FDCA Preclusion: When Can a Manufacturer Defeat a Competitor’s Lawsuit by Complying with FDA Regulations?
As many readers probably know, when a food or beverage manufacturer gets a consumer class action alleging that its labeling violated state law, one of the first things it should do is consider whether the disputed aspect of the labeling is covered by the federal Food, Drug and Cosmetic Act (“FDCA”). Many provisions of that statute—and, by extension, their implementing regulations—expressly preempt non-identical state-law regulations. If a putative class of consumers is asking a manufacturer to do something different with its labeling than those provisions do, there is a strong argument that the case is preempted: federal law (the FDCA) trumps state law (the relevant consumer protection statute).
In some instances, however, the FDCA also trumps other federal law, a mechanism known as preclusion. Until somewhat recently, the preclusion doctrine held that a food or beverage company could avoid any Lanham Act false-advertising claim by proving its compliance with FDA labeling regulations. The reasoning went that in addition to its public safety mission, the FDA is charged with acting when a food’s “labeling is false or misleading.” 21 U.S.C. § 343(a)(1). So, when the FDA says how manufacturers should label their products, those regulations represent the agency’s “considered” decision regarding what does—and does not—mislead consumers. POM Wonderful LLC v. Coca-Cola Co., 679 F.3d 1170, 1177 (9th Cir. 2012), rev’d, 573 U.S. 102 (2014). And were a court to override that decision, it would “undercut the FDA’s expert judgments and authority.” Id. In other words, the Food, Drug, and Cosmetic Act (FDCA) and its regulations “precluded” inconsistent Lanham Act claims—just as the FDCA and its regulations may “preempt” certain inconsistent state-law claims.
At first glance, the Supreme Court’s decision in Pom appeared to put an end to this “preclusion” defense, full stop. In reversing the Ninth Circuit, after all, it stated that “Congress did not intend the FDCA to preclude Lanham Act suits.” 573 U.S. at 121. But, as has become clear in the five years since Pom, FDCA preclusion lives on. In particular, some courts have recognized at least two areas where Lanham Act claims are still precluded by the FDCA: (1) where a plaintiff challenges a specific label that the agency has reviewed and pre-approved, and (2) where a plaintiff’s theory of liability would require the courts to interpret the FDCA when the FDA itself has not yet done so. And even absent preclusion, courts have routinely found that compliance with applicable FDA regulations is persuasive evidence that a label is not misleading.
POM Wonderful LLC v. Coca-Cola Co.
But back to the beginning. The dramatis personae in Pom Wonderful v. Coca-Cola Co. were two competing juice manufacturers, both of which sold pomegranate juice blends. Pom Wonderful argued that Coca-Cola’s statement of identity for its juice—which was clearly permitted by the FDCA—nonetheless had to be changed, because it was supposedly misleading to consumers. Coca-Cola raised a preclusion defense, arguing that a private competitor could not impose requirements on its labeling that the FDCA did not. At summary judgment, the Central District of California and then the Ninth Circuit agreed with Coca-Cola.
The Supreme Court did not. Writing for the Court, Justice Kennedy held that Congress did not intend the FDCA to preclude Lanham Act suits like POM’s. POM Wonderful, 573 U.S. at 121. The Court noted that “neither the Lanham Act nor the FDCA, in express terms, forbids limits Lanham Act claims challenging labels that are regulated by the FDCA.” Id. at 113. And while the FDCA has an explicit preemption clause that bars certain state-law claims, Congress “did not enact a provision addressing the preclusion of other federal law” such as the Lanham Act. Id. at 114. The Court also believed that the two statutes’ general purposes were distinct and complementary: the Lanham Act is concerned with competitors’ commercial interests, while the FDCA is primary concerned with “public health and safety.” Id. at 115.
But we can’t help but tell the ending of this story: Coca-Cola prevailed on remand, after a jury determined that its labeling was neither false nor misleading.
At first blush, the Supreme Court’s holding in Pom looks simple: Compliance with FDA regulations is no defense to false advertising claims under the Lanham Act. But since Pom, it has become clear that FDCA preclusion is not dead. Manufacturers have successfully invoked FDCA compliance to defeat Lanham Act suits, particularly where the dispute labeling (1) is explicitly approved by the FDA; or (2) is the subject of ongoing FDA interpretation. Moreover, even when the FDCA and its regulations do not preclude a suit outright, manufacturers can often point to regulatory compliance as evidence that its labeling is not in fact false or misleading.
The Supreme Court left an opening in Pom Wonderful by recognizing that not all regulatory compliance is created equal. Justice Kennedy explained that for foods and beverages, the “FDA does not preapprove . . . labels under [its] regulations.” That, the Court noted, “contrasts with the FDA’s regulation of other types of labels, such as drug labels, and is consistent with the less extensive role the FDA plays in the regulation of food than in the regulation of drugs.” Id. at 109.
