Markets Wired

In an Initial Decision announced today, Chief Administrative Law Judge D. Michael Chappell upheld a Federal Trade Commission complaint, and ruled that POM Wonderful LLC, its sister corporation Roll Global LLC, and principals Stewart Resnick, Lynda Resnick, and Matthew Tupper violated federal law by making deceptive claims in some advertisements that their POM Wonderful 100% Pomegranate Juice and POMx supplements (POM products) would treat, prevent, or reduce the risk of heart disease, prostate cancer, and erectile dysfunction.

An order Judge Chappell issued with the Initial Decision would bar the POM respondents from making any representation about the “health benefits, performance, or efficacy” of POM products or any other food, drug, or dietary supplement – unless the representation is not misleading, and the POM respondents possess “competent and reliable scientific evidence . . . to substantiate that the representation is true.”  It also would bar them from representing that any such product “is effective in the diagnosis, cure, mitigation, treatment, or prevention of any disease,” including treating, preventing, or reducing the risk of heart disease, prostate cancer, or erectile dysfunction – unless the representation is not misleading, and the POM respondents possess “competent and reliable scientific evidence . . . to substantiate that the representation is true.”  The order also would bar the POM respondents from misrepresenting “the existence, contents, validity, results, conclusions, or interpretations of any test, study, or research.”

The Initial Decision notes that the order proposed by the FTC staff also would  have prohibited the POM respondents from representing that any POM product “is effective in the diagnosis, cure, mitigation, treatment, or prevention of any disease, including, but not limited to, any representation that the product will treat, prevent, or reduce the risk of” heart disease, prostate cancer, or erectile dysfunction “unless the claim has received prior approval from the Food and Drug Administration in accordance with Food and Drug Administration statutes and regulations.”  In briefs before Judge Chappell, FTC staff had argued that requiring FDA approval of such representations  would provide clearer guidance, facilitate the POM respondents’ compliance with the order, and make the order easier to enforce.

However, Judge Chappell ruled that the FDA pre-approval requirement “would constitute unnecessary overreaching.”  Instead, the order issued by the judge would require the POM respondents to adhere to the same standard of “competent and reliable scientific evidence,” by requiring them to possess such evidence to substantiate both disease claims and more generalized claims about the health benefits, performance, and efficacy of their products.  The judge also imposed various monitoring and record-keeping provisions to facilitate the POM respondents’ compliance with the order.

According to Judge Chappell’s decision:

• The POM respondents’ violations of federal advertising law were serious because their claims “pertained to serious diseases and dysfunction of the body, including cancer,” and because consumers were unable to evaluate whether the claims were true or supported by the clinical studies cited in the ads.
• The evidence demonstrated that reasonable consumers would interpret the POM respondents’ advertisements as claiming that drinking eight ounces of POM Juice daily, taking one POMx pill daily, and/or taking one teaspoon of POMx Liquid daily treats, prevents, or reduces the risk of heart disease, prostate cancer, and/or erectile dysfunction, and/or is clinically proven to do so.
• Expert testimony demonstrated that there was insufficient competent and reliable scientific evidence to support claims that POM products treat, prevent, or reduce the risk of heart disease, prostate cancer, or erectile dysfunction, or are clinically proven to do so.

While Judge Chappell ruled that some of the POM respondents’ advertisements made the unsubstantiated claims, he found that with regard to some of their other ads, “the preponderance of the evidence fails to demonstrate that such advertisements would reasonably be interpreted by consumers as containing such claims.”

Filed in September 2010, the FTC complaint charged that the POM respondents violated federal law by making deceptive disease prevention and treatment claims.  The ads in question appeared in national publications such as Parade, Fitness, The New York Times, and Prevention magazines; on Internet sites such as pomtruth.com, pomwonderful.com, and pompills.com; on bus stops and billboards; in newsletters to customers; and on tags attached to the product.  POM Wonderful Pomegranate Juice is widely available at grocery stores nationwide.  POMx pills and liquid extract are sold via direct mail.

The FTC complaint alleged that the POM respondents’ heart disease claims were false and unsubstantiated because many of their scientific studies did not show benefits from using POM products for treating or preventing heart disease.  It alleged that the prostate cancer claims were false and unsubstantiated because, among other reasons, the study the POM respondents relied on was neither “blinded” nor controlled.  Finally, it alleged that the erectile dysfunction claims were false and unsubstantiated because the study on which the company relied did not show that POM Juice was any more effective than a placebo.

The Appeals Process. The Judge’s Initial Decision is subject to review by the full Federal Trade Commission on its own motion, or at the request of any party.  The Initial Decision will become the decision of the Commission 30 days after it is served upon the parties, unless a party files a timely notice of appeal – and thereafter files a timely appeal brief – or the Commission places the case on its own docket for review or stays the effective date of the decision.

Copies of the public version of the Initial Decision and Order by the Administrative Law Judge are available from the FTC’s website and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

(FTC File No. 0823122)
(FTC Docket No. 9344)
(POM)