Coca-Cola Wins Greenwashing Case

/in , , /by

The DC Superior Court has granted Coca-Cola Company’s motion to dismiss a 2021 lawsuit filed against it for false and deceptive marketing practices. Plaintiffs argued that the company had falsely represented itself as a sustainable and environmentally friendly company. The 2021 Complaint alleged that Coca-Cola’s representations violate the District of Columbia Consumer Protection Procedures Act (“DC CPPA”) because its marketing and advertising “tend to mislead and are deceptive about the true nature and quality of its products and business.”

The Complaint stated that the marketing is false and deceptive because the company “portrays itself as ‘sustainable’ and committed to reducing plastic pollution while polluting more than any other beverage company and actively working to prevent effective recycling measures in the U.S.” The Complaint cites numerous examples, including:

  • A statement on the Coca-Cola website stating, “Our planet matters. We act in ways to create a more sustainable and better shared future. To make a difference in people’s lives, communities and our planet by doing business the right way.”
  • A statement on the company website stating, “Make 100% of our packaging recyclable globally by 2025. [And] [u]se at least 50% recycled material in our packaging by 2030.”
  • A statement on the company’s Twitter account stating, “Scaling sustainability solutions and partnering with others is a focus of ours.” “Make 100% of our packaging recyclable globally by 2025. [And] [u]se at least 50% recycled material in our packaging by 2030.”

Coca-Cola filed a motion to dismiss in response. The DC Superior Court found that Coca-Cola’s statements were aspirational in nature and, therefore, not a violation of the DC CPPA. The Court stated that Earth Island Institute had not alleged that any statement made by Coca-Cola was provably false or plausibly misleading or that the company misled consumers as to its products’ characteristics. The Court acknowledged that Coca-Cola may have failed to meet advertised environmental goals in the past, but that does not impede its ability to set future environmental goals publicly.  In addition, the Court held that Coca-Cola’s statements were not tied to a “product or service” as required by DC CPPA. None of the statements were included on the bottle of any product or in the marketing of any product. Furthermore, the Court determined that Coca-Cola’s statements are not sufficient to create a misleading “general impression” or a “mosaic of representations” to a reasonable DC consumer as a matter of law under the DC CPPA.

The Court further stated that the Complaint could not prevail because it was based on how Coca-Cola has branded itself, and the DC CPPA does not have any controlling authority on how a brand cultivates its image. Coca-Cola made no specific environmental commitments, which further made it difficult for the Court to take any action. The Court stated that in other similar cases, companies made claims such as “100% recycled and recyclable bottles,” which is concrete and indicative of a promise to customers, as opposed to vague aspirational statements from Coca-Cola, such as the recyclable packaging by 2025.

Shell Company Greenwashing Complaint Filed with SEC

/in , , /by

On February 1, 2023, Global Witness, an environmental justice-focused non-profit organization and a Shell shareholder, filed a complaint with the SEC’s Climate and ESG Task Force requesting the Agency investigate claims Shell has made regarding its renewable energy sources. The complaint alleges that Shell has materially misstated its financial commitment to renewable resources of energy by inflating the content of its new report,  “Renewables and Energy Solutions” (“RES”), reporting segment regarding fossil fuel activities.

Global Witness believes statements in the RES exaggerate the extent to which Shell is reducing its reliance on fossil fuels and investing in renewable energy sources. The non-profit states that while Shell claims to spend 12% ($2.4 billion) of its annual expenditure ($19.7 billion) on “Renewables and Energy Solutions,” actually, the company spends only 1.5% ($288 million) of its annual expenditure on true renewables (e.g., solar and wind power generation).  The complaint asserts that much of the RES designation is actually being diverted to investments in natural gas, which is neither renewable nor an energy solution.

