The US Supreme Court is expected to allow Pom Wonderful to press charges against The Coca-Cola Company (NYSE:KO) for false advertising under the Lanham Act, in a decision that could open the door to many more lawsuits, reports Natalie Zmuda for Ad Age. Pom Wonderful is suing Coca-Cola for advertising one of its products as ‘pomegranate cranberry’ when it contains 0.3% pomegranate juice and 0.2% cranberry juice, which is in line with Federal Drug Administration guidelines even if it isn’t exactly what people expect when they buy the drink.
Chief Justice Roberts undercuts Coca-Cola’s central claim
“It seems quite obvious that the court is highly skeptical of Coca-Cola’s arguments,” Goodwin Procter attorney Robert Bader told Zmuda. “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.”
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The Coca-Cola Company (NYSE:KO) countered comments from the justices about its label being misleading by saying that its labeling was in line with FDA guidelines, but the Justices simply questioned whether the FDA has the appropriate expertise to determine whether labeling is misleading or the resources to police those guidelines.
“I don’t know that the FDA has any expertise in terms of consumer confusion, apart from any health issues,” said Supreme Court Chief Justice John Roberts, undercutting The Coca-Cola Co.’s (NYSE:KO) main argument.
Supreme Court ruling could lead to more lawsuits
Even if the Supreme Court makes a narrow ruling that the Pom Wonderful suit can go forward, The Coca-Cola Company (NYSE:KO) will still be able to defend its labeling and it’s possible that not much will change in the long-run. But if the Supreme Court opinion specifies that following FDA guidelines doesn’t protect a company from charges under the Lanham Act, it will open up the potential for lawsuits throughout the food and beverage industry. Without a clear line in the sand, many companies may decide to use Lanham Act suits as another tool to pressure rivals.
If The Coca-Cola Company (NYSE:KO) eventually loses its suit and has to change the labeling (or put a non-negligible amount of pomegranate and cranberry juice to its product), then any company that has tacked closely to FDA guidelines to minimize costs while still being able to market popular products will need to change their lineup or potentially get sued. Consumers will also benefit from having better information about what they are actually buying.