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Stewart and Lynda Rae Resnick, who once bought and sold The Franklin Mint, may hit another payday after the U.S. Supreme Court unanimously ruled on Thursday that their Pom Wonderful juice company can sue Coca-Cola for falsely advertising a pomegranate drink.
In a case that's significant for determining what's allowed when it comes to labeling food and beverages, Pom Wonderful got the legal green light to go after Coke for mislabeling a drink that is 99.4-percent apple and grape juice. Coke calls it "Pomegranate Blueberry" and that's misleading, according to Pom Wonderful, since the Coke product is 0.3-percent pomegranate, 0.2-percent blueberry and 0.1-percent raspberry juice.
By comparison, Pom's blueberry pomegranate juice is 85-percent pomegranate and 15-percent blueberry juices from concentrate and natural flavors.
Coke's position was that the approval for its label by the U.S. Food and Drug Administration (FDA) precluded false advertising claims under the Lanham Act. Lower courts had agreed that the Food, Drug, and Cosmetic Act (FDCA) precluded the Lanham Act on false advertising.
But the lower courts got it wrong. The Supreme Court said the FDCA and the Lanham Act are supposed to work in concert. POM's claim against Coke can go forward. The FDCA does not preclude Lanham Act lawsuits.
In the 8-0 decision, the high court said there is nothing in the text, history, or structure of the FDCA or the Lanham Act to indicate that Congress intended the use of one to preclude the other. (Justice Stephen Breyer recused himself from the case.)
Instead, the court said the FDCA and the Lanham Act complement each other in the federal regulation of misleading food and beverage labels and that competitors can bring false advertising claims for food and beverage products with labels approved by FDA.