s after-the-fact statement to justify that
result here. An agency may not reorder federal statutory rights without
congressional authorization.”
Reversed and remanded.
Final note: because the 9th Circuit's ruling was so broad and ill-defined, and because the Court is careful to distinguish pharmaceutical regulation, it's hard to say that this will directly affect many lawsuits, though plaintiffs may draw on the Court's emphasis on the Lanham Act's breadth.
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