In its complaint, Global Witness requests an SEC investigation into the following:

  • Whether the activities included in the RES segment have been properly reported under relevant accounting standards.
  • Whether including natural gas in RES without reporting how much spending Shell directs to gas has caused Shell to omit material facts necessary to its investors’ clear understanding of Shell’s purported energy transition.
  • Whether Shell’s reported capex on RES includes so much natural gas spending that labeling the segment “Renewables and Energy Solutions” constitutes a materially misleading misstatement.
  • Whether Shell is adequately disclosing its renewable energy investments in accordance with Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which make it unlawful to issue materially misleading statements or omissions in connection with the purchase or sale of any security.

Global Witness further requests that if SEC finds that Shell is misstating or omitting material facts in its financial filings, the Commission issue appropriate enforcement action to ensure that Shell’s investors have access to the clear and comprehensive information they rely upon to inform their investment decisions.

Thinx Settles Lawsuit Over PFAS in Products

/in , /by

Thinx, a New York-based period underwear company, has reached a settlement in a class action lawsuit related to the presence of PFAS in its products. The company was sued for marketing misrepresentations under the Florida Deceptive and Unfair Practices Act, on behalf of the Florida class, and breach of express warranty, unjust enrichment, negligent misrepresentation, and fraud, on behalf of the nationwide class. Plaintiffs alleged that third-party testing revealed the presence of PFAS in Thinx products despite claims by the company that its products, collectively referred to as “Thinx Underwear,” are a safe, healthy and sustainable choice. For example, multiple pages on its website state that the underwear is free of harmful chemicals.

The complaint asserted that customers are willing to pay a premium for Thinx Underwear as opposed to using less expensive traditional feminine hygiene products because traditional products are known to contain a variety of chemicals, including VOCs.

Thinx has continued to insist that it has never intentionally added PFAS to any of its Thinx Underwear. But the settlement agreement requires the company to take a number of steps to ensure PFAS are not intentionally added to its underwear at any stage of production. The company must also modify marketing materials to disclose the use of anti-microbial treatments, and it may not refer to the anti-microbial components as “non-migratory.” In addition, the settlement agreement requires Thinx to enter into a raw materials code of conduct with its suppliers, which requires suppliers to attest that PFAS are not intentionally added to Thinx period underwear.

Danone Waters Sued Over Label’s “Carbon Neutral” Statements

/in , /by

A class action suit was recently brought against Danone Waters of America Inc. The company sells bottled water worldwide under various brand names, including Aqua, Bonafont, and Evian. The lawsuit is specific to its Evian-branded water, which petitioners allege is deceptively and factually inaccurately marketed as “carbon neutral,” a practice referred to as “greenwashing.” The Petitioners’ suit claims violations of California’s Consumer Legal Remedies Act, New York’s Business Law sections on consumer protection and false advertising, as well as breach of express warranty, breach of implied warranty, unjust enrichment, and fraud.

The Complaint states technical definition of carbon neutral is a product “having or resulting in no net addition of carbon dioxide into the atmosphere.” (Citing Carbon-neutral, MERRIAM-WEBSTER (2022); see also A Beginner’s Guide to Climate Neutrality, UNITED NATIONS CLIMATE CHANGE, (Feb. 26, 2021), https://unfccc.int/blog/abeginner-s-guide-to-climate-neutrality). Evian labels and packaging do not include a definition of carbon neutral or direct consumers to its website for further information. Petitioners believe that reasonable consumers reading an Evian label would interpret the carbon neutral claim to mean that the manufacturing process does not create carbon emissions, which is factually inaccurate. Beyond the manufacturing process, it has also been found that the companies Danone utilizes to transport its Evian products are not carbon neutral.

Danone will likely argue that many interpret carbon neutrality to include carbon credits which a company can purchase to offset its carbon emissions. Rather than reducing or eliminating emissions, Danone founded and contributed funds to Livelihood Carbon Funds, which invests in agroforestry projects. Instead of a monetary return on investment, Danone will receive credits that, at least theoretically, offset carbon emissions. Petitioners claim that because the offsets created by these agroforestry programs won’t be realized for decades, Danone cannot make a successful carbon offsetting counterargument.

The case is ongoing in the U.S. District Court, Southern District of New York. The full docket can be found here.

