POM Wonderful LLC v. Coca Cola Co.

166 F.Supp.3d 1085

POM Wonderful LLC

v.The Coca Cola Company.

CASE NO.: CV 08–06237 SJO (MJWx)

United States District Court, C.D. California.

Signed February 19, 2016

Andrew Steven Clare, David Aaron Grossman, Walter Allan Edmiston, Loeb and Loeb LLP, Daniel A. Beck, Adam P. Zaffos, Brooke S. Hammond, Kristina M. Diaz, Matthew David Moran, Roll Law Group PC, Los Angeles, CA, Forrest Arthur Hainline, III, Goodwin Procter LLP, San Francisco, CA, for POM Wonderful LLC.

Jeffrey A. Rosenfeld, Rachel E. K. Lowe, Sean R. Crain, DLA Piper LLP US, Cynthia L. Sands, Martin & Martin LLP, Los Angeles, CA, Sarah E. Zgliniec, Steven A. Zalesin, Travis J. Tu, Jackson Taylor Kirklin, Joshua A. Kipnees, Kathrina J. Szymborski, Rachel B. Sherman, Ryan Sirianni, Vivian Storm, Yiling Chen-Josephson, Patterson Belknap Webb and Tyler LLP, New York, NY, Shani Thome, The Coca-Cola Company, Atlanta, GA, Nelson L. Atkins, Gonzalez Saggio and Harlan

LLP, Pasadena, CA, for The Coca Cola Company.

PROCEEDINGS (in chambers): ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT [Docket No. 498]

HONORABLE S. JAMES OTERO, UNITED STATES DISTRICT JUDGE

These matters come before the Court on Plaintiff POM Wonderful LLC's (‘POM‘ or ‘Plaintiff‘) Motion for Partial Summary Judgment (‘Motion‘), filed on December 1, 2015. Defendant The Coca Cola Company (‘Coca-Cola‘ or ‘Defendant ‘) opposed the Motion (‘Opposition‘) on December 18, 2015, and Plaintiff replied (‘Reply‘) on January 5, 2016. The Court heard oral argument from counsel on January 19, 2016. See Fed. R. Civ. P. 78(b). For the following reasons, the Court GRANTS IN PART and DENIES IN PART POM's Motion.

I. PROCEDURAL AND FACTUAL BACKGROUND

A. Procedural History

POM initiated the instant action against Coca-Cola on September 22, 2008, asserting three causes of action associated with Coca-Cola's sales of “Minute Maid® Enhanced Pomegranate Blueberry Flavored 100% Juice Blend” (“the Juice”): (1) False Advertising under section 43 of the Lanham Act, 15 U.S.C. § 1125(a) ; (2) False Advertising under section 17500 of the California Business and Professions Code ; and (3) Statutory Unfair Competition under sections 17200 et seq. of the California Business and Professions Code. (Compl., ECF No. 1.). POM filed a First Amended Complaint (‘FAC‘) on July 27, 2009, asserting the same three causes of action. (First Am. Compl., ECF No. 53.) On March 13, 2013, the Court entered summary judgment in favor of Coca-Cola as to POM's second and third causes of action, finding that these state law claims relating to the naming and labeling of the Juice are expressly preempted by the Federal Food, Drug & Cosmetics Act (“FDCA”). (Order Granting Def.'s Mot. for Summary Judgment, ECF No. 418.) Consequently, only POM's Lanham Act claim remains at issue in this action.

POM's Lanham Act claim centers on allegations that Coca-Cola has made false and/or misleading statements as to the pomegranate and blueberry juice content in the Juice product. (FAC ¶¶ 23–24.) POM alleges that consumers will believe the main ingredients in Coca–Cola's Juice product are pomegranate and blueberry juice, when in fact pomegranate juice ranks third and blueberry juice ranks fifth, by volume. (FAC ¶ 23.)

In the FAC, POM further alleges that it has “invested millions of dollars in researching the nutritional qualities and health benefits of pomegranate juice, an investment that continues to this day,” and further alleges that “[a] key element of P[OM's] marketing campaign has been its concentration on the health benefits associated with pomegranates and pomegranate juice....” (FAC ¶¶ 12, 14.) According to POM, this “investment of millions of dollars to research and promote the nutritional qualities and health benefits associated with pomegranate juice” enabled POM to “largely create[ ] the burgeoning market for genuine pomegranate juice that exists today.” (FAC ¶ 15.) Indeed, as of the time the FAC was filed, POM alleges that “in only six short years, [its pomegranate juice has] eclipsed all other products in its market segment of super premium juices to take the # 1 spot nationwide in supermarket sales, as well as the # 1 spot in the key geographic regions of Los Angeles, Chicago, New York, among many others.”

(FAC ¶ 15.) POM further alleges that its “annual supermarket sales have, incredibly, gone from zero to well over $70 million in that same period.” (FAC ¶ 15.)

