Court Dismisses POM Wonderful’s Challenge to FTC Substantiation “Rule”
A federal court in the District of Columbia has dismissed the declaratory judgment action that POM Wonderful filed against the Federal Trade Commission (FTC) shortly before the Commission brought an enforcement action against the pomegranate product producer. POM Wonderful LLC v. FTC, No. 10-1539 (D.D.C., decided September 30, 2012). More information about the complaint and FTC’s motion to dismiss appears in Issues 364 and 373 of this Update. According to the court, “[t]he balance of relevant factors counsels against exercising jurisdiction over this action.”
Among other matters, the court found that (i) the declaratory judgment
action would not fully resolve the parties’ claims because they would “still
have to litigate whether POM’s health claims about its products were false,
misleading, and unsubstantiated in violation of the FTC Act”; (ii) “other
overlapping proceedings are pending” and POM can raise arguments in those
proceedings that it has raised in the declaratory judgment action; and (iii)
“granting declaratory relief would require the resolution of an anticipatory
defense.” As to the latter, the court determined that “[a]t least two of the four
causes of action asserted in POM’s declaratory judgment action are properly
considered anticipatory defenses.”
The court also observed that by filing its action just two weeks before FTC
brought its enforcement action, POM “leaves the disfavored appearance
that [it] hastily filed the instant case, in part, to secure tactical leverage from
proceedings in this forum.” The essence of POM’s dismissed claims was that
FTC had adopted new substantiation requirements, i.e., heightened scientific
evidence and pre-approval from the Food and Drug Administration, without
notice-and-comment proceedings, when it entered agreements setting forth
these requirements with two companies “whose advertisements overstated
their products’ effect on disease prevention, mitigation, and treatment.” The
company will now have to litigate these claims in the enforcement action.