Federal Trade Commission Seeks Comment on Green Guides

/in , , , /by

The Federal Trade Commission (FTC) released a request for public comment on updating its  Guides for the Use of Environmental Marketing Claims (“Green Guides”), which provides guidelines for businesses that want to use environmental marketing claims in their advertising and labeling. The Green Guides aim to help businesses avoid making deceptive or misleading environmental. This includes assisting businesses in determining how consumers are likely to interpret specific claims and how to substantiate environmental claims.  In addition, the Green Guides present options for qualifying claims to avoid deception.

The Commission reviews the Green Guides every ten years, with the last review occurring in. Accordingly, FTC is now seeking comments on the Green Guides to ensure they continue providing helpful guidance for businesses and consumers.

In its request for public comment, the Commission has requested feedback by providing approximately 40 questions as prompts. The questions focus on what FTC Chair Lina M. Khan describes as “relatively emerging environmental topics” and businesses’ views on the Green Guides’ value. Topics include:

  • The use of environmental marketing claims in the context of emerging technologies and market trends, such as ozone friendly/safe, carbon offsets, recyclability, and energy efficiency, and whether the Green Guides should be updated in addressing these areas.
  • The impact of the Green Guides on small businesses, including any challenges or benefits that small businesses have experienced as a result of following the guidelines.
  • The extent to which the Green Guides are consistent with international guidelines and standards for environmental marketing claims.
  • Any additional guidance or clarification that the FTC could provide to help businesses make accurate and non-deceptive environmental marketing claims.

FTC also asks for comment on whether the Guides overlap or conflict with other federal, state, or local laws or regulations, and if so, how?

Additionally, the Commission requests comments on the Guides’ interaction with other environmental marketing regulations and whether the Commission should consider rulemaking to establish independently enforceable requirements related to unfair and deceptive environmental claims.

The Federal Register notice also discusses the types of information that the Commission would find helpful regarding specific environmental marketing claims, including carbon offsets and climate change, degradable, and recyclable.

The Agency is accepting comments until February 21, 2023. You can submit your comments online here.

Four Paint Companies Settle with FTC Regarding Unsubstantiated Zero VOC and Zero Emissions Claims

/in , /by

The four companies, Benjamin Moore & Co., Inc., ICP Construction Inc., YOLO Colorhouse, LLC, and Imperial Paints, LLC, agreed to settle Federal Trade Commission (FTC) allegations that they promoted products as emission-free or containing zero volatile organic compounds (VOCs) during and immediately after painting without having adequate substantiation for making those claims. Some advertisements from the companies also made explicit unsubstantiated safety claims regarding babies, children, pregnant women, and other sensitive populations, such as those suffering from asthma or allergies. The FTC is now taking comment on the Consent Orders for the four companies.

The FTC published Green Guides, which are designed to help marketers ensure that their environmental benefit claims are truthful and non-deceptive in accordance with Section 5 of the FTC Act, 15 U.S.C. §45. The companies failed to meet the FTC’s Green Guides and the FTC’s Enforcement Policy on Zero-VOC claims, and did so at their own peril. The Orders follow the Green Guides and the Enforcement Policy in that the companies cannot make unqualified zero-emission or zero-VOC claims unless the emissions and VOC content is actually zero (which is a difficult standard to meet), or the companies can meet the FTC’s de minimis standard, i.e., emissions and VOC content can be at trace levels.

The FTC’s  Enforcement Policy on Zero-VOC claims describes the “trace level” test a company must meet in order to make unqualified “zero” or “free-of” VOC claims: (1) VOCs have not been intentionally added to the product; (2) the presence of VOCs at that level does not cause material harm that consumers typically associate with VOCs, including but not limited to, harm to the environment or human health; and (3) the presence of VOCs at that level does not result in concentrations higher than would be found at background levels in the ambient air.

