In juicy battle with Coke, Supreme Court sides with POM
When it comes to selling juice drinks, beverage makers may now want to ensure their products actually include more than a trace of the juice touted on the label.
In an 8-0 ruling, the Supreme Court found in favor of POM Wonderful in its battle against beverage giant Coca-Cola (KO), ruling that the juice maker can bring false advertising claims against its bigger competitor.
At the heart of the legal battle is a drink from Coke's Minute Maid unit described as a "Pomegranate-Blueberry" juice, although it only included 0.3 percent of pomegranate juice. POM argued that it violated the Lanham Act, which prohibits false and misleading statements about a product, while Coca-Cola argued that it was allowed by the Food and Drug Administration.
In the ruling, Supreme Court justice Anthony Kennedy wrote that the two regulations "complement each other" and that FDA regulations don't preclude Lanham Act claims.
"It was really was a complete victory for POM," David Ter Molen, a partner at law firm Freeborn & Peters, told CBS MoneyWatch. "The key ruling is that if you have a Lanham Act claim, it can proceed against another company with respect to food labeling" even if the labeling is allowed by the FDA.
The Supreme Court's decision means POM may proceed with claims that Coca-Cola's labeling misleads consumers. Coca-Cola, in a statement emailed to CBS MoneyWatch, said it intends to fight POM's claims.
"We respect the Court's decision and remain committed to clear labeling that fully complies with FDA regulations. The Court has decided that even though the name and label for our product was authorized by FDA regulations, Pom is entitled to present its legal claims to a jury," the company said. "We intend to defend against Pom's claims that our labeling is misleading."
In a statement, POM called the decision "a real victory for consumers." It added, "The unanimous court ruling will translate into higher assurance for consumers that the labels on beverage and food are accurate."
The ruling also has broader implications for the food and beverage industry, Ter Molen said.
"What effectively existed before was a safe harbor. If you complied with FDA regulations, no one could come after you," he noted. Companies will "have to balance the risks and say, 'Hey if we go forward with this label, what is the risk of a lawsuit?' Before, the risk was effectively zero."
Still, it's unclear that there will be a flood of lawsuits after the ruling, notes August Horvath, a partner at Kelley Drye & Warren LLP.
"There aren't that many juice companies out there that want to start this kind of war," he said. "POM is a bit of a maverick in its dedication to this one fruit. What the juice companies are more concerned about is if it will embolden the consumer class-action case."