June 12 (Bloomberg) -- Coca-Cola Co. must defend against accusations that it deceived consumers about the amount of pomegranate juice in one of its beverages, as the U.S. Supreme Court revived a lawsuit by rival drink-maker POM Wonderful LLC.
The unanimous ruling gives companies a greater role in policing competing product labels for misleading advertisements. The justices said private parties can press false-advertising suits under a federal law known as the Lanham Act even when the U.S. Food and Drug Administration regulates a product.
The FDA “does not have the same perspective or expertise in assessing market dynamics that day-to-day competitors possess,” Justice Anthony Kennedy wrote for the court. “Lanham Act suits draw upon this market expertise by empowering private parties to sue competitors to protect their interests on a case-by-case basis.”
The label on Coca-Cola’s drink says “Pomegranate Blueberry Flavored Blend of 5 Juices,” with the first two words appearing in larger letters. A lower court had said FDA juice-labeling regulations authorized the Coca-Cola product’s name.
POM Wonderful says the label is misleading because the drink contains only 0.3 percent pomegranate juice and 0.2 percent blueberry juice. Apple and grape juice constitute 99 percent of the juice, POM Wonderful says.
Atlanta-based Coca-Cola says the label accurately tells consumers that the product is a blend of fruits and tastes like pomegranate and blueberry.
“We respect the court’s decision and remain committed to clear labeling that fully complies with FDA regulations,” Coca-Cola said in an e-mailed statement. “We intend to defend against POM’s claims that our labeling is misleading, and the evidence at trial will show that our product was not the cause of POM’s poor sales.”
POM Wonderful called the ruling “a real victory for consumers.” The decision “will translate into higher assurance for consumers that the labels on beverage and food are accurate,” the company said in an e-mailed statement.
Los Angeles-based POM Wonderful is a unit of Roll Global LLC, which is closely held by Stewart and Lynda Resnick.
POM Wonderful is separately fighting accusations over its own advertising. In a case now pending at a federal appeals court, the Federal Trade Commission says POM is deceiving consumers with claims about the health benefits of its pomegranate drinks.
The Supreme Court case is POM Wonderful v. Coca-Cola, 12-761.
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