On September 22, 2014, the Ninth Circuit approved Pom Wonderful’s request to drop its appeal of U.S. District Judge S. James Otero’s February 2013 order holding that Pom’s UCL and FAL false advertising claims are preempted by the federal Food Drug and Cosmetics Act. The Ninth Circuit dismissed the appeal with prejudice.
By way of background, Pom sued Coca-Cola for false advertising under both § 43(a) of the Lanham Act and California state false advertising laws because Coca-Cola markets a drink advertised as “Pomegranate Blueberry Flavored Blend of 5 Juices.” The juice blend, sold under Coca-Cola’s Minute Maid brand, consisted primarily of apple and grape juice, with only 0.3 percent pomegranate and 0.2 percent blueberry. Pom argued that identifying the juice as pomegranate when it contained such a small amount of the actual juice was false and misleading to consumers.
This case has been in the national spotlight recently based on the Supreme Court’s decision on June 12, 2014, finding that Pom’s Lanham Act claims against Coca-Cola (based on allegations that Coca-Cola mislabeled a juice product) were not preempted by the FDCA and that the two statutes should be “harmonized” rather than have preemptive effect over each other. The decision was based on the Court’s determination that the two federal statutes serve different purposes, the Lanham Act protecting competitive interests, while the FDCA protects consumer interests. Because of this distinction, the decision does not affect preemption in consumer class actions.
The Ninth Circuit’s dismissal of the appeal of Judge Otero’s February 13, 2013 order is, therefore, good news for defendants in consumer class actions because, as opposed to the Supreme Court’s opinion, this holding expressly impacts the consumer class action sphere. The order explicitly holds that the FDCA preempts Pom’s UCL and FAL claims because they imposed additional obligations to federal labeling requirements. There is no distinction between the purposes of the FDCA (consumer protection) and state false advertising laws (again, consumer protection).
Recognizing that preemption can be a difficult hurdle for plaintiffs to overcome, Judge Otero noted Pom’s “Catch-22”: “either [the state law claims] impose obligations identical to those in the FDCA, in which case Defendant has already satisfied [its] obligations; or they impose obligations additional to those in the FDCA, in which case they are preempted[.]”
Pom appealed the ruling in May 2013, but the appeal was stayed pending Supreme Court review of the Lanham Act issue.
At this point, it is unclear what the impetus for ditching the appeal was (as the parties have not settled), although it appears that the juxtaposition between the Lanham Act and the FDCA is still to be sorted out by the district court.
Nevertheless, now that there is no appeal pending, Judge Otero’s ruling can again be safely used to bolster preemption arguments and is a welcome “re-addition” to the consumer class action defense arsenal.