Just How Wonderful is the FTC Ruling?

POM Wonderful v FTC - Both Sides Claim Victory even though the Court says: "neither side's position as to the claims made or adequacy of substantiation has been totally vindicated."

In an Initial Decision issued on May 17, 2012, a Federal Trade Commission Administrative Law Judge found that some of POM Wonderful's health claims implied that its products treat disease and those claims were not supported by sufficient scientific evidence, rendering the claims "false and misleading" under the Federal Trade Commission Act ("FTC Act") (15 U.S.C. § 41 et seq.). Although the Court entered a multi year cease and desist order against POM Wonderful, the ruling is by no means a victory for the FTC as the remedy it sought - prior review of marketing materials and the requirement for a heightened level of scientific research - was soundly rejected by the Court.

Despite the Court's findings and injunction, POM declared victory stating "the FTC's Administrative Law Judge has upheld POM Wonderful's right to share valuable, scientifically-validated information about the health benefits of its safe food with consumers.... Through its lawsuit against POM, the FTC tried to create a new, stricter industry standard, similar to that required for pharmaceuticals, for marketing the health benefits inherent in safe food and natural food-based products. They failed...." Despite the Court's Order that POM essentially follow the law and denying the relief FTC sought, the FTC likewise declared victory stating the Court upheld "an FTC complaint that POM violated federal law by making deceptive claims in some advertisements that their POM Wonderful 100% Pomegranate Juice and POMx supplements (POM products) would treat, prevent, or reduce the risk of heart disease, prostate cancer, and erectile dysfunction."

The litigation began in September of 2012 when POM filed a declaratory judgment action in the District Court for the District of Columbia (10-cv-1539) on the grounds that FTC had adopted a "new standard" (as evidenced in the Nestle Consent Order and Iovate Stipulated Final Judgment with FTC which required prior review of product claims), without formal rulemaking requiring companies to obtain pre-approval of advertisements by FDA and two controlled clinical trials to substantiate health claims. According to POM, the "new standard" violated the First Amendment as a prior restraint prohibiting POM from disseminating truthful scientific information. FTC commenced its administrative proceeding shortly thereafter and sought to dismiss the federal court case on the grounds that its administrative proceeding rendered POM's federal court action moot because FTC was not enforcing a "new standard" but merely requiring "prior review" as a remedy. The FTC trial took more than 5 months, included 2,000 exhibits, 46 company sponsored studies (costing over $35 million dollars), 14 testifying experts, 10 additional witnesses, over 3,000 pages of trial transcript, 4,000 findings of fact, and 4,000 pages of post trial briefing—resulting in an initial decision of 335 pages.

While the First Amendment undercurrent...