The Supreme Court will begin hearing arguments today in a second case that could have a dramatic impact on marketers.
The court ruled last month that a company does not have to be direct competitor to sue another company under the decades-old Lanham Act, a federal law that bears on false ad claims.
Today's case, Pom Wonderful vs. Coca-Cola, stems from a 2008 complaint by Pom Wonderful that Coca-Cola had misled consumers with a Minute Maid "pomegranate blueberry" product that contained 0.3% pomegranate juice and 0.2% blueberry juice.
But the broader issue now at hand is whether the Food and Drug Administration's regulation of beverage labeling preempts the ability of Pom, or any private party, to sue over alleged deceptive advertising, as a lower court held.
If the Supreme Court rules in favor of Pom and its right to sue, it could spur a big increase in consumer suits over labeling and advertising claims. A decision is expected in June.
"We are looking forward to the Supreme Court review of the Ninth Circuit's decision that a food producer is immune from suits for false statements on its product label," a Pom spokeswoman said. "It is our strong belief that the court of appeals' decision undermines the transparency that health-conscious consumers rightly expect so they can make informed decisions about what they eat and drink."
Coca-Cola defended its labeling. "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," a spokesman said.
Linda Goldstein, chair of the advertising, marketing and media division at Manatt Phelps & Phillips, said the case is "monumental" for the food and beverage industry.
"Where I think the real action is, is the broader question of whether ... FDA regulations preempt private claims," she said. "The industry has been besieged by a barrage of consumer class actions essentially claiming that labeling for food and beverage products are misleading to consumers even when they comply with FDA regulations."
Some lower courts have ruled that FDA regulations preempt private claims, while others have ruled they don't. If the Supreme Court rules in favor of Coca-Cola, that could put a stop to various class action lawsuits, Ms. Goldstein said. But if it rules in favor of Pom, "it will allow the chaos and confusion to continue and likely open the floodgates to even more class action litigation," she said.
In combination with the Lanham Act ruling in March, Pom Wonderful vs. Coca-Cola makes for an eventful Supreme Court session for marketers. "It's unusual for any advertising-related cases to reach the Supreme Court," said Ms. Goldstein. "It's quite monumental for two to reach the Supreme Court in same session."
Tomorrow the court will hear arguments in a case with major ramifications for the TV business, American Broadcasting Companies v. Aereo, in which the major broadcast networks will try to shut down a service pulling their signals from the air and streaming them to consumers.