Coca-Cola Dodges Federal False Advertising Claim

(CN) - Pomegranate juice purveyor Pom Wonderful cannot pursue federal false-advertising claims that Coca-Cola's pomegranate blueberry drink contains mostly apple and grape juices, but it may be able to revive its state law challenges, the 9th Circuit ruled Thursday.

Pom Wonderful alleged in a 2008 lawsuit in California that Coca-Cola had misled consumers of its pomegranate blueberry drink, which is marketed under the Minute Maid brand. Pom claimed that Coca-Cola had improperly labeled the drink with a picture of a pomegranate and blueberries, when in fact it contains only about 0.3 percent pomegranate juice, 0.2 percent blueberry juice, and 0.1 percent raspberry juice. The remaining 99.4 percent of the drink is composed of apple and grape juices.

Pom claimed that the drink's name and labeling violated the false-advertising provision of the federal Lanham Act, as well as California's Unfair Competition Law (UCL) and False Advertising Law (FAL).

Presiding U.S. District Judge S. James Otero in Los Angeles barred Pom's Lanham Act challenge, finding that the drink's labeling had been approved by the Food and Drug Administration and thus could not be second guessed. Otero likewise rejected Pom's state law claims because the company failed to show that it had lost money or property as a result of Coca-Cola's alleged deceptions.

A three-judge panel of the 9th Circuit affirmed as to Pom's federal claims on Thursday from Pasadena. The panel unanimously found that the Food, Drug, and Cosmetic Act (FDCA) bars a Lanham Act claim related to product names and labeling.

"The naming component of Pom's claim is barred because, as best we can tell, FDA regulations authorize the name Coca-Cola has chosen," wrote Judge Diarmuid O'Scannlain for the court. "The FDA has concluded that a manufacturer may name a beverage using the name of a flavoring juice that is not predominant by volume."

However, the panel vacated the lower court's ruling on Pom's state law claims in light of a recent California Supreme Court decision.

"The district court interpreted the 'lost money or property' language to require a plaintiff to show that it is entitled to restitution from the defendant -- even if the plaintiff seeks only injunctive relief," O'Scannlain wrote. "That was error. The California Supreme Court has now made clear that standing under section 17204 (the UCL standing provision) does not depend on eligibility for restitution."

Since the California Supreme Court made its decision after the District Court ruled on Pom's claims, the panel remanded the state law claims and directed the lower court to determine "whether Pom's state law claims are expressly preempted and whether California's safe-harbor doctrine insulates Coca-Cola from liability on any of Pom's state law claims."

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