The Enforcement Policy’s “trace level” test was changed in the recent Consent Orders. In the Orders, the new “trace level” test is:

  • A VOC has not been intentionally added to the covered product;
  • Emission of the covered product does not cause material harm that consumers typically associate with emission, including harm to the environment or human health; and
  • Emission of the covered product does not result in more than harmless concentrations of any compound higher than would be found under normal conditions in the typical residential home without interior architectural coating.

The emphasis in the “trace level” test now seems to be on “emissions,” which is defined in the Orders as any compound that is emitted or produced during application, curing, or exposure of a covered product. Additionally, it appears that the FTC further refined the third criteria pertaining to background levels by specifying where the background level measurement should be, i.e., in a typical residential home, and how the measurement should be taken, i.e., without interior architectural coating.

Based on the Consent Orders, the four companies promoted products as emission-free or zero-VOC without having adequate substantiation for making those claims. As such, they are barred from doing the following:

  • Making unqualified emission-free and VOC-free claims, unless both content and emissions are actually zero, or emissions are at trace levels, beginning at application and thereafter;
  • Making claims about emission, VOC levels, odor, and other environmental or health benefits, unless they are true and not misleading, and unless the companies have competent and reliable scientific evidence to back them up; and
  • Providing third parties with the means of making false, unsubstantiated, or misleading representations about material facts regarding paints.

In addition, the four companies must send letters to their distributors, instructing them to stop using existing marketing materials, and provide stickers or placards to correct misleading claims appearing on product packaging or labeling in order to correct existing unsubstantiated claims. Benjamin Moore and ICP Construction must also disclose that the environmental seals appearing in their promotional materials are their own in-house designations.

It must be noted that if the FTC Commission finalizes the Orders, it plans to update the 2012 Sherwin-Williams Company and PPG Architectural Finishes Orders previously settled with the FTC over unsubstantiated zero-VOC and environmental benefit claims.

Council of Better Business Bureaus’ National Advertising Division Recommends Kauai Coffee to Modify and Discontinue Environmental-Benefits Claims for Coffee Pods

/in /by

The National Advertising Division (NAD), of the Council of Better Business Bureaus, recommended that Kauai Coffee Company, LLC, discontinue certain environmental-benefits claims for the company’s single-serve coffee pods. In addition, NAD found that the company’s webpage fails to meet FTC Green Guide requirements for advertising claims. The NAD decision recommends that Kauai Coffee company discontinue and modify several advertising claims. It also requested that the company provide substantiation for a number of express claims.

NAD’s purpose is to provide efficient, cost-effective resolution to disputes between private parties regarding national advertisements. The process is voluntary. This type of voluntary enforcement allows the NAD to use alternative dispute resolution to address and settle disputes within 60 to 90 days. Advertisements challenged under the NAD are subjected to the “claim substantiation” standard promulgated by the Federal Trade Commission (FTC). Companies can appeal the NAD decisions to the National Advertising Review Board, which appoints appellate panels to review decisions issued by the NAD. NAD reserves the right to refer the claims to the appropriate federal agency, usually the FTC, for further action. It is this threat of a potential FTC investigation that incentivizes those to participate in the voluntary NAD process.

Much of the Kauai Coffee NAD decision addresses claims regarding the compostability of the Kauai coffee pods. Although the company obtained third party certification that the pods meet the requirements of ASTM standards D6400 and D6868, the certification does not extend to typical disposal methods. Indeed, the pods will disintegrate and biodegrade swiftly and safely only in a professionally managed industrial composting facility, which is not readily available to most consumers, and the pods are not suitable for home compositing. NAD found that Kauai Coffee must prominently discloses these facts.

According to NAD, the Kauai Coffee webpage violated the FTC Green Guides requirements by not clearly and prominently disclosing both that the pods are not suitable for home composting and that industrial composting programs are not readily available to most consumers. Indeed, NAD noted, “it is well-established that any material disclosures must be clear and conspicuous and appear in close proximity to the claim it is qualifying.”

In addition, NAD has asked the company to substantiate a number of its environmental-benefits claims including:

• “Don’t trash the Earth with your coffee. Brew & Renew.”

• Kauai Coffee comes in “new certified 100% compostable pods that work in all K-Cup brewers.”

