By Brent Kendall
WASHINGTON--During oral arguments this spring, Supreme Court
Justice Anthony Kennedy led sharp questioning on whether Coca-Cola
Co.'s marketing of a pomegranate-blueberry juice misled consumers
because the drink contained little actual pomegranate.
Thursday he wrote a unanimous opinion allowing rival juice maker
Pom Wonderful LLC to proceed with a false advertising lawsuit
against Coca-Cola, a decision giving companies room to sue
competitors over food and beverage marketing that may push the
envelope.
Pom claimed Coca-Cola unfairly captured pomegranate juice sales
by marketing a "pomegranate blueberry flavored" juice blend from
its Minute Maid unit that contains minuscule amounts of pomegranate
or blueberry. Instead, the juice is 99.4% apple and grape
juices.
It filed suit in 2008 under federal trademark law, which allows
companies to bring lawsuits when their commercial interests are
damaged by a rival's allegedly misleading representation of its
products.
Coca-Cola has acknowledged the contents of its juice blend but
denied Pom's allegations of misleading consumers. It said its
product packaging accurately depicted all five fruits used in the
juice and informed consumers that the beverage tasted like
pomegranate and blueberry.
Justice Kennedy said in a 17-page opinion that Food and Drug
Administration regulations on juice labeling aren't a barrier to
lawsuits like Pom's.
"Competitors who manufacture or distribute products have
detailed knowledge regarding how consumers rely upon certain sales
and marketing strategies," Justice Kennedy wrote. "Their awareness
of unfair competition practices may be far more immediate and
accurate than that of agency rule makers and regulators."
The decision overturned a 2012 San Francisco-based appeals court
ruling that Pom's claims couldn't go forward because they would
intrude on the FDA's authority to decide how juices can be
labeled.
The Supreme Court on Thursday didn't decide whether the Minute
Maid marketing was actually misleading. Instead, it sent the case
back to lower courts for further proceedings.
Pom said the ruling would lead to higher assurances for
consumers that food and beverage labels are accurate. "We believe
that when people better understand what they are consuming, they
can make healthy and more informed decisions about what they buy,"
the company said.
Coca-Cola said it remained committed to clear labeling that
fully complies with FDA regulations. "We intend to defend against
Pom's claims that our labeling is misleading, and the evidence at
trial will show that our product was not the cause of Pom's poor
sales," a company spokesman said.
Consumer groups backed Pom in the case, saying private
litigation by companies was a deterrent to misleading food and
beverage marketing.
The case is one of two closely watched marketing cases involving
Pom Wonderful. The juice maker, owned by Los Angeles billionaires
and philanthropists Lynda and Stewart Resnick, is on the defensive
in the second case, which is under consideration by a federal
appeals court in Washington. There, Pom is fighting Federal Trade
Commission findings that it made misleading ad claims about the
disease-fighting benefits of its products.
Write to Brent Kendall at brent.kendall@wsj.com
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