Federal Regulations and False Advertising
Organizations within the federal government do not always communicate well with each other. This can be a problem for companies trying to operate under a web of federal regulations because approval in one place does not necessarily mean approval across the board. One recent example of this was the Supreme Court case Pom Wonderful LLC v. Coca Cola Co.The case was an important decision in the world of false advertising and consumer fraud. In short, the court held that just because a statement on a piece of food packaging follows the FDA guidelines, it is not immune from false advertising claims under the Lanham Act.
The Lanham Act
The Lanham Act is one of the major federal statutes governing the way that companies advertise. One of the most important parts of the law is that it creates a “private right of action” with regard to cases of false or misleading advertising. This means that if a company puts out false or misleading advertising, not only can the government bring an action against them, but private entities can as well.
Interestingly, the private right of action is granted to a company’s competitors rather than to its consumers. For example, if McDonald’s released an advertisement that was false or misleading, the people who believed the ad and wrongly went to McDonald’s would not be allowed to sue under the Lanham Act. However, Burger King or Wendy’s would be allowed to bring a claim against McDonald’s for their false advertising. The idea behind this is that a company’s competitors are harmed by false advertising because it pulls customers away from them, and that it is easier for another company to sue over this as compared to a dispersed group of consumers.
It is under this theory that Pom Wonderful sued the Coca Cola company for their sale of their Minute Maid pomegranate blueberry juice. The issue was that the Minute Maid juice was marketed as 100 percent juice, despite the fact that it only contained 0.3 percent pomegranate juice and 0.2 percent blueberry juice. The rest was made up of grape, apple, and raspberry juices. Importantly, the Minute Maid label state that the product was a “pomegranate blueberry flavor blend of 5 juices.” This labeling conformed with the FDA standards for labeling blends of juices, and the FDA actually filed a brief supporting Coca Cola and arguing that what the company did was perfectly acceptable under their regulations.
Nevertheless, the Supreme Court held that mere compliance with FDA regulations was not enough to shield a company from lawsuits under the Lanham Act. While the reasoning for any Supreme Court decision is multifaceted, this one focused largely on the differing purposes of the Lanham Act and FDA regulations. The Lanham Act is about preventing consumers from being misled by advertising, while the FDA regulations were created to promote public health and safety, so they complement each other rather than duplicating each other. This case has important implications for Lanham Act claims in other areas since it may allow them to survive despite other federal regulation in the area.
If you believe one of your competitors is engaging in false or misleading advertising, contact a West Palm Beach business litigation attorney at Pike & Lustig, LLP today. Our firm’s professionals are here to counsel you on your options for protecting your business.