Compliance with FDA rules no guarantee against suits over misleading labels, US Supreme Court
A review of the general business consensus by customs and international trade law specialists Sandler, Travis & Rosenberg in the US has found the decision by the US Supreme Court to allow juice company POM to proceed with its Lanham Act case against the Coca-Cola Company creates uncertainty and increases their vulnerability to litigation.
At the same time, consumer activists and health advocacy groups have said the court decision has confirmed a potent legal weapon exists to support their efforts to protect public health, according to the Sandler, Travis & Rosenberg Trade Report.
POM’s success was in getting the Supreme Court to agree that POM has the right to sue against misleading labelling irrespective of any argument by Coca Cola that it had complied with FDA labelling rules.
The US Supreme Court ruled on 12 June 2014 that companies could be sued over allegedly misleading food and beverage labels even if those labels comply with applicable Food and Drug Administration (FDA) regulations. The Court ruled that POM could proceed with a lawsuit against the Coca-Cola Company for allegedly deceptive labelling and advertising of a pomegranate and blueberry juice product. A lower court had previously ruled that because the labels were compliant with FDA rules, POM had no standing to sue based on consumer deception and advertising laws under the Lanham Act.
Australian food law expert Joe Lederman of FoodLegal said that the effect of the US Supreme Court decision is also to confirm that the US position is similar to the existing Australian legal position.
The case centered on the fact that one of the beverage company’s juice products is labeled as “pomegranate blueberry” even though the juice of those two fruits combined makes up only 0.5 per cent of the product as a whole. POM, which produces a similarly named product that contains only those two juices, argued that the label is therefore misleading. The Coca-Cola Company countered that the US Federal Food, Drug and Cosmetic Act (FDCA) allows beverages to be named according to the juice that provides the flavor, if not the volume, of a juice product and that FDA approval of a product’s label precludes false advertising claims under the Lanham Act.
In an 8-0 decision the Supreme Court disagreed, pointing out that the FDCA and the Lanham Act “complement each other in the federal regulation of misleading food and beverage labels.” The Court said the FDCA protects the public health and is largely utilised by the government on the public’s behalf, while the Lanham Act is primarily used by companies to combat unfair competition. Neither law “forbids or limits Lanham Act claims challenging labels that are regulated by the FDCA,” the Court said, and that any congressional intent to impose such a restriction would have manifested itself before now because the two laws have coexisted for nearly 70 years.
Mr Lederman said that in Australia a food manufacturer cannot rely on compliance with the Australia New Zealand Food Standards Code to absolve the company of the separate legal liability to comply with the Australian Competition and Consumer Act – which includes the Australian Consumer Law against misrepresenting the product or having product labelling or product descriptions that are misleading .