Last week's Supreme Court ruling went against Coca-Cola for deceptive labeling. What does this mean for food labeling?
Last Thursday, the U.S. Supreme Court shook up the nutrition world like no court case in decades by unanimously deciding POM Wonderful can indeed sue Coca-Cola for its misleading label, “Pomegranate Blueberry Flavored Blend of 5 Juices.” Why misleading? Because this healthy-sounding juice contains only 2 teaspoons of pomegranate and blueberry juice in a whopping 59-ounce bottle.
The dispute has been going on since 2008. The core legal issue is whether two federal statutes, which have peacefully co-existed for 70 years, can continue to do so, or whether the false-advertising Lanham Act trumps the FDA’s Food, Drug and Cosmetic Act (FDCA), which regulates labeling.
Coke argued that its product name was accurate, and the ingredients are listed in order of appearance on the Nutrition Facts panel, per the FDCA. POM noted that the name of the drink was really Pomegranate Blueberry because those two words were far larger than everything else on the label; in reality, the product contained 0.3 percent pomegranate juice and 0.2 percent blueberry juice, while 99.4 percent of the rest of it was apple and grape juice (and another 0.1 percent raspberry juice for good measure). POM also had to demonstrate damages by the deceptive label.
The Supreme Court ruled 8-0 for POM, with Justice Stephen Breyer abstaining.
“Frankly, the Supreme Court agreed with every argument POM made,” said Daniel Silverman, a former in-house counsel at POM Wonderful and partner at Venable LLP in Los Angeles. “They did not want to countenance deception.”
So what does that mean for you? A few takeaways:
1. The FDA got spanked, too. The FDA has historically enjoyed full authority over product labels, but “this ruling says, number one, the court philosophically is letting the free market decide” about what’s legit on labels, said Loren Israelsen, president of the United Natural Products Alliance. “The FDA will be a part of this discussion but is not the last word. You can imagine the FDA is concerned about the implications of this decision now that their authority and sovereignty over regulated labels appears to be changed.”
2. You can walk and chew gum at the same time. This sounded a lot like a simple case over whether shoppers were duped. In oral arguments before the court, Justice Kennedy – who ended up writing the court opinion – was clearly peeved when the Coke attorney said only “unintelligent consumers” might be be duped. “Don’t make me feel bad because I thought that this was pomegranate juice!” said Justice Kennedy from the bench.
But this court decision was really whether the two federal acts could peacefully co-exist, with the Supreme Court, unlike lower courts, ruling that they could. And because that's so, POM can sue Coke. To read the full text of the decision, click here.
“The label drove the analysis,” said Claudia Vetesi, a consumer litigation and product liability attorney with Morrison & Foerster, based in San Francisco.
Here’s how Justice Kennedy worded the conclusion: “Congress did not intend the FDCA to preclude Lanham Act suits like POM’s. The position Coca-Cola takes in this Court that because food and beverage labeling is involved it has no Lanham Act liability here for practices that allegedly mislead and trick consumers, all to the injury of competitors, finds no support in precedent or the statutes.”
3. What will Coke do once it loses again at trial? This is important, and click here for a blog postulating the possibilities.
- Change the label
- Change the formulation
- Evaluate the rest of its questionable marketing or formulations that are now exposed to lawsuits because of this case. And this brings up the next one:
4. Every other company will also re-look at its products to see just how exposed they are to competitor lawsuits.
5. If a company deceives, it will pay. The lawsuits will commence apace. “Food manufacturers, although perhaps compliant with FDA labeling requirements, will still be subject to suits by competitors or other individual parties for any alleged misleading or false claims on their product packaging,” wrote Paul W. Garrity and Tyler E. Baker from the New York law firm Sheppard Mullin Richter & Hampton, LLP.
The case’s linchpin: The Supreme Court says that the Lanham Act was “a floor, not a ceiling,” according to Silverman. “Just because you meet technical labeling requirements, you can’t dupe consumers. Yes, you have to meet requirements, but that’s not all. You can’t deceive. In the case of Coke, it was frankly a clear smoking gun they were out to deceive.”
“There will be the emotion and immediacy to rectify the competitive injustice in the eyes of companies,” opined Israelsen.
6. This is the biggest court case in decades. In 1999, the First Amendment case Pearson v. Shalala brought into being the concept of qualified health claims, which allowed people to hear about non-misleading scientific information even when the evidence was not airtight. The qualified health claim extends for selenium and prostate cancer and even omega-3 fish oils for cardiovascular health. Even so, there is so much dissembling language around them that many companies have chosen to not go there. Because it’s just not that sexy to read on a label, “Very limited and preliminary scientific research suggests … FDA concludes that there is little scientific evidence supporting this claim.” Um, thanks? Now it’s going to be private companies settling grudges against other companies for not being fully honest in order to sell more stuff.
And before that court case, what was bigger? Lawyers (and others): comment on our Facebook page or Twitter.