The Wonderful Case of Pom: Are State-Law Claims Preempted?

By Barbara Barath, Esq.

A year ago, in a case alleging a juice beverage's name and labeling are deceptive, a panel of appeals judges held the Federal Food, Drug, and Cosmetic Act (FDCA) preempts private parties federal claims to enforce labeling regulations.

Pom Wonderful LLC v. Coca-Cola Co., it seemed to the defense bar, was wonderful legal authority for motions to dismiss claims that foods, beverages, or cosmetics are mislabeled. But the U.S. Court of Appeals for the Ninth Circuit did not actually decide whether private parties are also barred from bringing such mislabeling claims under state law.

Since the Ninth Circuit published the decision, courts have been split on what it means for private state-law claims. Defendants have argued the case should be read to bar private state-law claimsnot just under the "primary jurisdiction doctrine" but also under preemption. Plaintiffs, on the other hand, have argued Pom does not bar private state-law claims at all. Courts continue to struggle over the reach of the decision.

Although the U.S. Supreme Court has agreed to review the case, it will not directly decide whether private state-law claims over food labels are preempted by federal regulations. Instead, the question before the justices is limited to whether private federal-law claims are preempted.

The Pre-Pom Split

Before the Ninth Circuits ruling in Pom, some California district courts held certain state-law claims were preempted by the FDCA. For example, in Fraker v. KFC Corp., a 2007 case, the Southern District of California held private plaintiffs state-law unfair or deceptive acts or practices (UDAP) claims were preempted by the FDCA.

In contrast, the California Supreme Court ruled in In re Farm Raised Salmon Cases that certain state-law claims were not preempted by the FDCA. There, plaintiffs brought various state UDAP claims against grocery stores for selling artificially-colored farmed" salmon without disclosing to consumers the use of color additive and the related health concerns.

The California Supreme Court reasoned plaintiffs do not seek to enforce the FDCA. Their action is based on the violation of state lawalbeit state law that is, in compliance with section 343-1 [of the FDCA], identical to FDCA provisions." Where Congress authorizes states to adopt requirements identical to those promulgated by a federal agency, the court concluded, states are also free to provide for private remedies for violations of those requirements."

Is Pom Wonderful?

In Pom, the Ninth Circuit could have resolved this split in authority once and for all. But it didnt.

In the case, juice manufacturer Pom Wonderful LLC accused The Coca-Cola Company of misleading consumers by labeling its juice product Pomegranate Blueberry" even though the drink purportedly contained less than 1% pomegranate and blueberry juices. Pom Wonderful brought state UDAP claims as well as a claim under the federal Lanham Act, which broadly prohibits false advertising and authorizes a lawsuit by anyone who believes he or she will likely be damaged by the false advertising.

The Central District of California dismissed, as preempted by the FDCA, both the Lanham Act claim and the state-law claims (to the extent they were based on obligations not identical to those imposed by FDCA). On appeal, the Ninth Circuit concluded Pom Wonderful's Lanham Act claim was indeed barred, although it did not explicitly hold the claim was "preempted."

"We are primarily guided in our decision not by Coca-Cola's apparent compliance with FDA regulations," Circuit Judge Diarmuid F. O'Scannlain wrote, "but by Congress's decision to entrust matters of juice beverage labeling to the FDA and by the FDA's comprehensive regulation of that labeling."

Allowing private plaintiffs to sue under the Lanham Act to enforce the FDCA or its regulations, O'Scannlain observed earlier in the court's opinion, would undermine Congresss decision to limit enforcement of the FDCA to the federal government."

The Ninth Circuit thus arguably found the claim was preempted because, as the California Supreme Court remarked in Bronco Wine Company v. Jerry R. Jolly, Congress intended, by comprehensive legislation, to occupy the entire field of regulation, leaving no room for the states to supplement federal law."

