Walmart and Reynolds Sued Over Recyclable Plastic Bag Marketing Claim

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The State Attorney General of Minnesota has filed a lawsuit against Walmart Inc. and Reynolds Consumer Products Inc. (the owner of the trash bag trademark “Hefty”) for falsely marketing their plastic bags as recyclable. The Complaint alleges violations of Minnesota’s Prevention of Consumer Fraud Protection Act, Deceptive Trade Practices Act, False Statement in Advertising Act, and deceptive environmental marketing claim regulations.

These statutes utilize language explicitly prohibiting the use and dissemination of false, deceptive, or misleading statements. For example, Minnesota’s False Statement in Advertising Act strictly prohibits advertising that contains any material assertion, representation, or statement of fact that is untrue, deceptive, or misleading. Minnesota’s Deceptive Trade Practices Act further states:

“A person engages in a deceptive trade practice when …the person … represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have….” (emphasis added).

Defendants, through their product labeling, advertised their products as recyclable, which was false.  In addition, their actions disqualified the recyclable contents of the plastic bags from being recycled. In Minnesota, when recyclable materials or products are placed in non-recyclable bags on the curb, waste management will render the contents of the entire bag unrecyclable, leading both the bag and its contents to end up in landfills.

Additionally, the Complaint alleges deceptive environmental marketing claims by Walmart, citing the Federal Trade Commission’s (“FTCs”) Guides for the Use of Environmental Marketing Claims (also referred to as the “Green Guides”). The Green Guides state, “it is deceptive to misrepresent, directly or by implication, that a product or package is recyclable. A product or package should not be marketed as recyclable unless it can be collected, separated, or otherwise recovered from the waste stream through an established recycling program for reuse or use in manufacturing or assembling another item.” Minnesota recycling facilities cannot process the Hefty brand plastic trash bags labeled as recyclable); in fact, they can cause machine malfunctions and even serious damage.

The Complaint asked the court to order a stop on the sale of these products as marketed. Further, the Complaint requests that the court order the defendants to fund a program to educate Minnesota residents about recyclable materials.

This is not the only lawsuit related to Hefty’s recycling bags. Last year Connecticut’s Attorney General filed a lawsuit against the manufacturer, Reynolds, alleging the company has falsely and deceptively marketed the same Hefty recycling at issue in the Minnesota case. The Complaint states that Reynolds has marketed and sold these bags “despite full knowledge that their bags were incompatible with recycling facilities in Connecticut.” This case is still being litigated.

Delta Airlines Sued for Greenwashing Making Carbon Neutral Claims

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Delta Airlines is the latest company to face a greenwashing class action lawsuit. The complaint alleges that the company has misled its customers by making carbon neutral claims. According to the complaint, Delta advertises that it has been carbon-neutral since March 2020; however, because Delta is using carbon offsets to achieve this, the complaint alleges that the company is making representations that are “manifestly and provably false.”

While on paper the purchase of carbon offsets should account for Delta’s global emissions, the complaint claims that issues exist with the accuracy and reliability of offsets issued by a voluntary carbon offset market. The complaint alleges that the voluntary offset market is comprised of “a loose arrangement of companies and NGOs that facilitate investment in green projects such as renewable energy and prevention of deforestation,” but that these carbon neutral projects have foundational issues such as inaccurate and speculative accounting of true carbon offsets, and the fact that many of these projects were scheduled and would have occurred regardless of participating carbon offset programs. Therefore, Delta’s claims “hinge[] on an underlying set of representations” that Plaintiff asserts are “manifestly and provably false.”

The complaint purports that “both scientists and government regulators have specifically identified [Delta] as one of many companies who have grossly misstated the actual carbon reduction produced by their carbon offset portfolio.” If these allegations are true, this would mean that, in reality, Delta is not fully carbon neutral, as the offsets it purchases are not accurately measured.

The Plaintiff alleges the carbon neutral claims are false and misleading and that consumers would not have purchased tickets on Delta flights at all or would have paid substantially less for them had they been aware the claims were false. This assertion is consistent with the increasing trend of consumers paying market premiums for greener products and services, i.e., products and services that have a smaller carbon footprint than competitors or no carbon footprint.

This complaint was brought pursuant to California’s Consumers Legal Remedies Act and California’s False Advertising, Business and Professions Code, which prohibits improper representations regarding the sale and source, sponsorship, approval, or certification of the services sold.

Keurig Reaches $10M Settlement in False Advertising “Recyclable” Class Action

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Keurig has reached a $10 million settlement in a class action lawsuit. The case filed in 2018, Smith v. Keurig Green Mountain, Inc., alleged the company falsely advertised its K-Cups as recyclable. The lawsuit claimed violations of the California Consumer Legal Remedies Act, the fraudulent, unlawful, and unfair prongs of the California Unfair Competition Law, breach of express warranty, and unjust enrichment.

The Complaint states that Keurig marketed the K-Cups in an untruthful or deceptive manner, misleading the “reasonable consumer” to believe the product was recyclable. Members of the Class claim that they relied upon Keurig’s false representations and followed Keurig’s recycling instructions, and, had they known the K-Cups were not recyclable, they would not have purchased them or paid the amount they did. Keurig presented the K-Cups as recyclable, yet there were unmentioned caveats that prevented the product from being recycled even when customers placed the products into the recycling stream, including:

  • Many communities do not accept the plastic used in K-Cups (polypropylene), into recycling.
  • Keurig’s instructions prevent recyclability by advising users that they do not need to remove the K-Cup’s paper filter, although not doing so makes the product ineligible for recycling.
  • The K-Cup design hinders recyclability because the foil lids are difficult to remove, but without doing so, the product is ineligible for recycling.

Consumers who purchased Keurig’s K-Cups between June 8, 2016, and August 8, 2022, are eligible for an award of up to $36. If any money remains in the settlement fund after these payments, 75 percent of the remaining funds will be given to Ocean Conservancy, an environmental non-profit organization that formulates ocean policy and the national and state levels; the remaining 25 percent will go to Consumer Reports, a non-profit organization that conducts independent product testing and consumer advocacy.

Coca-Cola Wins Greenwashing Case

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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.

PFAS Class Action Lawsuit Filed Against Colgate-Palmolive and Tom’s of Maine

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A class action lawsuit has been filed against the Colgate-Palmolive Company and Tom’s of Maine after Plaintiffs discovered that Tom’s Wicked Fresh! Mouthwash contains PFAS. (Tom’s of Maine is a majority-owned subsidiary of Colgate-Palmolive.) The complaint alleges that the companies are violating California’s False Advertising Law, California’s Unfair Competition Law, and the Illinois Consumer Fraud and Deceptive Business Practices Act. The complaint also alleges breach of express warranty, fraud, constructive fraud, and unjust enrichment.

Tom’s Wicked Fresh! Mouthwash is marketed as a “natural” mouthwash.  However, the complaint asserts that independent, third-party testing revealed multiple PFAS substances are present at material levels in the product. The complaint argues that the representation of the product as “natural” implies that it is free from unnatural and artificial ingredients. The complaint notes that the presence of PFAS and other synthetic ingredients is not disclosed on the product label. It also argues that consumers are willing to pay a premium for natural products. Plaintiffs assert that the “natural” claims are false statements, misleading representation, and material omissions.  In addition, they argue that customers would not be willing to pay a premium for the product or would not purchase it at all if they knew that the product contained PFAS and artificial ingredients. The complaint asks the court to award restitution on the basis of unjust enrichment.

Shell Company Greenwashing Complaint Filed with SEC

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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

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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

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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

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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

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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.