0.51% Walmart ad-to-sales percentage
The Supreme Court spent about an hour on Monday listening to arguments from Pom Wonderful and Coca-Cola in a case that could have far-reaching implications for food and beverage marketers.
Several legal experts interviewed by Ad Age said they expect the Supreme Court will rule in favor of Pom, which is seeking approval to challenge Coca-Cola's labeling using the Lanham Act, a federal law businesses use when suing each other over false ad claims. If Pom wins, the pomegranate juice brand will have the opportunity to argue that Coca-Cola has misled consumers with a "pomegranate blueberry" product that contains 0.3% pomegranate juice and 0.2% blueberry juice. A decision is expected in June.
"It seems quite obvious that the court is highly skeptical of Coca-Cola's arguments," said Robert Bader, an attorney with Goodwin Procter. "There's an overriding distaste for the fact that, at least from their perspective, the label on the juice is false, misleading. ... It would be hard for them to say, 'Pom, your claims can not go forward,' when the label is in their eyes, and in the eyes of most in the public, misleading."
The justices questioned Coca-Cola closely on the label of its Minute Maid product. "I think it's relevant for us to ask whether people are cheated in buying this product, " said Justice Anthony Kennedy.
Kathleen Sullivan, who argued on behalf of Coca-Cola, said the company doesn't believe "consumers are quite as unintelligent as Pom must think they are."
In response, Justice Kennedy said, "don't make me feel bad because I thought that this was pomegranate juice."
A Pom spokeswoman said the company was "pleased" with today's hearing. "A majority of the justices, including Chief Justice John Roberts, sharply questioned Coke's lawyers about why their so-called 'Pomegranate-Blueberry Juice' label should not be considered misleading when the product itself contains trivial amounts of either of those juices," the spokeswoman said. "We brought this case because we strongly believe that no food producer should be immune from suits for false statements on its product label. The only point of including these two juices is so Coca-Cola can use a name that has the obvious purpose to mislead consumers about what they are buying."
Coca-Cola continued to defend its labeling, pointing out that it is in compliance with FDA regulations, even as Justice Kennedy said it is "doubtful that the FDA has sufficient resources to police food and beverage labeling."
Added Chief Justice John Roberts, "I don't know that the FDA has any expertise in terms of consumer confusion, apart from any health issues."
A Coca-Cola spokesman said, "We are committed to clear and accurate labeling of our products in accordance with all applicable FDA regulations, and we are confident that our labeling fully complies with those regulations."
If the Supreme Court rules in favor of Pom, it could open the door to more competitive lawsuits under the Lanham Act. "The Lanham Act has had a little bit of a lull over the last five years," said Randy Miller, an ad lawyer at Venable LLP. "This case will be widely discussed, and companies are going to start to remember and think of the Lanham Act act as a weapon in their toolkit."
Indeed, companies that have complied with FDA labeling requirements will no longer be shielded from liability, explained Ivan Wasserman, partner at Manatt Phelps & Phillips. "Many food and beverage companies struggle on a daily basis with trying to ensure their labels aren't misleading," he added.
The decision could also signal that the Supreme Court is less likely to give deference to the FDA. "It will be interesting to see whether the court really takes on the scope of the FDA's authority, whether they speak at all to policy implications … or whether they'll be more narrow in their approach," said Mr. Bader.