The Court was referring to the fact that medical devices and drugs, along with their labels, must be expressly approved by the FDA before they make it to market—whether through the section 510(k), New Drug Application, or another route. And, once approved, a manufacturer generally cannot change its product’s label without FDA sign-off. For example, for devices approved through the 510(k) route—reserved for medical devices that are substantially similar to previously approved ones—the manufacturer cannot change the labeling of its product without prior FDA sign off. E.g., 21 C.F.R. § 807.81(a)(3). The FDA is yet more demanding for generic drugs: no generic drug label may deviate in any way from its brand-name counterpart absent permission from the FDA. PLIVA, Inc. v. Mensing, 564 U.S. 604, 615 (2011). By contrast, although food and beverage manufacturers must comply with the FDCA and its regulations, in most instances they do not need the FDA to sign off on their labels before products can go to market.
This difference matters in the false advertising context. When a plaintiff alleges that a drug or device manufacturer’s labeling is false or misleading, enforcing the Lanham Act would put the defendant in a lose-lose situation: Face a private lawsuit or disobey explicit FDA instructions. For that reason, the leading Lanham Act treatise explained in those situations, there “is a direct conflict between a clear mandate of the FDCA regulations and Lanham Act enforcement.” 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 27.65:50 (5th ed. 2015). And at least some courts have started to reach the same conclusion. See JHP Pharms., LLC v. Hospira, Inc., 52 F. Supp. 3d 992, 1000 & n.5 (C.D. Cal. 2014) (the “presumption” after Pom is that Lanham Act claims are not precluded “unless” the FDA “pre-approved a particular labeling scheme”); G&W Labs., Inc. v. Laser Pharm., LLC, 2018 U.S. Dist. LEXIS 102132, at *47 (D.N.J. June 19, 2018) (similar); Par Sterile Prods., LLC v. Fresenius Kabi USA LLC, 2015 U.S. Dist. LEXIS 32409, at *13 n.5 (N.D. Ill. Mar. 17, 2015) (similar).
The Second Circuit, at least at first, reached the same conclusion for drug and device labels. A year after the Pom decision, the court considered “whether representations that are wholly consistent with an FDA[-approved drug] label are subject to Lanham Act liability.” Apotex Inc. v. Acorda Therapeutics, Inc., 823 F.3d 51, 64 (2d Cir. 2016). The answer, the Second Circuit held, was “no.” Advertisements and “representations commensurate with information in an FDA label generally cannot form the basis for Lanham Act liability.” Id. (emphasis added) Although the Second Circuit has issued one subsequent decision in tension with that holding, its efforts to reconcile the later decision with Apotex was confusing, to say the least.
The bottom line here is that Pom appeared to leave open a preclusion defense to the Lanham Act when the FDA pre-approves, and requires a manufacturer to use, specific labeling language. At least some courts have also started to reach that conclusion. And we think that makes intuitive sense: Drug and device manufacturers must receive FDA sign-off for their product labels, and cannot change them without further regulatory review. That should preclude Lanham Act suits urging the manufacturers to change those same labels, in violation of the regulatory scheme.
Pseudo Primary Jurisdiction
Separate from preclusion, many courts have recognized that, notwithstanding Pom, plaintiffs cannot use the Lanham Act to interfere with FDA’s rulemaking authority. Unlike the typical primary jurisdiction case—where courts stay a case pending the resolution of an issue within the special competence of an administrative agency—courts have dismissed outright Lanham Act claims that bypass “FDA’s exclusive enforcement authority by seeking to prove that Defendants violated the FDCA, when the FDA did not reach that conclusion.” PhotoMedex, Inc. v. Irwin, 601 F.3d 919, 928 (9th Cir. 2010). PhotoMedex, although decided before Pom, is illustrative. There, the defendant modified its medical device, and the plaintiff sued under the Lanham Act. According to the plaintiff, the defendant’s changes to device were big enough that it no longer should have advertised its device as “FDA approved.”
The Ninth Circuit dismissed the claim, reasoning that the FDA alone has “the responsibility for taking enforcement action” when a company mispresents whether its product was cleared by the FDA. Id. Allowing the claim to proceed, the Ninth Circuit explained, would “would, in effect, permit’ the defendant “to assume enforcement power which” the FDCA “does not allow and require the finder of fact to make a decision that the FDA itself did not make.” Id. at 30.
