POM Wonderful appeal denied by Supreme Court

POM WonderfulThe U.S. Supreme Court has declined to hear POM Wonderful LLC’s petition for writ of certiorari regarding a 2013 FTC decision that found some of POM Wonderful’s health related claims to be misleading.  As a result, the FTC ‘s January 2013 order against POM Wonderful will stand.

FTC’s REsponse to Supreme Court’s Denial of Appeal

FTC Chairwoman Edith Ramirez has said:

I am pleased that the POM Wonderful case has been brought to a successful conclusion.  The outcome of this case makes clear that companies like POM making serious health claims about food and nutritional supplement products must have rigorous scientific evidence to back them up. Consumers deserve no less.

D.C. Circuit Upholds 2013 Decision

In late January 2015, in a decision covered by ftclaw.com, the D.C. Circuit Court affirmed the FTC’s January 2013 decision against POM Wonderful, which, as noted, found that POM Wonderful had deceptively advertised that some of its products could treat, prevent, or reduce the risk of heart disease, prostate cancer, and erectile dysfunction, and were clinically proven to have such benefits.  The FTC’s order requires that future disease treatment and prevention claims made by POM Wonderful to be supported by at least one randomized human clinical trial and other health benefit claims to be supported by reliable scientific evidence.

D.C. Circuit Rejected FTC’s Categorical Argument Requiring Two RCTs for all Disease-Related Claims

While the D.C. Circuit’s decision is a victory for the FTC and consumers alike, in as much as it upheld the FTC’s action against POM Wonderful, the greater significance of the decision was the D.C. Circuit’s rejection of the FTC’s categorical position that all disease-related claims had to be supported by at least two randomized clinical trials (“RCT”).  The D.C. Circuit held that while two RCTs would be better and more reliable than one, the FTC had failed to justify the imposition of a two RCT requirement for all disease-related claims.  Even still, the court was unwilling to completely foreclose the possibility of imposing a two-RCT requirement going forward.  Instead, the D.C. Circuit carefully left open the possibility that a narrowly crafted two-RCT requirement could survive First Amendment scrutiny if the FTC could offer an appropriate justification.

POM Wonderful Petitions U.S. Supreme Court for Review After En Banc Petition is Denied

Even though the D.C. Circuit’s ruling rejected the FTC’s position that two RCTs were required to support POM Wonderful’s disease-related claims, it did find that POM Wonderful’s claims were misleading.  Following the D.C. Circuit’s opinion, POM Wonderful petitioned the D.C. Circuit for en banc review of the court’s earlier decision.  That petition was denied.  POM Wonderful then filed a petition for writ of certiorari to the U.S. Supreme Court seeking review of the D.C. Circuit’s decision.

As in the request for the en banc review, POM Wonderful asked the Supreme Court to address the question of whether the D.C. Circuit should have deferred to the FTC on the question of whether certain speech is not protected by the First Amendment, or alternatively, whether the Court of Appeals should have done a de novo review on that issue.

At issue were seventeen advertisements which, according to POM Wonderful, the FTC incorrectly determined are misleading.  POM claims that the ads were not misleading because they included qualifying language.  However, the FTC decided that, despite the qualifying language, the ads were misleading to a “significant minority” of consumers; this significant minority allegedly would interpret the ads as unqualified claims that there is conclusive evidence that POM Wonderful’s products cure or prevent cardiovascular disease and prostate cancer.  POM Wonderful disputed the FTC determination and argued that the First Amendment entitled POM Wonderful to de novo review of the FTC’s determination.

POM discussed four reasons for granting the writ:

  1. The D.C. Circuit’s determination conflicts with Supreme Court precedent holding that “factual” determinations by lower tribunals that concern the protected character of the speech at issue are reviewed de novo.
  1. There is a circuit split on the question presented.
  1. The issue is important and precedent setting and the Court should not allow “a major precedent setting . . . speech restriction to go into effect without” review. According to POM, “if the D.C. Circuit’s grant of enormous deference to the FTC in this case remains in place, the agencies’ settlement leverage will derail most future vehicles before they leave the station.”
  1. The POM Wonderful case is rare because it concerns thirty-six different ads viewed differently by the ALJ, the Commission, and indeed dissenting Commissioner Ohlhausen. According to POM Wonderful, the case “will allow this Court to demonstrate the importance and application of the standard of review in a concrete setting that will clarify future cases.”

After all the litigation involving these parties, it is noteworthy that POM Wonderful did not challenge the entirety of the FTC’s order.  Instead, POM Wonderful acknowledged in its petition to the Supreme Court that even if the Court rules in favor of POM Wonderful, that ruling would not be outcome determinative in terms of the FTC order as a whole.  Thus, regardless of what would happen at the Supreme Court, POM Wonderful would be subject to at least a major part of the FTC’s Order.  Even still, POM Wonderful asserted that Supreme Court review of which ads were false or misleading is relevant for POM Wonderful because it would determine the scope of the FTC’s Order.  If the seventeen additional ads were found not false or misleading, as POM Wonderful claimed, POM Wonderful may continue to use them.

FTC Responds That U.S. Supreme Court Review Is Not Warranted

In its responsive briefing, the FTC argued that the Supreme Court’s review was not warranted in light of the fact that the D.C. Circuit court reviewed 19 of POM Wonderful’s ads de novo.  The FTC claimed that POM Wonderful’s de novo review claim was untimely raised in the D.C. Circuit, with no opportunity for the FTC to respond.  The FTC summarized:

Because the court of appeals’ de novo findings with respect to the 19 ads are sufficient to sustain the FTC’s order, the outcome in this case would not change even if this Court granted certiorari and held that de novo review was constitutionally required.  In any event, the court of appeals’ holding that substantial-evidence review applies in this context is correct and does not conflict with any decision of this Court or of another circuit or a state court of last resort.

Ultimately, the Supreme Court agreed with the FTC, dismissing POM Wonderful’s appeal.  However, POM Wonderful can take solace in the fact that the FTC at least foreclosed the categorical requirement of two RCTs for all disease-related claims.  But the FTC managed to score a minor victory on that point as well, because the D.C. Circuit left open the possibility that two RCTs, while not categorically required for all disease-related claims, could still be required under the right circumstances.  For now, POM Wonderful is out of options as it relates to their de novo review claims, but the FTC may have to reposition itself regarding future arguments that two RCTs are required as it relates to disease-related claims.

* Photo Cred.: couponingfor4.net

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