While the court did not explicitly mention the primary jurisdiction" doctrine either, it applied some of the typical factors examined in determining whether to dismiss on grounds of this doctrine. Courts invoke primary jurisdiction to stay proceedings or dismiss a complaint without prejudice while an administrative agency like FDA handles a matter within its particular area of expertise.

O'Scannlain declared that, for a court to act when the FDA has notdespite regulating extensively in this areawould risk undercutting the FDAs expert judgments and authority." Allowing a plaintiff to maintain a claim that would require a court to originally interpret ambiguous FDA regulations and decide whether conduct violates the FDCA (because the FDA has not concluded such conduct violates the FDCA), would usurp the FDAs interpretive authority," he observed.

The Ninth Circuit didn't specify its reasoning was limited to federal statutory claims. However, it did not actually decide whether the state-law claims were also barred. Instead, it remanded to the district court the question of whether Pom Wonderful had "standing" to assert those state claims. If plaintiff is found to have standing, "it may need to address . . . whether Poms state-law claims  are expressly preempted," O'Scannlain wrote.

Post-Pom

Because the Ninth Circuit failed to explicitly address whether state-law claims  are barred on either preemption or primary jurisdiction grounds, California district courts have struggled to determine howor whetherPom affects such claims.

Some district courts have interpreted Pom to mean state-law claims are not barred by either the preemption or the primary jurisdiction doctrine as long as the state-law regulations plaintiffs seek to enforce are not contradictory to federal regulations. For instance, in Brown v. Hain Celestial Group, the plaintiff brought claims against manufacturers and sellers of cosmetic products that are marked as organic," alleging state UDAP and California Organic Products Act claims.

The court found the federal Organic Foods Products Act (OFPA) does not expressly bar state-law claims  that do not conflict with OFPAs provisions." The court also declined to apply the primary jurisdiction doctrine, expressing doubts that staying this litigation would serve any useful purpose."

Two other district courts held Poms holding is limited to barring federal claims. In CytoSport, Inc. v. Vital Pharmaceuticals, Inc., a protein shake producer brought state and Lanham Act false advertising claims against its competitor, which produced Muscle Milk, claiming use of the word milk" was deceptive (since Muscle Milk contains no milk). The FDA had issued a warning letter to the defendant regarding its use of the word milk," but had not made a final determination regarding compliance with FDA regulations.

The court held the Lanham Act claims were barred by the holding in Pom because the FDA is the entity that must determine whether a label is deceptive or misleading under the FDCA. However, the court determined the state-law claims are not barred by the ruling in Pom because the FDA specifically permits states to create labeling requirements that are identical to the FDAs and establish independent causes of actions for those claims."

Similarly, in Delacruz v. Cytosport, Inc., the plaintiff brought state-law claims, alleging the labeling of Muscle Milk barsin a way that suggested the bars were healthymisrepresented their nutrient content. The court held [t]he Ninth Circuits preemption ruling was limited to a finding that the FDCA preempted Poms claims under the Lanham Act." While the court did not dismiss the state-law claims, it apparently assumed Pom was merely a preemption case rather than also a primary jurisdiction case, and thus did not address that aspect of the Pom decision.   

On the other hand, a court in the Northern District of California held state-law claims are barred under Pombut under the primary jurisdiction doctrine. In Astiana v. The Hain Celestial Group, Inc., the plaintiffs brought various state UDAP claims, arguing defendants use of the word natural" on their cosmetic products was false and misleading. The court noted that, while the FDCA governs the labeling of cosmetics, it has no policy, informal or otherwise, regarding the use of the term natural" in cosmetics." In Pom, the court noted, the Ninth Circuit found that Congress had entrusted the task of guarding against deception to the FDA."

The court in Hain decline[d] to make any independent determination of whether defendants use of natural was false or misleading" because doing so would risk undercutting the FDAs expert judgments and authority." The plaintiffs state-law claims were not found to be preempted; instead, finding the claims are barred under the primary jurisdiction doctrine," the court expressed the view "that the Pom court was implicitly relying on the primary jurisdiction doctrine" because Pom is actually based on the idea of deference to the FDA."

