WASHINGTON – The politically well-connected California billionaires who built POM Wonderful into a pomegranate juice powerhouse have lost their latest challenge to federal regulators, but the fight isn’t over yet.
In another turn to a long-running dispute over health claims and aggressive salesmanship, a Washington-based federal judge dismissed POM Wonderful’s assertions that the Federal Trade Commission went too far in restraining advertising. In quietly dismissing the case, U.S. District Judge Richard W. Roberts suggested the Los Angeles-based fruit juice company was simply trying to beat regulators to the punch.
“POM’s conduct leaves the disfavored appearance that POM hastily filed the instant case, in part, to secure tactical advantage,” Roberts said.
POM sued two years ago after the trade commission went after other companies for allegedly deceptive health claims. It argued that the regulators were encroaching on free-speech rights and the Food and Drug Administration’s authority, and that other companies like itself were at risk.
Two weeks later, the trade commission filed its complaint against POM. It contended that company officials filed their lawsuit challenging the FTC’s authority because they knew regulators were about to crack down.
At issues were ads for POM that made claims like: “SUPER HEALTH POWERS! Backed by $25 million in medical research. Proven to fight for cardiovascular, prostate and erectile health.”
The larger dispute, though, lives on, as POM Wonderful is still trying to convince the trade commission to reverse course and accept the company’s advertising.
Through their company, Roll Global, Stewart and Lynda Resnick of Beverly Hills, Calif., have become major agribusiness players in California’s San Joaquin Valley, as well as major contributors to political candidates. Their holdings include Paramount Citrus, which describes itself as the “largest integrated grower, shipper and packer of fresh citrus” in the United States, and Paramount Farms, which says it “grows, processes and packages more pistachios than any company in the world.”
Forbes magazine estimated the Resnicks’ net worth at $2.2 billion.
Using health research, canny marketing and pomegranates grown in the San Joaquin Valley, the Resnicks made POM Wonderful famous as well. In a 345-page decision in May, an administrative law judge acknowledged the existence of pomegranate-related health studies but upheld most of the trade commission’s complaints about the juice maker’s claims.
“There was insufficient competent and reliable scientific evidence to support the implied claims in some of the challenged advertisements … that the POM products treat, prevent or reduce the risk of heart disease, prostate cancer or erectile dysfunction, or were clinically proven to do so,” Judge D. Michael Chappell wrote.
Citing its “First Amendment rights to communicate the promising results of our extensive scientific research program on pomegranates,” company officials are challenging the trade commission. A formal appeal of Chappell’s May decision led to a flurry of written briefs and 90-minute oral arguments on Aug. 23 before the entire five-member commission. No ruling has yet been issued.
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“POM Products deliver health benefits to consumers,” Washington-based attorney Edward Lazarus wrote in an appeal brief for the company. “It makes no sense to prohibit or chill an advertiser from telling them so.”
Roberts’ 11-page decision concluded that POM Wonderful must first finish with the full trade commission proceedings before further legal action can proceed.
An attorney for POM Wonderful declined to comment, and a company spokesperson could not be reached Tuesday.
©2012 McClatchy Washington Bureau
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