POM Wonderfuls lawsuit against FTC raises intriguing questions on free speech and specific substantiation requirements, but could have far-reaching consequences depending on how the situation unfolds.

Marc Ullman, Of counsel

September 17, 2010

4 Min Read
POM Lawsuit Raises Questions about FTC Standards

On Sept. 13, 2010 POM Wonderful LLC filed a lawsuit in U.S. District Court for the District of Columbia against FTC alleging the agencys requirements of FDA preapproval for "disease" and "health claims," regardless of the existence of substantiation and a requirement of two clinical trials to support structure/function claims, violates the First Amendment. While a challenge to FTC's overreaching in its enforcement actions against the supplement industry is certainly called for, it is far from clear that this is the right one.

POMs complaint alleges standards imposed by FTC in enforcement of its substantiation doctrine improperly suppress free speech. In addition to procedural issues, such as the failure of the complaint to allege an actual controversy with FTC (such as an ongoing enforcement action), there appear to be substantive hurdles stand in POMs way.

First, the complaint alleges an FTC requirement that advertisers have FDA approval for "disease" and "health claims," even if the claims are truthful and not misleading, violates POMs First Amendment free speech rights. It would seem to be a substantive problem to this challenge that this is not a formal prerequisite to making such a claim announced in an Advertising Guide or a proposed rulemaking, but one FTC has included as part of the injunctive relief in enforcement actions. For at least the past decade, FTC has taken the position that the Federal Food, Drug and Cosmetic Act requires preapproval of disease and health claims, and if future enforcement action is based on the violation of an injunction, it should simply be able to point to the failure to get FDA approval rather than litigate the merits of the claim. Courts are willing to include this kind of restriction in injunctions (consent or court imposed) under the general theory that it encourages compliance with all aspects of federal law while preserving judicial and enforcement agency resources. Overcoming these factors will be a hard row to hoe.

Second, POM challenges what appears to be a new FTC policy of including language in Consent Injunctions requiring two clinical studies on the specific product in question to support any structure/function or health-related claim for foods (and by implication dietary supplements). This policy is much more troubling. It has been alluded to by FTC for a number of years, and something the supplement industry has been rightly concerned with for some time. If FTC actually put such a policy in place through an Advertising Guide or Notice and comment rulemaking, it would have the potential to suppress the vast majority of claims being made for supplements. However, as POM acknowledges, the two-study requirement has appeared only in Consent Injunctions resolving enforcement actions against Nestle and Iovate Health Sciences. In defending against POMs lawsuit, FTC will certainly argue both Nestle and Iovate were represented by competent counsel, and their acceding to this requirement was a reasonable part of the negotiation process ending an enforcement action. Indeed, it is not unusual for parties in litigation with the federal government to waive constitutional rights as part of the negotiation process leading to a settlement agreement. Under such circumstances, it seems unlikely a court will find FTC acted improperly during the settlement process or imposed a standard on a broad swath of regulated industry through these two consent injunctions.

While POMs lawsuit challenges FTC policy positions that have long been troubling to the supplement/natural products industry, the consequences of taking on these issues and losing may be far reaching and damaging. The potential ramifications of an FTC requirement of multiple product-specific studies as substantiation was serious enough to bring together a broad coalition of business interests, including the car industry, the natural products industry, the Chambers of Commerce and many others in opposition, to inclusion of language in the House version of the Financial Reform legislation that would have granted FTC the power to do this through rulemaking. Should POM lose this litigation on the merits, the next time the proponents of expanded FTC powers seek to grant the Commission unfettered rulemaking powers, it will be able to counter industry objections by pointing to a federal court decision upholding the very practices industry is objecting to. The long-term implications of such an outcome may be very serious indeed.

Marc Ullman, Esq., is a partner in the New York-based firm Ullman, Shapiro & Ullman . His practice includes representation relating to FDA compliance, regulatory issues, FTC proceedings and litigation.

About the Author(s)

Marc Ullman

Of counsel , Rivkin Radler

Marc S. Ullman represents clients in matters relating to all aspects of Food and Drug Administration regulatory issues with a focus on the dietary supplement/natural products industry; Federal Trade Commission proceedings and litigation concerning consumer protection compliance and response to enforcement actions, concerning advertising practices, privacy and cyber security. Previously, he practiced with one of New York’s leading white collar criminal defense firms for ten years, where he represented clients in both federal and state prosecutions, as well as numerous related civil matters and other litigations.

Marc’s practice as part of Rivkin Radler’s Health Services Practice Group includes representation of clients on issues relating to FDA compliance, including labels, labeling, claims and good manufacturing practices. He has also represented clients in a number of complex adversarial proceedings with the FDA relating to the scope of the agency’s powers under the Dietary Supplement Health and Education Act of 1994 and its ability to seek remedies such as consumer restitution as well as counseling clients on general litigation related issues and most recently on complex legal issues of concern to the emerging hemp trade in the U.S.

He has represented clients in adversarial proceedings involving the FTC, including the negotiation of consent decrees and litigation regarding the adequacy of substantiation of advertising claims. Marc has appeared/testified on behalf of clients before the Food and Drug Administration’s Food Advisory Committee and at the FDA’s 2000 hearing concerning the impact of the First Amendment to the U.S. Constitution on FDA’s regulation of health claims concerning diseases. He has also counseled clients in connection with matters under investigation by the U.S. Congress.

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