Argument analysis: Justices skeptical of Coke’s right to “cheat consumers”
on Apr 22, 2014 at 6:00 pm
It’s a blessing and a curse. One advantage of retaining experienced counsel for a Supreme Court argument is the likelihood that the Justices well might listen more carefully before dismissing what counsel has to say. But Monday’s argument in POM Wonderful v. Coca-Cola showed the downside: the Justices are more likely to speak their minds frankly. And you know it isn’t going well for your client when one of the Justices, speaking frankly, repeatedly complains that your client is “cheating” its customers.
The case involves a Coca-Cola product bearing an emphatic “Pomegranate Blueberry” label; despite the label, the product consists of about 99% apple and grape juice, but only 0.3% pomegranate juice and 0.2% blueberry juice. POM filed suit against Coca-Cola contending that Coca-Cola’s labeling of the “Pomegranate Blueberry” product is so misleading that it violates the Lanham Act; this harms POM because POM advertises and sells products that actually contain substantial amounts of pomegranate juice.
The district court and the Ninth Circuit remarkably accepted Coca-Cola’s position that regulations issued by the Food and Drug Administration (the “FDA”) under the federal Food, Drug and Cosmetic Act (“FDCA”) preempted POM’s action under the Lanham Act — even though it is plain that the FDA never examined or approved the challenged label, and even though the FDCA does not mention the Lanham Act.
The Justices were, in a word, unimpressed. For a while, during the argument of Seth Waxman (for POM) and Melissa Sherry (Assistant to the Solicitor General, on behalf of the FDA), it seemed that the Justices were taking it easy after the heated argument in Republic of Argentina v. NML Capital, the first case argued that morning. But that appearance was proven false the moment Kathleen Sullivan rose to defend Coca-Cola’s position. The Justices were dubious about so many things about her position that it is difficult to decide which points to emphasize.
As a doctrinal matter, the biggest objections came to Coca-Cola’s “preemption” argument. Coca-Cola points to a recent amendment of the FDCA that explicitly preempts actions similar to this one under state law, and argues that the need for national uniformity justifies extending that preemption doctrine to federal statutes as well.
But the Justices were having none of that. Justice Kagan commented that “there are plenty of statutes which say you can’t bring State law or Federal law claims. Congress knows how to do that.” And when Sullivan persisted, Justice Ginsburg pointedly asked: “Do you have an example, Ms. Sullivan, of a case where Congress precluded some State claims and said nothing at all about Federal laws in which this Court has held that the express preclusion of State law claims implicitly precluded Federal claims?”
After she admitted that she did not have such a case, the Justices collectively urged Ms. Sullivan to move on from that point. To that end, Justice Kagan asked: “Suppose we thought that the preemption provision here was utterly irrelevant, that it applies to state law and not Federal law. . . . So suppose I just put that aside. Do you still have any kind of argument?”
But things didn’t get any better when Ms. Sullivan moved on. With the preemption argument out of the way, the next doctrinal problem for Coca-Cola was the Court’s recent decision in Wyeth v. Levine (permitting a state tort suit for failure to warn based on a pharmaceutical label that the FDA explicitly required the manufacturer to use). Justice Sotomayor (among others) seemed to view that case as directly conflicting with Ms. Sullivan’s argument:
How do we square this with Wyeth? Wyeth, the FDA actually approves, looks at the label and says, this one is okay. Not only is it not misleading, but it complies with all health requirements, and because the producers of drugs have the ability to change the label without FDA approval, we found no preemption. . . . It’s even worse, this case. The FDA doesn’t approve the labels. It never looks at them and says they are okay or not okay unless they decide to enforce the statute. How is this better than Wyeth?
This was a notable weak point for Coca-Cola. Although Wyeth had been a centerpiece of POM’s briefing, Coca-Cola had dismissed it as irrelevant – but its only basis for distinguishing Wyeth was the preemption provision. The one that Justice Kagan just asked her to assume was irrelevant. So Ms. Sullivan had nothing particularly useful left to say about Wyeth.
