By Brent Kendall From Wall Street Journal

Beverage Giant Faces Claims by Pom Wonderful over Pomegranate-Flavored Juice

WASHINGTON—During oral arguments this spring, Supreme Court Justice Anthony Kennedy led sharp questioning on whether Coca-Cola Co. KO -0.33% ‘s marketing of a pomegranate-blueberry juice misled consumers because the drink contained little actual pomegranate.

Thursday he wrote a unanimous opinion allowing rival juice maker Pom Wonderful LLC to proceed with a false advertising lawsuit against Coca-Cola, a decision giving companies room to sue competitors over food and beverage marketing that may push the envelope.

Pom claimed Coca-Cola unfairly captured pomegranate juice sales by marketing a “pomegranate blueberry flavored” juice blend from its Minute Maid unit that contains minuscule amounts of pomegranate or blueberry. Instead, the juice is 99.4% apple and grape juices.

It filed suit in 2008 under federal trademark law, which allows companies to bring lawsuits when their commercial interests are damaged by a rival’s allegedly misleading representation of its products.

Coca-Cola has acknowledged the contents of its juice blend but denied Pom’s allegations of misleading consumers. It said its product packaging accurately depicted all five fruits used in the juice and informed consumers that the beverage tasted like pomegranate and blueberry.

Justice Kennedy said in a 17-page opinion that government regulations on juice labeling aren’t a barrier to lawsuits like Pom’s.

“Competitors who manufacture or distribute products have detailed knowledge regarding how consumers rely upon certain sales and marketing strategies,” Justice Kennedy wrote. “Their awareness of unfair competition practices may be far more immediate and accurate than that of agency rule makers and regulators.”

Pom Wonderful pomegranate juice Agence France-Presse/Getty Images

The decision overturned a 2012 San Francisco-based appeals court ruling that Pom’s claims couldn’t go forward because they would intrude on the Food and Drug Administration’s authority to decide how juices can be labeled.

The Supreme Court on Thursday didn’t decide whether the Minute Maid marketing was actually misleading. Instead, it sent the case back to lower courts for further proceedings.

Pom said the ruling would lead to higher assurances for consumers that food and beverage labels are accurate. “We believe that when people better understand what they are consuming, they can make healthy and more informed decisions about what they buy,” the company said.

Coca-Cola said it remained committed to clear labeling that fully complies with FDA regulations. “We intend to defend against Pom’s claims that our labeling is misleading, and the evidence at trial will show that our product was not the cause of Pom’s poor sales,” a company spokesman said.

Consumer groups backed Pom, saying private litigation by companies was a deterrent to misleading food and beverage marketing.

Pom has brought similar claims against other juice makers touting pomegranate products, without much success. Jurors in California found labeling and packaging for Tropicana and Ocean Spray juices weren’t misleading. In another lawsuit, a jury found marketing for a Welch’s white grape-pomegranate juice was misleading, but said Pom didn’t prove its business was harmed by Welch’s conduct.

The high court case is one of two closely watched marketing cases involving Pom Wonderful. The juice maker, owned by Los Angeles billionaires and philanthropists Lynda and Stewart Resnick, is on the defensive in the second case, which is under consideration by a federal appeals court in Washington. There, Pom is fighting Federal Trade Commission findings that it made misleading ad claims about the disease-fighting benefits of its products.

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