Although the precedential value of PhotoMedex is a tad murky after Pom, see ThermoLife Int'l, LLC v. Gaspari Nutrition Inc., 648 F. App'x 609, 612 (9th Cir. 2016), courts still follow its reasoning. Most recently, in Amarin Pharma, Inc. v. ITC, the plaintiff alleged that its competitors were improperly selling pills as “dietary supplements,” when the products were in fact “new drugs.” 923 F.3d 959, 961 (Fed. Cir. 2019). And like in PhotoMedex, the Federal Circuit affirmed the dismissal of the plaintiff’s claims, because “the FDA ha[d] not provided guidance as to whether the products at issue in this case should be considered ‘new drugs’ that require approval.” Id. at 968.
Other federal courts have followed the same path. See, e.g., Kurin, Inc. v. Magnolia Med. Techs., Inc., 2019 U.S. Dist. LEXIS 184382, at *8 (S.D. Cal. Oct. 23, 2019) (dismissing Lanham Act claim that defendant’s device was misclassified); JHP Pharm., Ltd. Liab. Co. v. Hospira, Inc., 52 F. Supp. 3d 992, 1005 (C.D. Cal. 2014) (dismissing Lanham Act claim challenging the legality of the defendant’s product under FDA regs). As they should. Unlike in Pom, the theory of these plaintiffs’ claims turns on whether a company violated an ambiguous FDA (or some other agency’s) regulation. Allowing plaintiffs to shoehorn a question of regulatory compliance into the Lanham Act would require judges to make a “preemptive determination of how the FDA would interpret and enforce its own regulations.” Amarin Pharma, 923 F.3d at 967.
“Preclusion Lite”: Regulatory Compliance as Evidence of Non-Falsity
Even when outright preclusion is not on the table, courts have recognized that FDA compliance provides persuasive evidence that advertising is not misleading. After all, the FDA’s regulations are intended not just to protect consumer health and safety, but also to prevent false or misleading representations to the public. And those regulations are the product of both the agency’s expertise and input from industry, consumer groups, and other interested parties via the notice-and-comment process.
For that reason, notwithstanding Pom, courts still give weight to manufacturers’ compliance with FDCA labeling and marketing regulations. See, e.g., Ivie v. Kraft Foods Global, Inc., 2013 U.S. Dist. LEXIS 25615, at *35-36 (N.D. Cal. Feb. 25, 2013) (finding FDA guidance “relevant to the issue of whether these labels could be deceptive or misleading to a reasonable consumer”); Bohac v. Gen. Mills, Inc., 2013 U.S. Dist. LEXIS 147530, at *10-11 (N.D. Cal. Oct. 10, 2013) (“Of course, the FDA’s views are relevant to the issue of whether these labels could be deceptive or misleading to a reasonable consumer but they are not the sole or dispositive factor.”).
That is equally true when courts must determine whether an advertiser’s claims have scientific support. Maybe even more so than when interpreting a label, the FDA often has unique expertise in assessing the scientific validity of manufacturer’s claims. See Sugar Ass'n v. McNeil-PPC, Inc., 2008 U.S. Dist. LEXIS 89487, at *3 (C.D. Cal. Jan. 7, 2008) (recognizing the relevance of the FDA’s approval of sucralose’s safety); SmithKline Beecham Consumer Healthcare, L.P. v. Johnson & Johnson-Merck Consumer Pharm. Co., 1996 U.S. Dist. LEXIS 7257, at *41 (S.D.N.Y. May 24, 1996) (deferring to FDA’s conclusion that over-the-counter medication worked as intended).
It’s important to remember, though, that FDA compliance cuts both ways. Failure to follow FDA labeling and advertising guidance, or ignoring an FDA scientific opinion, can be used against defendants in Lanham Act actions. For example, in Eli Lilly & Co. v. Arla Foods, Inc., 893 F.3d 375 (7th Cir. 2018), the Seventh Circuit relied on the FDA’s regulatory guidance (not even a final rule) when finding a defendant’s advertisement about its cheese misleading. Id. at 383-84. And courts have relied on FDA’s scientific conclusion when finding an advertiser’s efficacy claims false. E.g., Zeneca, Inc. v. Eli Lilly & Co., 1999 U.S. Dist. LEXIS 10852, at *97 (S.D.N.Y. July 15, 1999). Whether preclusive or not, a company’s FDA (non)compliance will remain a vital piece of evidence in any false-advertising action.
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Pom Wonderful meant the end of a strong FDA preclusion defense in Lanham Act cases, at least for food and beverage manufacturers. But the FDA’s—or other agencies’—opinions still matter. For drug and medical device manufacturers, courts have recognized that FDA’s preapproval of a label should be dispositive to a Lanham Act claim. And courts have been cautious, notwithstanding Pom, letting plaintiffs use unclear FDA regulations as the starting point for their Lanham Act claims. Finally, even where an agency’s regulations are not case determinative, courts often rely on the FDA’s expert opinion in deciding whether an ad is false or misleading. All in all, compliance with the FDCA and its regulations can still be very useful to a manufacturer defending against a competitor suit, even if it is not always a silver bullet.