In one of the least shocking developments since gambling was discovered at Rick’s in Casablanca, the full Federal Trade Commission affirmed the decision made last summer by the Commission’s ALJ finding that POM Wonderful made deceptive disease claims in its advertising.  Here is our blog post concerning the ALJ’s decision.  The Commission, however, found even more of the ads to be deceptive than the ALJ did and ordered stricter injunctive relief.  Throughout the decision, the Commission provides much for advertisers to consider, especially food advertisers.

The FTC sued POM in September 2010 alleging that POM’s ads made deceptive claims that: (i) its products prevented, treated, or reduced the risk of heart disease, prostate cancer, and erectile dysfunction, and (ii) that POM had clinical studies, research and trials to prove those claims. Contentious discovery and an evidentiary hearing that spanned over five months ensued.  The FTC’s ALJ found that some of the ads made the challenged claims, but did not provide the FTC staff with all of the relief that it wanted.  The ALJ also held that randomized, placebo-controlled trials (“RCTs”) were not required to substantiate the claims made by POM, but that the substantiation offered by POM was inadequate.  Both sides appealed.  In its decision on the appeal, the full Commission, affirmed and expanded the ALJ’s finding of liability and expanded the scope of the injunctive relief.

The Commission examined each of the 43 challenged ads and discussed its findings regarding ad interpretation in a detailed appendix to the opinion.  Based on its analysis of the ads, the Commission found that not only were the 19 ads found by the ALJ found to be false or deceptive indeed false or deceptive but 17 other ads also were false or deceptive.  In so doing, the Commission found that these ads made one or more of the specific disease claims alleged, and not, as POM argued, simply claims about the general health benefits of consuming POM products.  The Commission also rejected POM’s argument that the use of qualifiers such as “may” or “can” modified the statements in the ad such that disease claims were not made.  Similarly, the Commission rejected POM’s argument that the humor, hyperbole, and parody found in many of the POM ads somehow blocked or modified the disease claims.

The Commission disagreed with the ALJ’s finding that RCTs were not required to substantiate these claims.  Premised on its finding that serious disease claims had been made, the Commission found that the greater weight of the expert evidence offered at trial showed that RCTs were required.  The Commission declined to state how many of such tests would be required, but noted that because POM had failed to produce any RCTs the claims were not substantiated.  The Commission rejected the ALJ’s finding that because the products were safe foods not being offered as a substitute for medical treatments a lower level of substantiation was required.

The Commission dismissed POM’s arguments that requiring prior substantiation for claims violated both the First and Fifth Amendments.  However, the Commission did decline to find liability premised on media appearances that two of the individual defendants had made, finding that complaint counsel had failed to show that the appearances constituted commercial speech under the First Amendment (expect more on this issue later).

Regarding relief, complaint counsel’s own experts had stated that one RCT would constitute competent and reliable scientific evidence for the prostate cancer and ED claims.  The Commission, however, ordered as “fencing in” that POM have two RCTS for any future disease claims.  This was consistent with the position the Commission has taken in other recent cases regarding the substantiation required for disease claims.  However, this the first time we have seen the Commission go on record stating that it can require substantiation in an order above what might otherwise be required to adequately substantiate a claim as “fencing in.”  In a footnote to her opinion, Commission Ohlhausen objected to this conclusion, noting that it could unduly limit consumer access to useful information and chill First Amendment protected speech.  The outcome here raises the possibility that a company under a consent order might not be able to make a claim, otherwise supported by adequate and competent reliable scientific evidence, because it has been “fenced in” while its rivals, who are not under a similar consent order, might be free to do so.   Expect to hear more about this issue if, as expected, POM appeals.  The Commission, however, rejected staff request that the order require POM to obtain FDA pre-approval for any disease claims, finding the relief not necessary in this matter.  The FTC has, however, entered into orders in other cases that do require FDA pre-approval for certain claims and specifically reserved the right to continue to do so.  The Commission’s opinion in POM has led to the somewhat inexplicable position of having consent orders that require FDA preapproval for claims that a product reduces the likelihood of getting a cold or flu but not for POM’s claims that its product can treat, prevent or relieve the risk of heart disease, prostate cancer or erectile dysfunction.

In a rather odd procedural twist, Commissioner Ohlhausen, who authored the Commission’s opinion, also wrote a concurrence.  In the concurrence, Commissioner Ohlhausen departed from the majority in finding some of the ads in question to make the challenged claims, explaining that extrinsic evidence would be necessary to find that those ads made the disease claims in question.  As noted above, she also departed from the majority’s requirement that two RCTs should be required in the order.  She expressed concern that the majority was being overly aggressive in finding disease claims to be made and that by so doing the Commission might by infringing upon both the First Amendment and the dividing line drawn by the FDA between structure function claims and disease claims.  If POM appeals as expected, those criticisms will likely be echoed.

This saga seems far from over.  For now, however, food advertisers must continue to be extremely careful in what they say about the health benefits of their products.