Pom on Remand

On remand, the district court in Pom recently found the FDCA preempts state-law claims. The defendants had filed a motion for summary judgment, arguing Poms state-law claims are expressly preempted by the FDCA since, [b]y seeking to hold Coca-Cola liable for naming and labeling practices that federal law expressly permits, Poms state-law claims necessarily would impose requirements that are not identical to federal prescriptions." The defendants declared federal law expressly permits" their practices, because as the Ninth Circuit observed, [a]s best we can tell, Coca-Colas label abides by the requirements the FDA has established."

The district court granted the defendants summary judgment motion. The court apparently acted under the assumption that defendants had in fact demonstrated compliance with FDA regulations" such that any state-law claims that prescribed requirements identical to those imposed by the FDCA were moot. The court also found that any of Poms state-law claims that sought to impose requirements that were additional to FDCA's obligations were preempted because such requirementswhile not contradictory to FDCA's mandateswere not identical either.

The courts decision suggests no state-law claims can be brought as long as it appears the defendant has complied with FDCA regulations; any claims based on identical requirements (while not preempted) are moot, while any claims based on contradictory or additional requirements are preempted.

Pom Goes to Supreme Court

In the meantime, Pom filed a petition for a writ of certiorari, arguing the Ninth Circuit was wrong when it held a private party cannot bring a Lanham Act claim, challenging a product label regulated under the FDCA. Pom argued that [t]he Court of Appeals ruling conflicts with this courts precedents governing how courts should reconcile potentially overlapping federal statutes and creates a conflict among the Courts of Appeals on the important question of whether false labeling claims are actionable under the Lanham Act notwithstanding regulation by the FDA under the FDCA." Pom suggested the Ninth Circuits opinion would leave the regulation of food and beverage labels almost entirely to the FDA: Under the Ninth Circuits reasoning, any time an agency has broad authority to regulate in a given sphere, that regulation could preclude private actions under entirely different statutes."

In its opposition brief, Coca-Cola asserted Pom had based its petition on an erroneous premise": namely that the Ninth Circuit had said the Lanham Act was inapplicable to any FDA-regulated label. Coca-Cola argued the court had actually reached the much narrower conclusion that product labeling that is specifically authorized by the [FDCA or the FDAs regulations]" could not be challenged as false or misleading under the Lanham Acts general proscriptions. 

In its reply brief, Pom retorted it was Coca-Cola who had mischaracterized the Ninth Circuits decision: the Ninth Circuit had not concluded Coca-Colas label was specifically authorized" by the FDCA but, in fact, had recognized FDA has never reviewed the label.

On March 25, 2013, the Supreme Court granted cert. The Court will not directly decide whether private state-law claims over food labels are preempted by federal regulations: the question before it is limited to whether private federal-law claims are preempted. But the Court may decide whether Coca-Colas label was specifically authorized." And, as discussed above, the Pom district courts decision on remand was based on the assumption that Coca-Cola demonstrated compliance with FDA regulations." If the Supreme Court finds Coca-Colas label was not specifically authorized, the foundation of the district courts decision regarding state-law claims may also be called into question.

The Future of Pom

Since many post-Pom courts refused to hold private state-law claims over food labels are preempted by federal regulations, the defense bar may wonder if Pom is as wonderful as they thought. That trend may be reversed, however, with the Pom courts recent decision on remand.  In the end, the Ninth Circuit may be called upon to decide this issue. In the meantime, the primary jurisdiction doctrine remains a strong means to dispose of state-law claims, and defendants can be confident that attempts to enforce state-law requirements that are contradictory to federal regulations are expressly preempted.

Barbara Barath is an associate in the Litigation Department of Morrison & Foerster's San Francisco office. She received her J.D. degree from the University of Southern California Gould School of Law in 2009 and was elected to the Order of the Coif. Morrison & Foerster is a global law firm with more than 1,000 lawyers in 16 offices in the United States, Europe and Asia.