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May 22

FTC May Have Won Battle with POM Wonderful but Industry Appears to Have Won the War

On May 21, 2012, the Federal Trade Commission (“FTC”) announced that it has prevailed in its claim against POM Wonderful LLC (“The Company”) pursuant to a recent ruling by Chief Administrative Law Judge (“ALJ”), D. Michael Chappell. In an Order dated May 17, 2012, Judge Chappell directed the juice giant to refrain from making statements that POM Wonderful 100% Pomegranate Juice and POMx supplements can prevent or treat heart disease, erectile dysfunction and prostate cancer unless the Company has “competent and reliable scientific evidence” to substantiate these claims.

Although the FTC is largely heralding the ALJ’s order as a victory, it appears that POM Wonderful and the industry generally, may be the ultimate victors. In response to the FTC’s efforts to forbid POM from making disease claims (those claims that a product can cure or treat a disease or condition) without two well-controlled clinical trials to support the claims, the ALJ found that this heightened degree of substantiation is not appropriate. Rather, the ALJ found that a single standard applied for substantiation of disease claims and health claims (those claims suggesting a relationship between a product and a disease or condition). According to the ALJ’s finding the level of substantiation necessary to support disease and health claims is “competent and reliable scientific evidence,” meaning that which is:

sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that the representation is true.

Despite arguing that clinical studies are necessary to support disease claims throughout the case, the ALJ refused to accept this construction of “competent and reliable scientific evidence.” Interestingly, the rejected standard has been applied in recent years to a number of companies targeted by the FTC. See the Nestlé Healthcare Nutrition, Inc. and The Dannon Company, Inc. Consent Orders. However, because these companies consensually, albeit begrudgingly, entered into binding settlements with the FTC, the question remained whether this standard would be applied when put to the test by the courts. Because the FTC is not likely to give up so quickly, it is expected that this ruling will be put to the test again, this time on appeal.

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