High court opens door to false advertising claims
A recent ruling by the U.S. Supreme Court opens the door for new litigation over false advertising in the food industry, experts say.
The nation’s highest court has resurrected a lawsuit over alleged juice mislabeling, allowing similar cases to proceed as well, experts say.
“It’s absolutely taking away a roadblock to these lawsuits, but these lawsuits don’t win every day,” said Jason Schultz, professor at the New York University School of Law.
In other words, the ruling allows plaintiffs to pursue cases over misleading food labels but it doesn’t actually improve their chances of success, he said.
“You don’t win these lightly,” Schultz said.
To prevail, companies must prove their rivals’ claims were literally false or tricked consumers, usually by providing survey data, said Rebecca Tushnet, professor at Georgetown University Law Center.
“The critical question is, ‘Does it actually mislead consumers?’” she said. “That is always the crux of the case.”
The underlying dispute pits Pom Wonderful, a California pomegranate grower, against the Coca-Cola Co.
Coca Cola’s Minute Maid brand makes a juice product that’s prominently labeled with the words “pomegranate” and “blueberry” even though it contains mostly apple and grape juices.
Pom Wonderful filed a legal complaint over this label under the Lanham Act, which allows companies to sue their competitors over allegations of “deceptive and misleading” advertising.
The Minute Maid product contains less than 1 percent pomegranate and blueberry juice but it’s less expensive, so it diverts sales from Pom’s juice, which is derived entirely from those fruits, the complaint said.
Coca-Cola countered that Pom’s lawsuit was precluded by another federal statute, the Food, Drug and Cosmetic Act, or FDCA, which gives the federal government authority over juice labels.
Only the U.S. Food and Drug Administration can enforce misbranding rules for food, effectively blocking lawsuits that allege false advertising, according to the Coca-Cola Co.
The 9th U.S. Circuit Court of Appeals, which has jurisdiction over much of the West, agreed with that interpretation of the law and threw out Pom’s lawsuit in 2012.
The nation’s highest court has now rejected the 9th Circuit’s opinion and will allow Pom’s case to proceed.
The right to sue over mislabeling under the Lanham Act is not ruled out by the FDCA, the Supreme Court held in a unanimous decision.
Rather, the two laws complement each other, the justices said.
“Although both statutes touch on food and beverage labeling, the Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety,” the ruling said.
Instead of being contradictory, Lanham Act false advertising lawsuits have “synergies” with FDA regulations, the court held.
Food manufacturers may have a better understanding of market conditions than FDA, the opinion said. “Their awareness of unfair competition practices may be far more immediate and accurate than that of agency rulemakers and regulators.”
The Supreme Court’s ruling seeks to use the two federal laws to maximize consumer protection, given the limits on what federal regulators can realistically accomplish, said Tyler Ochoa, professor at Santa Clara University Law School.
“FDA doesn’t really have the resources to police every one of these instances,” Ochoa said.