Surely the roughest part of the questioning came from a group of Justices driven by the facts of the case to find it inconceivable that Congress intended to forbid this cause of action. The point was made most forcefully (and repeatedly) by Justice Kennedy, who asked early on: “Is it part of Coke’s narrow position that national uniformity consists in labels that cheat the consumers like this one did?”
Ms. Sullivan tried blithely to sweep the question aside as irrelevant: “Justice Kennedy, you perhaps have succumbed to Mr. Waxman’s attempt to argue his jury argument here. We’re on a motion to dismiss.”
But that only got Justice Kennedy more incensed:
I think it’s important for us to know how the statutes work. And if the statute works in the way you say it does and that Coca-Cola stands behind this label as being fair to consumers, then I think you have a very difficult case to make. I think it’s relevant for us to ask whether people are cheated in buying the product. Because Coca-Cola’s position is to say even if they are, there’s nothing we can do about it.
Summing up his understanding of her position with incredulity, Justice Kennedy asked: “You want us to write an opinion that said that Congress enacted a statutory scheme because it intended that no matter how misleading or deceptive a label it is, if it passes the FDA, there can be no liability. That’s what you want us to say?”
And Justice Kennedy was not alone. Several of the Justices (presumably reacting to the image of the label in POM’s brief, plainly took it as a given that the label Coca-Cola defends is designed to deceive. For example, that perspective drove Justice Ginsburg’s suggestion (echoed by the Chief Justice) that the FDCA and the Lanham Act should be treated as two entirely separate regimes:
But maybe the two acts are serving different purposes, Ms. Sullivan. The law that you are relying on is supposed to be concerned with nutritional information and health claims, not a competitor losing out because of the deception. The consumer is able to buy the Coke product much cheaper and the POM product costs more; the consumer thinks that they are both the same, so they’ll buy the cheaper one.
Piling on in the same vein, Justice Ginsburg drew directly on Mr. Waxman’s argument to emphasize what seemed to her most absurd about Ms. Sullivan’s position:
Let’s suppose that there a consumer survey and say it was a valid survey. And overwhelmingly, consumers said that they are misled, that they thought that they were getting pure pomegranate, and they were just astonished to find out that what they were getting was apple juice with, what Mr. Waxman told us, a “dropper of blueberry.”
Sticking to her guns, Ms. Sullivan suggested that the appropriate remedy for consumers, rather than a suit under the Lanham Act, was to go to the FDA. But she drew Justice Kennedy back into the fray when she commented as an aside at the end of that answer that “we don’t think that consumers are quite as unintelligent as POM must think they are.”
Justice Kennedy interrupted her to say: “Don’t make me feel bad because I thought that this was pomegranate juice.” When Justice Scalia commented that Justice Kennedy “sometimes doesn’t read closely enough,” the ensuing laughter did not suggest much sympathy for Ms. Sullivan’s position.
The argument closed with an incisive summary by Justice Ginsburg of what seemed to be the consensus of the Court:
I would like you to respond to this question: In the real world, the FDA has a tremendous amount of things on its plate, and labels for juices are not really high on its list. It has very limited resources. You are asking us to take what is has said about juice as blessing this label, saying it’s not misbranding, when its regulations aren’t reviewed by the Court, when there is no private right of action, and say that that overtakes the Lanham Act. It’s really very hard to conceive that Congress would have done that.
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This is another one of those odd cases in which a decision that seems defensible enough under the authorities influencing a panel of the court of appeals seems to have almost nothing to support it at the Supreme Court level. Coca-Cola retained excellent counsel, and I can hardly imagine anything Ms. Sullivan could have done to present the case better. But I wouldn’t pick this case as likely to bring the first occasion of the Term for a Justice to vote to affirm a Ninth Circuit decision. Indeed, recognizing the difficulty of predicting actual votes based on comments at argument, this is probably the closest thing I’ve ever experienced to an oral argument signaling a unanimous reversal. I would mark this one down as the first case to be decided from the April calendar.
[Disclosure: Goldstein & Russell, P.C., whose attorneys contribute to this blog in various capacities, is among the counsel to POM Wonderful in this case. However, the author of this post is not affiliated with the firm.]