Food and beverage companies can be sued for false advertising if they put labels on products that would "mislead and trick consumers," the U.S. Supreme Court ruled Thursday.
The unanimous decision could have broad impact on parts of the food industry.
It came in a case brought by billionaire Los Angeles couple Lynda and Stewart Resnick over a Coca-Cola product called Pomegranate Blueberry that actually is made of 99.5% apple and grape juice.
Only about 0.3% is pomegranate juice, which amounts to "a teaspoon in a half-gallon," an attorney told the court.
Among the consumers apparently fooled by the label was Justice Anthony M. Kennedy, who wrote the court's opinion. When the case was argued in April, a lawyer for Coca-Cola said most consumers are smart enough to know juice drinks are blends that often do not contain much of the named fruit.
"Don't make me feel bad," Kennedy told her, "because I thought this was pomegranate juice."
Kennedy noted in his opinion that in addition to the name Pomegranate Blueberry, the Coke product label displays a "vignette of blueberries, grapes and raspberries in front of a halved pomegranate."
The ruling is a victory for the Resnicks, who make and promote pomegranate juice called Pom Wonderful.
They sued Coca-Cola, alleging they were losing sales for their Pom juice because consumers were being fooled. In a statement, their company called the ruling a "real victory for consumers."
The implications could go considerably beyond the small but trendy world of pomegranate juice, opening a wide range of product labels to challenge.
Until Thursday, many judges and food-industry lawyers maintained that sellers of beverages and food products could not be sued for false advertising so long as the product's label accurately disclosed the ingredients in small print, as required by the Food and Drug Administration.
Adopting that view, a federal judge in Los Angeles as well as the U.S. 9th Circuit Court of Appeals threw out the suit brought by the Resnicks.
But in reviving Pom Wonderful v. Coca-Cola, Kennedy pointed to a separate federal trademark law known as the Lanham Act. It forbids using "false or misleading descriptions" to sell a product. This law serves a different purpose from the FDA's regulation, which focuses on whether a product is safe to use, Kennedy said.
The two laws "complement each other," he said, and the FDA's "protection of health and safety" shouldn't result in "less policing of misleading food and beverage labels."
The Supreme Court did not rule on the merits of the case, saying only that the makers of Pom Wonderful may go to court and try to prove their false advertising claim.
Separately, the Resnicks are fighting their own false advertising battle involving a ruling two years ago by the Federal Trade Commission, which said the couple had hyped the health benefits of pomegranate juice. Their appeal is pending before a U.S. appellate court here.
In a second decision, the court said a bankrupt person cannot shield money from an inherited IRA from her creditors. While true retirement funds are shielded, the justices agreed, the money that comes to an heir can be spent immediately and does not count as a retirement account.Copyright © 2015, Los Angeles Times