• “Compostable in industrial facilities. Check locally, as these do not exist in many communities. Not certified for backyard composting.”

• “Now you can enjoy the great taste and convenience of single-serve coffee without worrying about the environmental impact. Our certified 100% compostable pod is compatible with all K-cup brewers and is designed to go back to the land – not the landfill.”

NAD has also asked that Kauai Coffee discontinue use of the following statements:

• “Don’t trash the Earth with your coffee. BREW & RENEW” along with the image of the trash can imprinted with a green/blue image of the earth.

• “Now you can enjoy the great taste and convenience of single-serve coffee without worrying about the environmental impact. Our certified 100% compostable pod is compatible with all K-cup brewers and is designed to go back to the land – not the landfill.”

NAD reports that Kauai Coffee will comply with NAD’s recommendations.

FTC rules on advertising sunscreen as “all natural.”

/in , /by

The Federal Trade Commission has ruled that California Naturel, Inc. falsely advertised its sunscreen product as “all natural” in violation of the FTC Act. Despite the company’s “all natural claim,” the sunscreen contains 8% dimethicone, a synthetic substance.

Last week, the Commission issued an order [PDF] prohibiting California Naturel from misrepresenting the ingredients or composition of its products, including whether the product is “all natural” or “100% natural” or any environmental or health benefits of the product. The company must have competent and reliable scientific evidence supporting its claims about the content and ingredients in its products. The Order also requires California Naturel to submit a report to the Commission, within 60 days, detailing its compliance with the Order.

In April, we reported that the FTC proposed settlements with four other personal care product manufacturers and issued an administrative complaint to California Naturel for marketing sunscreen as “all natural” even though it contained dimethicone. California Naturel also advertised that it “uses only the purest, most luxurious and effective ingredients found in nature.” The company did not dispute that the product contained 8% dimethicone, nor that dimethicone is a synthetic ingredient.

According to the Commission’s Opinion [PDF], California Naturel added a disclaimer at the bottom of the product webpage in early 2016, after the FTC began its investigation, stating: “The FTC requires us to add the following: ‘Dimethicone, a synthetic ingredient, is 8% of the sunscreen formula, the remaining 92% are natural products.’” However, the Commission found that the net impression created by California Naturel’s advertising conveyed to consumers that the sunscreen was “all natural.”

The Commission (except for Commissioner Ohlhausen, who dissented in part [PDF]) found that the disclaimer was not sufficiently conspicuous to change the overall message that the sunscreen is “all natural.” In particular, the Opinion criticized the disclaimer’s distance from the product’s “all natural” claims, noting that it was “not visible at all without scrolling down” and “well below the website’s ‘Add to Cart’ button so consumers are invited to purchase the product before they would even see the disclaimer.” FTC has previously issued guidance on online disclosures that urged marketers to place disclosures before “order now” or “add to shopping cart” links.

The Commission was also unpersuaded that the website’s disclosure of the product’s dozens of ingredients rendered the marketing “transparent.” The Commission pointed out:

All of the ingredients are in the same font and font size, and nothing on the face of the list identifies dimethicone as a synthetic ingredient. …If the cursor is properly positioned, this webpage identifies dimethicone as a “silicone-based polymer.” [I]t is reasonable for a consumer to rely on express claims, and thus that they should not be required to search for and dig out information that contradicts what an advertisement expressly and prominently conveys. Indeed, we expect consumers to rely on express statements such as the “all natural” representation at issue here, and to interpret such statements as meaning what they say.

The Commission concluded that the “all natural” claim was false and misleading because the product contains 8% of a synthetic ingredient. Further, the Commission rejected California Naturel’s proposed defense that there is no regulatory definition specifying the percentage of natural ingredients required to qualify as “natural,” since the company made the express claim that the product is “all natural.”

The Commission’s Opinion is a significant interpretation of the meaning of “all natural” claims, which are not addressed in FTC’s Green Guides guidance on environmental marketing. Here, the Commission cited court cases for the proposition that an “all natural” claim means that the product contains only ingredients found in nature. The Opinion also suggests that a properly qualified “natural,” or “92% natural” claim might have passed muster.

