Today the United States Supreme Court ruled in POM Wonderful v. Coca-Cola Co., No. 12-761, slip op. (U.S. June 12, 2014), that at least in food cases – where “the FDA does not preapprove [product] labels,” id. at 5 – the FDA’s food regulations do not preclude competitor lawsuits under another federal statute, the Lanham Act. The opinion (by Justice Kennedy) was unanimous.
We’re mostly interested in prescription medical products, and in preemption of state product liability litigation, so what does POM mean for our clients? Not a whole lot, at least directly. The Court made sure, right off the bat, to explain what POM was not. Here’s the second paragraph of the legal analysis portion (Part II) of POM:
First, this is not a pre-emption case. In pre-emption cases, the question is whether state law is pre-empted by a federal statute, or in some instances, a federal agency action. This case, however, concerns the alleged preclusion of a cause of action under one federal statute by the provisions of another federal statute. So the state-federal balance does not frame the inquiry. Because this is a preclusion case, any “presumption against pre-emption,” has no force.
POM, slip op. at 7 (citations omitted). So anybody worried that the Court would damage the preemption arguments of either side can rest easy. Nor is the status of the presumption against preemption changed.
Half our readership now clicks away.
The Court does discuss exclusive FDA enforcement, albeit in the context of food – with its explicit exception for certain state actions (see our earlier discussion here). Because POM is not a preemption case, Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001), is never mentioned, although §337(a) is. Here’s what the Court says about that in POM:
[T]he FDCA and its regulations provide the United States with nearly exclusive enforcement authority, including the authority to seek criminal sanctions in some circumstances. 21 U. S. C. §§333(a), 337. Private parties may not bring enforcement suits. §337. Also unlike the Lanham Act, the FDCA contains a provision pre-empting certain state laws on misbranding. That provision, which Congress added to the FDCA in the Nutrition Labeling and Education Act of 1990, forecloses a “State or political subdivision of a State” from establishing requirements that are of the type but “not identical to” the requirements in some of the misbranding provisions of the FDCA. 21 U. S. C. §343-1(a). It does not address, or refer to, other federal statutes or the preclusion thereof.
POM, slip op. at 5 (citation omitted). So, if the plaintiff were attempting to enforce the FDCA – which the plaintiff in POM was not (it was claiming deceptive labeling despite compliance) – things might be different. Certainly things are different if the action involved state law where the food preemption provision would be applicable.
So if POM is not a preemption case, what is it? It’s a “preclusion” case involving the intersection, or perhaps the collision, of two federal statutes. Thus, “traditional rules of statutory interpretation” apply. POM, slip op. at 8. The first place one turns in statutory interpretation is to the statutory language. What do the statutes say? Neither statute (the Lanham Act or the FDCA) contained any language addressing its interaction with the other. Id. at 9.
No other provision in the Lanham Act limits that understanding or purports to govern the relevant interaction between the Lanham Act and the FDCA. And the FDCA, by its terms, does not preclude Lanham Act suits.
Because there’s “[n]o textual provision in either statute [that] bar[s] unfair competition claims,” Congress presumably intended them to “coexist.” Id. Here, the court analogized to Wyeth v. Levine, 555 U.S. 555 (2009), in that Congress could have included some limitation provision in the 70+ years that both statutes have been on the books. POM, slip op. at 9-10. That Congress went to the trouble to add a detailed express preemption clause to §337(a) governing food claims, but remained mute about the Lanham Act, indicated that coexistence with the other federal statutes was intended:
Congress enacted . . . an amendment that added to the FDCA an express pre-emption provision with respect to state laws addressing food and beverage misbranding. Yet Congress did not enact a provision addressing the preclusion of other federal laws that might bear on food and beverage labeling. This is powerful evidence that Congress did not intend FDA oversight to be the exclusive means of ensuring proper food and beverage labeling.
POM, slip op. at 10 (citations and quotation marks omitted). Thus, the limited food preemption provision hurt the defendant’s preclusion argument, rather than helped it (under the statutory construction maxim “expressio unius est exclusio alterius”), because the Lanham Act wasn’t covered. Id. at 10-11 (“[b]y taking care to mandate express pre-emption of some state laws, Congress if anything indicated it did not intend the FDCA to preclude requirements arising from other sources”).
Thus, the Court held that the Lanham Act and the FDCA “complemented” one other. Id. at 11. “Although both statutes touch on food and beverage labeling, the Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety.” Id. Plaintiff’s Lanham Act claim, raising solely “commercial interests,” did not implicate “[e]nforcement of the FDCA and the detailed prescriptions of its implementing regulations [that] is largely committed to the FDA.” Id. That’s the complete opposite of, we hasten to point out, a product liability or other action that asserts “health and safety” issues or that seeks “enforcement of the FDCA.” We think we’re good there. If anything, POM might help us in such a case.
The Court recognized another relevant distinction between the FDCA’s regulation of food, as opposed to prescription medical products – the FDA engages in no pre-approval review of food labeling (the sole subject of the claims in POM):
Unlike other types of labels regulated by the FDA, such as drug labels, it would appear the FDA does not preapprove food and beverage labels under its regulations and instead relies on enforcement actions, warning letters, and other measures. Because the FDA acknowledges that it does not necessarily pursue enforcement measures regarding all objectionable labels, if Lanham Act claims were to be precluded then commercial interests − and indirectly the public at large − could be left with less effective protection in the food and beverage labeling realm than in many other, less regulated industries.