POM identifies Coca–Cola in the FAC as one of several “[u]nscrupulous competitors [that] have set out to cash in on [POM's] success” and to profit from the fact that, “[d]ue to POM's marketing efforts and funding of research, ... many consumers now associate pomegranate juice with certain nutritional qualities and health benefits.” (FAC ¶ 16.) POM claims that Coca–Cola's Juice label contains many misleading elements not required by federal or state regulation, by, for example, naming the Juice “Pomegranate Blueberry” and juxtaposing this brand name with a picture of a pomegranate and other fruits when in fact the Juice is primarily composed of cheaper apple and grape juices. (FAC ¶¶ 19–20, 23.) As a result, POM alleges that Coca–Cola “wrongfully misleads and deceives consumers, and tricks them into believing that they are getting a similar product [to POM's] (i.e., all natural pomegranate blueberry juice with all of its associated health benefits) for a lower price, when in fact they are getting a very different product primarily containing apple juice and grape juice.” (FAC ¶ 25.)

Coca–Cola filed its Answer to the FAC (“Answer”) on September 30, 2009, in which it asserts a number of affirmative defenses. (Answer to Am. Compl., ECF No. 70.) At issue in the instant Motion is the thirty-forth affirmative defense, in which Coca–Cola alleges that “P[OM]'s claims against [Coca–Cola] are barred, in whole or in part, due to unclean hands.” (Answer 12–13.) In support of this affirmative defense, Coca–Cola offers the following:

Plaintiff has engaged in naming, labeling, marketing and advertising conduct designed to deceive consumers about its products. For instance, Plaintiff describes its Pomegranate Blueberry juice product as Pomegranate Blueberry 100% Juice, yet at the time it filed its Complaint, Plaintiff's product contained other ingredients, including plum, pineapple, apple, and blackberry juices from concentrates and natural flavors. In addition, Plaintiff's name, label, advertisements, website, and promotions of Plaintiff's pomegranate juice products—including its 100% pomegranate juice product and its 100% juice blend products, such as its Pomegranate Blueberry 100% Juice product—are designed to give consumers the false impression that these juices are fresh-squeezed, and not “from concentrate.” In addition, Plaintiff alleges that it “largely created the burgeoning market for genuine pomegranate juice,” by educating the public about health claims through its advertisements and/or promotions. Many of Plaintiff's health claims are not supported by any substantial scientific evidence. Indeed, by Plaintiff's own admission, many of its advertising claims constitute mere “puffery.” Thus, Plaintiff is seeking to capitalize in this case on the fruits of its own misconduct in the form of misleading labeling and advertising.

(Answer 12–13.) Thus, Coca–Cola's unclean hands defense alleges three distinct forms of misconduct: (1) that POM's juice product contained ingredients other than pomegranate and blueberry notwithstanding being labeled “Pomegranate Blueberry 100% Juice” (“ingredient claim”); (2) that POM gave the false impression that its juices were “fresh-squeezed” rather than “from concentrate” (“ 'from concentrate' claim”); and (3) that POM's health claims about its pomegranate products are “not supported by any substantial scientific evidence” (“health advertisement claim”). (Answer 12–13.)

By way of a motion filed on November 3, 2009 (“Motion to Strike”), POM moved to strike the portion of Coca–Cola's unclean hands defense alleging that POM's juice products “are designed to give consumers the false impression that these juices are fresh-squeezed, and not 'from concentrate,' ” as POM's “FAC says nothing about fresh-squeezed juice or juice concentrate.” (Mot. to Strike Unclean Hands Allegations 1, ECF No. 103.) The Court denied POM's Motion to Strike on December 14, 2009, finding that Coca–Cola had alleged “that Plaintiff has employed the very deceptive marketing tactics that Plaintiff alleges Defendant has employed,” and that “[i]t is not necessary that a plaintiff engage in precisely the same behavior as it alleges in the complaint, in order for a defendant to state a valid unclean hands affirmative defense.” (Order Den. Mot. to Strike 2, ECF No. 143.)

On June 5, 2015, POM moved for leave to file a Second Amended Complaint (“SAC”), claiming that the SAC would “simplif[y] the claims” and “focus[ ] on Coca–Cola's false labeling and packaging, and suing for that deception only under the Lanham Act.” (Mot. for Leave to File SAC, ECF No. 449.) The proposed SAC sought to remove POM's original allegations concerning the purported health benefits of pomegranate juice and the importance of POM's health claims in creating consumer demand for its products. (Mot. for Leave to File SAC, Ex. 1.) POM filed its motion for leave to file an SAC after the United States Court of Appeals for the District of Columbia largely denied POM's petition for review of an order by the United States Federal Trade Commission (“FTC”) finding that many of POM's advertisements contained misleading or false claims about POM's juice products and ordering POM and certain of its executives to cease and desist from making any claim about the “health benefits” of a food, drug, or dietary supplement unless the representation is non-misleading and supported by “competent and reliable scientific evidence.” See POM Wonderful, LLC, et al. v. FTC, 777 F.3d 478 (D.C.Cir.2015) ; POM Wonderful LLC, No. 9344,...