Pom tests limits of FTC power with health-ad campaign

POM wonderful has hit back at the Federal Trade Commission with a new advertising campaign, telling consumers when it comes to &quotFTC v. POM - You be the judge."
POM
POM wonderful has hit back at the Federal Trade Commission with a new advertising campaign, telling consumers when it comes to "FTC v. POM - You be the judge."
Posted May 28, 2012, at 6:09 a.m.

The juice maker Pom poked a big stick in the eye of the Federal Trade Commission this week.

The FTC and the marketer of pomegranate juice have been locked in a legal battle since the agency accused the company of hyping the health benefits of its juice and related products. Earlier this week, an administrative court judge slammed Pom for failing to back up claims in some of its advertisements, specifically about the products’ ability to treat or prevent heart disease, prostate cancer and erectile dysfunction.

But Pom clung to parts of the decision that were more favorable and trumpeted them in an advertising campaign launched days later. In full-page advertisements in the New York Times, Los Angeles Times and elsewhere, the company boasted that the judge agreed that its products “provide significant health benefits.” The ads made no mention of the judge’s criticisms.

“My first reaction was: ‘This is a very aggressive counterattack,’ ” said Thomas Cohn, a former FTC regional director, now an advertising lawyer in New York. “It’s pretty unusual to see a defendant launch this kind of campaign after a judge has ruled.”

The in-your-face nature of Pom’s response sparked an excited buzz in legal circles. In recent years, the agency has taken high-profile enforcement actions against some major advertisers such as Dannon, Nestle and Kellogg. The firms settled their cases without admitting wrongdoing. By not rolling over, Pom is aggressively testing the limits of the FTC’s power and making a public spectacle of it along the way.

“What’s going on with Pom is wild,” said Jeffrey Greenbaum, an advertising lawyer with Frankfurt Kurnit Klein & Selz in New York. “At the same time, there is some value in getting some oversight on what’s appropriate. If the FTC is overstepping its bounds, that issue is not going to resolve itself until people choose some tough cases and test the limits of what the FTC has authority to do.”

The judge’s decision offered something to both sides.

In the opening pages of the ruling, Chief Administrative Law Judge Michael Chappell agreed with the agency’s assertions about the misleading nature of some of the advertisements.

“The weight of the persuasive expert testimony demonstrates that there was insufficient competent and reliable scientific evidence to support the implied claims” in some of the advertisements targeted by the FTC, Chappell wrote.

The judge said that the authors of the one of the studies Pom used to substantiate its claims each testified that their study did not conclude that Pom juice treats, prevents or reduces the risk of prostate cancer.

In its ad campaign about the 335-page ruling, Pom omitted those details. Instead, it pulled excerpts such as the one on page 282: “Competent and reliable scientific evidence supports the conclusion that the consumption of pomegranate juice and pomegranate extract supports prostate health.”

In a statement, the company said it had every right to “illuminate the facts and opinions” stated in the judge’s ruling. It also said the FTC failed to mention in its statements that the ruling found less than 2 percent of Pom’s 600 print and outdoor ads misleading. Pom plans to appeal those findings.

One of the big risks the company takes with this high-profile campaign is that the FTC, at some later date, may require corrective advertisements if it finds that the company mischaracterized the judge’s ruling in its ad.

The FTC did not win on all fronts.

The court denied the agency’s request that some of Pom’s products should get pre-approved by the Food and Drug Administration before making similar claims in the future. Unlike pharmaceutical drugs, which can have serious side effects, pomegranate is a natural product that is recognized as safe and has no adverse side effects, the judge said.

As a result of this ruling, the government cannot require Pom to conduct random and placebo-controlled clinical studies to make its health claims. Instead, it can simply rely on competent and reliable scientific evidence going forward.

While this ruling may be a side note to consumers, it is significant in legal circles because the FTC has been pushing for FDA pre-approval of products in many of its settlements and got some companies to agree to it, lawyers who track these kinds of cases said.

The judge’s decision is not final. Either side can file an appeal to the FTC by June 18. The respondents can appeal again, with a federal court of appeals, if they want to contest the FTC’s final decision.

The FTC declined to comment on Pom’s new advertising campaign given that one or both parties are likely to appeal certain aspects of the decision.

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