Quick Take: Some Possible Impacts of SCOTUS’s POM Wonderful Decision on State-law Food Labeling Class Actions

food-courtIn some of our commentaries on food labeling class actions (collected under the “Food Court” tag), we have lamented how such lawsuits end-run the federal Food Drug and Cosmetic Act’s (FDCA) prohibition on private enforcement. Defendants have argued that the FDCA preempts lawsuits brought under laws such as California’s Sherman Law or Unfair Competition Act. Regrettably, judges have rejected this argument, and have found preemption only if a lawsuit would impose labeling requirements beyond what Food and Drug Administration (FDA) regulations would require.

Plaintiffs and defendants in these suits expressed significant interest when the U.S. Supreme Court agreed in January to review a U.S. Court of Appeals for the Ninth Circuit decision, POM Wonderful LLC v. Coca-Cola Co. There, the Ninth Circuit ruled that the FDCA precluded POM’s federal Lanham Act suit charging that a Minute Maid Blueberry Pomegranate juice’s name and label were misleading. While POM Wonderful involved the interplay between two federal statutes, rather than between federal and state statutes, some opined that a broadly written Supreme Court opinion could either help state-law food labeling suit defendants defeat those claims or add powerful credence to plaintiffs’ arguments that the FDCA does not impede their private enforcement actions.

The High Court decided POM Wonderful on June 12. In an opinion authored by Justice Kennedy, the Court unanimously reversed the Ninth Circuit. While the ruling could inspire more Lanham Act lawsuits between  competitors, it is unlikely to have a major impact on the types of class actions being filed in The Food Court and elsewhere.

Justice Kennedy stated baldly that “this is not a pre-emption case,” and thus “the state-federal balance does not frame the inquiry.” POM Wonderful therefore will not impact arguments that the FDCA preempts state-law class actions challenging food labels. Justice Kennedy also observed “this is a statutory interpretation case,” and focused the Court’s analysis on whether the FDCA and the Lanham Act were complementary or conflicting.

Along the way, Justice Kennedy made some statements that lawyers suing food companies will find comforting, but will not likely impact their overall litigation strategy. The Court stated that Congress’s decision not to preclude challenges to product labels under the Lanham Act or other laws reflects that Congress “‘did not intend FDA oversight to be the exclusive means’ of ensuring proper food and beverage labeling.” Justice Kennedy specifically noted that FDA does not preapprove food and beverage labels and utilizes case-by-case enforcement actions instead. He added:

Because the FDA acknowledges that it does not necessarily pursue enforcement measures regarding all objectionable labels, ibid., if Lanham Act claims were to be precluded then commercial interests—and indirectly the public at large—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.

This, in our opinion, is a very weak justification for empowering corporate plaintiffs’ lawyers to “police” food and beverage labeling. FDA’s exercise of prosecutorial discretion is something Congress surely anticipated when passing the FDCA, and its failure to explicitly disallow litigation under other federal laws does not mean that it desired private enforcement when FDA chose not to act.

Plaintiffs’ lawyers will, in any event, tout Justice Kennedy’s unconvincing rationale as adding credence to their state consumer-law claims. But because federal judges have uniformly rejected defendants’ arguments that such class actions conflict with FDA’s regulatory authority, this language from POM Wonderful does not represent a change in the law.

Coca-Cola argued that allowing Lanham Act suits such as POM Wonderful’s would undermine Congress’s goal of uniformity in food labeling regulation. We have expressed a similar concern over the proliferation of state consumer protection class actions. The Court in POM Wonderful stated that Congress passed the Lanham Act to “enforce a national policy to ensure fair competition.” It also stated,

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.

Justice Kennedy agrees with us in principle that state-law class actions create disuniformity. Unfortunately, courts have not yet found that state consumer lawsuits are the type of actions that are “partially forbidden by the FDCA’s pre-emption provision,” so this statement may not assist food labeling defendants any more than the earlier statements will help the plaintiffs.

In the aftermath of POM Wonderful, one should expect the status quo or perhaps an uptick in state consumer protection class actions nit-picking at marketing claim on processed food labels. Another outcome of the Court’s ruling could be a parallel wave of Lanham Act suits from disappointed competitors like POM Wonderful that mimic the consumer class actions’ claims.

Let’s hope that most food company and their lawyers recognize the destructive future for everyone that would be down that road.

Also published at WLF’s Forbes.com contributor page

2 thoughts on “Quick Take: Some Possible Impacts of SCOTUS’s POM Wonderful Decision on State-law Food Labeling Class Actions

  1. Pingback: Food roundup - Overlawyered

  2. Pingback: Finger on the Pulse: From Our Blogroll and Beyond | The Legal Pulse

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