Ninth Circuit rules on “all natural” food claims.

/in , /by

Last week, the Court of Appeals for the Ninth Circuit reversed in part and affirmed in part orders issued by a district court judge in a putative class action case involving “all natural” claims made by Dole Foods. In Brazil v. Dole, No. 14-17480 (9th Cir. Sept. 30, 2016), the plaintiff, Chad Brazil, alleged that Dole’s “All Natural Fruit” labels for packaged fruit products were deceptive under the California Unfair Competition Law (UCL), California False Advertising Law (FAL), and California Consumer Legal Remedies Law (CLRA).

The plaintiff claimed that the labels were deceptive because the products contain synthetic citric and ascorbic acid, citing evidence including informal policy issued in 1993 by the federal Food and Drug Administration (FDA), as well as more recent FDA warning letters to food sellers making similar claims (“100% Natural” or “All Natural”). The FDA’s informal policy [PDF] states that a “natural” claim on a food label is truthful and non-misleading when “nothing artificial or synthetic… has been included in, or added to, a food that would not normally be expected in the food.” In the warning letters, FDA described “natural” claims as deceptive because the food products included synthetic citrus acid, among other substances.

Upon appeal, the Ninth Circuit affirmed the lower court’s order decertifying the class because the plaintiff failed to show how to calculate the price premium with proof common to the class. The Court also affirmed the dismissal of the plaintiff’s claims for the sale of “illegal products.”

However, the Ninth Circuit reversed the district court’s granting of summary judgment on the merits of Brazil’s claims. The Court held that the evidence presented “could allow a trier of fact to conclude that Dole’s description… is misleading to a reasonable consumer.” Interestingly, the Court noted that the FDA warning letters “did not always rely on the limitation that an artificial or synthetic product would ‘not normally be expected to be in the food’ – and, in fact, asserted that foods that naturally contain citric acid (such as tomatoes) may not be labeled ‘all natural’ if synthetic citric acid is added to them.”

While unpublished, the Ninth Circuit’s opinion [PDF] may prove consequential because it suggests how the Court may interpret “natural” claims in the future. In addition, a number of other cases involving “natural” claims have been stayed while this case has been pending and the plaintiff’s bar may be emboldened to pursue further litigation.

The case has been remanded to the lower court to allow the plaintiff “injunctive relief on behalf of the class and his remaining individual claim for restitution.”

Seventh Generation Settles “Natural” Claims Class Action For $4.5M

/in /by

Consumers in this class action claimed that Seventh Generation Inc. deceptively labeled its cleaning products as “natural” even though they contained synthetic preservatives. Seventh Generation has agreed to pay $4.5 million to settle this case in New York federal court.

Seventh Generation makes several household cleaning items such as laundry detergent, glass cleaner, and dish soap. The products in question are natural laundry detergent, natural 4X concentrated laundry detergent, ultra power plus natural laundry detergent, natural dish liquid, and ultra power plus natural dish liquid. They were available for sale in stores such as Walgreens, Walmart, Target, Amazon.com, Bed Bath & Beyond, and Whole Foods.

The consumers alleged that the company incorrectly used the term “natural,” despite the fact that two of the ingredients — Methylisothiazolinone (“MIT”) or Benzisothiazolinone (“BIT”) — are synthetic. MIT and BIT are antimicrobial preservatives.

In its press release, Seventh Generation stood by its “natural” labeling, but cited burdensome litigation costs as its reason for settlement. Under the terms of the settlement, Seventh Generation will remove the “All Natural” and “100% Natural” claims, and will add clarifications about the non-toxic and hypoallergenic claims. Additionally, Seventh Generation will provide compensation to eligible claimants.

This lawsuit is one of several settled and pending cases against companies claiming that their products are natural, but contain synthetic substances. See Earth Friendly Settlement and Tom’s of Main Settlement.