A federal judge has dismissed a lawsuit filed by POM Wonderful against its arch nemesis the Federal Trade Commission (FTC) back in 2010 and accused it of filing the case “to secure tactical leverage” as bosses knew the FTC was about to accuse them of false advertising.
In a lawsuit filed in September 2010, POM sought a declaratory judgment stating that the FTC had violated POM’s rights to free speech and exceeded its legal remit by requiring food/supplement companies to back up disease claims in ads with two human intervention trials.
Two weeks later, the FTC filed an administrative complaint accusing the pomegranate juice specialist of making false and unsubstantiated advertising claims that its products could prevent or treat heart disease, prostate cancer, and erectile dysfunction.
Roberts: Courts should not allow parties to use the Declaratory Judgment Act to engage in forum shopping
In a memorandum opinion published on September 30, District Judge Richard Roberts said the issues in the suit filed by POM were being addressed in the case brought by the FTC, and that “continuing this parallel matter would not aid in the orderly progress of resolving the parties' disputes”.
POM’s conduct, meanwhile, gave “the disfavored appearance that POM hastily filed the instant case, in part, to secure tactical leverage from proceedings in this forum”, he argued, given that POM knew the FTC was preparing to bring an administrative action when it filed its suit.
Courts, he said, “should not allow parties to use the Declaratory Judgment Act to engage in forum shopping”.
Besides, POM will have the opportunity to challenge any FTC final action, he added.
What happens next?
In a May 2012 ruling on the false advertising case brought by the FTC vs POM, administrative law judge Michael Chappell criticized several of POM’s claims but also challenged the argument outlined in FTC consent decrees that ‘competent and reliable scientific evidence’ must equate to least two randomized controlled human trials (RCTs).
Both sides appealed and are currently waiting for FTC Commissioners to make a final decision regarding whether to adopt, in whole, in part, or not at all, Chappell’s decision.
An FTC spokeswoman said: "We expect a decision from the Commission by early December."
The case is being followed closely by the food and supplements industry as it addresses broader questions over the substantiation required for making claims about foods as distinct from drugs.
Contrary to the FTC’s position - expressed in several recent consent decrees - Chappell concluded that so-called 'gold-standard', randomized, double-blind placebo-controlled human clinical trials (RCTs) are not essential for supporting structure-function claims on foods and supplements and are “not necessarily” even essential for products marketed as reducing the risk of disease.
Should the FTC allow this part of Chappell’s ruling to stand on review, "it will be a very significant victory/clarification for the supplement industry”, claimed Marc Ullman, partner at law firm Ullman, Shapiro & Ullman.
Indeed, the ruling amounted to "a stunning rejection of the FTC’s theory that POM was legally required to have double-blind, randomized placebo-controlled clinical trials to make the claims that the FTC attacked" said Hyman, Phelps & McNamara attorney Riëtte van Laack.
More on the FTC vs POM case (and why it matters)…
POM Wonderful declined to comment on Judge Roberts’ opinion.