POM, slip op. at 12 (citations omitted) (emphasis added). This analysis looks like a clear signal from the Court that it would likely take a stricter view of
Lanham Act claims involving FDA “preapproved” drugs or medical devices.
The defendant had argued for a “uniformity” purpose – which is similar to preemption. However, a “significant flaw” in this argument was (as previously
discussed) that Congress addressed preemption expressly, and didn’t restrict “federal law”:
The centralization of FDCA enforcement authority in the Federal Government does not indicate that Congress intended to foreclose private enforcement of other federal statutes.
POM, slip op. at 13. Nor did the Court find any “disuniformity” arising from enforcement of another federal statute to be nearly as bad as what happens when 50 different state laws are involved:
It is quite different from the disuniformity that would arise from the multitude of state laws, state regulations, state administrative agency rulings, and state-court decisions that are partially forbidden by the FDCA’s pre-emption provision.
Id. at 14. Once again, the Court emphasizes that a case raising preemption of state law may well be precluded, even where the product is food, rather than a prescription medical product.
Finally, the greater “specificity” of FDA regulation, when compared with the Lanham Act, did not warrant preclusion of the latter by the former. That would
matter only if the Lanham Act claim actually interfered with the FDA’s regulatory scheme:
[T]his greater specificity would matter only if the Lanham Act and the FDCA cannot be implemented in full at the same time.
POM, slip op. at 15. However, “neither the statutory structure nor the empirical evidence” indicated the POM litigation would result in any such interference. Id.
The final section of POM considered and rejected certain arguments made by the government on behalf of the FDA. The Court rejected a distinction between what the FDA “specifically authorized” versus what it merely “tolerated.” POM, slip op. at 15. The Court found no “ceiling” because the statutes were “complimentary.” Id. Nor was there any evidence that the FDA had considered commercial competition in its adoption of the relevant regulations. Id. at 16. An “inconclusive” administrative record could not be preclusive as a “balancing of interests.” Id. (distinguishing the administrative process underlying Geier v. American Honda Motor Co., 529 U. S. 861 (2000)). “This is not a case where a lawsuit is undermining an agency judgment.” POM, slip op. at 16-17. Furthermore, the FDCA does not have the power, to “reorder federal statutory rights without congressional authorization.” Id. at 17.
Thus, a Lanham Act case that did “undermine” an FDA “judgment” can be precluded, even under POM. We can’t say how many of these will exist in the food area, but in prescription medical products, where the FDA reviews the safety and other technical attributes of products before letting them on the market, the chance that litigation under Lanham Act (or other federal statutes such as the FCA) would undermine FDA determinations is undoubtedly much greater.
Where else does this leave us and our clients? First, we don’t think POM does much either way for preemption arguments or product liability litigation, with one peculiar (and indirect) exception. The Court’s parting shot, about “reordering federal statutory rights,” could implicate the FDA’s pending attempt to change regulatory framework concerning generic drugs to eliminate preemption. The Hatch-Waxman Act says “same.” The FDA does not have any “congressional authorization” to read “same” out of the statute and thus “reorder” generic manufacturers’ “statutory rights.” Other than that, as for product
liability litigation, POM shouldn’t be more than a “cf.” citation.
Second, while the Supreme Court in POM didn’t say a word about primary jurisdiction, the Ninth Circuit decision in POM was the primary recent exemplar of that theory’s affirmative application to bar an administratively-related suit. With the Ninth Circuit now reversed, use of primary jurisdiction as an alternative
or adjunct to preemption will be more difficult – no matter what kind of litigation is involved.
Third, what the Supreme Court had to say about “complementary” federal statutes and suits that “undermine” FDA decisions is likely to resonate in the analogous context of False Claims Act litigation. We’re not FCA lawyers, but the fact remains that, like the Lanham Act, the FCA is another federal statute. To the extent that FCA defendants have been making arguments based on POM in the Ninth Circuit, they will have to go back to the drawing board. The same observation would apply to RICO.
Fourth and finally, there is an existing body of law precluding Lanham Act claims in drug/device litigation on the ground that plaintiffs are really attempting to enforce the FDCA in violation of §337(a). Bexis has collected and discussed this precedent in his book. There are, as the POM decision makes clear, several differences between the food litigation in POM and drug/device- related Lanham Act litigation.
- Unlike food, there are no exceptions to exclusive FDA enforcement exclusivity with respect to prescription medical products;
- Unlike food, the FDA engages in pre-market review of prescription medical products, and such products may not be marketed without such review; and
- Unlike POM, where FDCA compliance was simply a fact, in prescription medical product cases, Lanham Act plaintiffs often claim FDCA violations.
To the extent that this prior Lanham Act precedent precludes judicial re-examination and/or alteration of actual FDA decisions concerning prescription medical products, we think it remains good law after POM. However, to the extent that, like POM, FDA compliance is only a background fact in a particular case and the compliant product nonetheless allegedly impinges upon the commercial, competitive interests protected by the Lanham Act, then this pre-POM precedent may not preclude litigation.