POM-eled: POM Wonderful, The FTC and Competitor Challenges (Hint – It's All About Consumer Deception)

The name of POM Wonderful, LLC (“POM”) will now forever be linked to some important advertising rulings that are not only of central significance to the food industry, but have broader advertising significance as well.  We are reminded of those actions today because POM’s advertising claims touting health benefits of pomegranate juice resulted in a ruling by the D.C. Circuit Court of Appeal upholding in part a January 2014 Federal Trade Commission (“FTC”) decision on POM’s health claim advertising, but rejecting one of the remedies of most concern to industry as a whole: a requirement that claims be supported by two (not one) well controlled, randomized clinical trials. 

A statement by FTC Chairwoman Edith Ramirez rejected the notion that the Commission would be precluded from requiring two clinical trials in other circumstances.  Chairwoman Ramirez explained that this court decision affirmed the January 2014 FTC decision that the marketers of POM Wonderful 100% Pomegranate Juice and POMx supplements deceptively advertised that the products could treat, prevent, or reduce the risk of heart disease, prostate cancer, and erectile dysfunction, and were clinically proven to have such benefits.  She noted that the court did not uphold the FTC order requirement for two randomized well controlled human clinical trials by POM in that case. However, she explained that the court did affirm the FTC’s order requiring POM to have at least one such study before making disease prevention or treatment claims, and held out the possibility that two might be warranted in other cases. 

POM of course was not just the recipient of a claim about allegedly false advertising claims.  POM previously challenged successfully a competitor making “pomegranate” juice claims, resulting in an important 8 to 0 U.S. Supreme Court ruling in POM Wonderful LLC  v. The Coca-Cola Company, 133 S. Ct. 2224 (Jun. 12, 2014).  In that case, the Court ruled that regardless of whether a 100% juice product complies (or not) with Food and Drug Administration (“FDA”) labeling regulations under the federal Food, Drug and Cosmetic Act (“FDCA”), a competitor’s false advertising case under the federal Lanham Act could still proceed. 

The product at issue was Coke’s Minute Maid brand 100% juice product “Pomegranate Blueberry Flavored Blend of 5 Juices.”  The product contained only .3% pomegranate juice and .2% blueberry juice, and was artificially colored to resemble the deep purple of pomegranate juice.  The Supreme Court explained that the FDCA and the Lanham Act “complement” each other, and that Congress intended “to enact two different statutes, each with its own mechanisms to enhance the protection of competitors and consumers.”  Thus, the Supreme Court permitted Pom’s false advertising claim to proceed against Coke because regardless of compliance or non-compliance with regulations, the essential question in the case was whether consumers were likely to be deceived. 

What do these two separate legal actions tell us?  The major lesson is that in advertising cases, it comes down to consumer deception.  In short, the issue is whether consumers – in the mind of the FTC or a court – are likely to be deceived by claims regardless of regulatory compliance, and in the case of health claims, the potential for such deception in the absence of one or more clinical trials. 

Some practice pointers can be drawn from these decisions:

1. Support your claims.  And when it comes to health claims, make sure there is a clinical basis for the claim. 
2. Don’t assume that compliance with FDA – and perhaps other agency labeling rules – will shield you from a Lanham Act challenge.  And where a competitor challenge is available, consumers in class action litigation may not be far behind.
3. Don’t assume that the FTC will abandon its demand that health claims be supported by two well-controlled, randomized clinical studies.  The D.C. Court of Appeals’ decision provides some reason to believe that companies will be better able to resist those demands, but Chairwoman Ramirez appears to have staked out a position that the FTC will not necessarily be deterred from seeking that remedy. 
4. Don’t assume that the door is wide open for any type of Lanham Act challenge where a product is labeled in accordance with regulatory requirements.  The Supreme Court left open the possibility of a preclusion defense where the competitor claim would be “undermining an agency judgment.”  Nevertheless, advertisers need to be sure that they have a reasonable basis for their claims.  That reasonable basis will vary depending on the claim, but the FTC clearly thinks that consumers expect that health claims will have some clinical underpinning.  It is also vital that advertisers understand the regulatory framework that may apply to their claims, but not forget the role the perception has in the minds of not just consumers, but judges.
5. Regulators and judges are only human.  When they see advertising claims, they are going to consider the claim through the prism of their own experience, and what they think the evidence says about consumer deception.  

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