WASHINGTON (CN) - Pom Wonderful can use the Lanham Act to pursue claims that Coca-Cola's rival drink falsely advertises its pomegranate content, the Supreme Court ruled today.
Pom juices are, as the name suggests, derived from the pomegranate fruit. In 2008, the Los Angeles-based company took aim at Coca-Cola's Minute Maid pomegranate blueberry drink, which contains mostly apple and grape juice, and less than 1 percent each of pomegranate or blueberry juice.
Its content notwithstanding, Coca-Cola boldly displays the words "pomegranate blueberry" on its label. An explanation of the product's five-juice blend, added ingredients and use of concentrate appears in much smaller type.
Claiming that Coca-Cola was misleading consumers about the juice content - apple and grape juices are less expensive than blueberry and pomegranate juices - Pom alleged violations of state law and the false-advertising provision of the federal Lanham Act.
Coca-Cola meanwhile countered that the Food, Drug, and Cosmetic Act, a separate federal statutory regime, allows it to use the label in question and in fact precludes the Lanham Act claim.
The Supreme Court took up
the case after both a federal judge in Los Angeles and the 9th Circuit rejected
Pom's Lanham Act challenge.
In their reversal Thursday, the mostly unanimous justices found that the FDCA does not bar a Lanham Act claim related to product names and labeling.
"There is no statutory text or established interpretive principle to support the contention that the FDCA precludes Lanham Act suits like the one brought by POM in this case," Justice Anthony Kennedy wrote for the court. "Nothing in the text, history, or structure of the FDCA or the Lanham Act shows the congressional purpose or design to forbid these suits. Quite to the contrary, the FDCA and the Lanham Act complement each other in the federal regulation of misleading food and beverage labels. Competitors, in their own interest, may bring Lanham Act claims like POM's that challenge food and beverage labels that are regulated by the FDCA."
Justice Stephen Breyer took no part in the consideration or decision of the case.
The ruling highlights that the federal laws in question have coexisted since 1946.
"If Congress had concluded, in light of experience, that Lanham Act suits could interfere with the FDCA, it might well have enacted a provision addressing the issue during these 70 years," Kennedy wrote.
No amendment to either law has included a "provision addressing the preclusion of other federal laws that might bear on food and beverage labeling," Kennedy added.
"This is 'powerful evidence that Congress did not intend FDA oversight to be the exclusive means' of ensuring proper food and beverage labeling," he continued.
The court also rejected a call by the U.S. government to adopt a position contrary to those argued by either Pom or Coca-Cola: "that a Lanham Act claim is precluded 'to the extent the FDCA or FDA regulations specifically require or authorize the challenged aspects of [the] label.'"
For Kennedy, this idea raises "practical concerns about drawing a distinction between regulations that 'specifically ... authorize' a course of conduct and those that merely tolerate that course."
It also "assumes that the FDCA and its regulations are at least in some circumstances a ceiling on the regulation of food and beverage labeling," Kennedy added.
The argument fails because "Congress intended the Lanham Act and the FDCA to complement each other with respect to food and beverage labeling," the ruling states.
Ultimately the government wants "to preclude private parties from availing themselves of a well-established federal remedy because an agency enacted regulations that touch on similar subject matter but do not purport to displace that remedy or even implement the statute that is its source," Kennedy said.
But "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," Kennedy added.