In Part 1, we examined the rise of class action lawsuits over protein supplement manufacturers. Recently, the United States Court of Appeals for the Ninth Circuit held that inaccurate food labels could be subject to state law claims, as the Food, Drug, and Cosmetic Act (“FDCA”) did not preempt those claims. This issue is of importance in the pending consumer litigation against Quest Nutrition and the manufacturer of Body Fortress protein powder.
Consumers are not the only group with a potential right of action against manufacturers who are spiking their protein with amino acids. The Lanham Act allows one competitor to sue another for making false and misleading statements or descriptions about the contents or nature of its goods. 15 U.S.C. § 1125(a).
For example, company A is selling 100% pure whey protein at about $11 a pound. On its packaging, it proudly – and truthfully – states that it is selling 100% whey protein. Company B is also selling a product it labels as 100% whey protein, but it’s actually only about 80% protein – the other 20% is made up of cheap amino acids. This allows Company B to sell a product it claims is 100% whey protein (but isn’t) for a price 20% lower than Company A.
Under 15 U.S.C. § 1125, Company A could sue Company B for unfair competition. In the past, companies in the position of Company B have claimed that unfair competition claims over their labeling fall under the FDCA and are within the exclusive jurisdiction of the Food and Drug Administration. That is, until June of 2014, when the Supreme Court decided that hypothetical Company B’s argument was wrong – the FDCA would not preclude a Lanham Act claim for unfair competition.
Pom Wonderful LLC v. Coca-Cola Company grappled with the same issue underlying protein spiking. Pom Wonderful creates and markets a variety of pomegranate-based products under its ubiquitous POM label. Coca-Cola is the owner of Minute-Maid, a juice company that made a “pomegranate blueberry” juice. In reality, Coca-Cola’s offering was 0.3% pomegranate juice, 0.2% blueberry juice, and 99.4% apple and grape juice. Nonetheless, Coca-Cola gave the words “pomegranate” and “blueberry” particular significance on the juice’s label.
Pom sued Coca-Cola for unfair competition under 15 U.S.C. § 1125. Pom argued that Coca-Cola’s labeling created the impression that its primary ingredients were pomegranate and blueberry, when the reality was quite the opposite. The United States District Court for the Central District of California rejected Pom’s argument, though, stating that the FDCA precluded a challenge to the accuracy of Coca-Cola’s labeling. The Ninth Circuit upheld the District Court’s ruling to that end, finding that Pom’s grievance was an issue for the FDA to address, rather than Pom.
The Supreme Court quickly dispatched with that reasoning. The court plainly stated that Pom “is not a pre-emption case.” Instead, the Supreme Court found that neither the FDCA nor the Lanham Act–both federal statutes–limit or preclude the Lanham Act’s application issues governed by the FDCA. Instead, the court found the Lanham Act and FDCA to “complement each other,” and that the FDCA did not create any express or implied bar to a Lanham Act claim.
So what does it all mean?
Company A, who is selling 100% whey protein as it claims, can smack Company B with a lawsuit and correct the marketplace. Company B would be left with a number of unpleasant options: also sell 100% protein, thus losing the cost advantage it obtained by diluting its product; admit that its product is not 100% protein; or exit the marketplace. Because Companies A and B are competitors, the Lanham Act would allow Company A to bring the suit, rather than consumers.
However, if the suit brought about any changes to Company B’s behavior, it would result in a number of gains for consumers: better quality products, more accurate labeling, and increased marketplace knowledge of what Company B is actually selling.
To see the Supreme Court explain it, it seems almost obvious that the FDCA would never bar a Lanham Act claim. Yet the trial court and even the court of appeals, which both believed that the FDCA barred the claim, had to stand corrected. Now that the issue is settled, it may be easier for supplement companies to go to court against their less scrupulous rivals.
For a different take on the Pom Wonderful decision, and how it may persuade you to make your own juices at home, check out this post from Fit-Juice.