Companies are increasingly finding themselves having to defend against lawsuits for allegedly “greenwashing” their marketing campaigns, as consumer plaintiffs take issue with brands’ attempts to present themselves and their products as environmentally friendly. Coca-Cola Companies, for example, has landed on the receiving end of more than one such lawsuit, with a pool of plaintiffs alleging in a lawsuit filed in a California federal court in 2021, for example, that the beverage giant is on the hook for marketing its bottles as “100% recyclable” and thus, “not harmful to – or beneficial to, the natural environment” even though such claims are allegedly “false, misleading, and likely to deceive reasonable consumers because the products are not 100% recyclable,”
In the Swartz v. Coca-Cola Companies case, the plaintiffs assert that Coca-Cola is liable for false advertising; negligent misrepresentation; unfair, unlawful, and deceptive trade practices; violating the Consumers Legal Remedies Act; and “greenwashing” under California’s Environmental Marketing Claims Act. That case – which is still underway following two dismissals from an N.D. Cal. judge and a recent rejection of Coca-Cola’s third motion to dismiss – is notable for a number of reasons, not least of which being the plaintiffs’ greenwashing cause of action.
While “all 50 states and the District of Columbia have laws prohibiting unfair or deceptive conduct, which public enforcers and private plaintiffs, alike, have used to bring greenwashing claims,” attorneys Meegan Brooks and Anthony Anscombe previously noted, “several states also have laws that specifically regulate green-marketing claims.” Among them are Maine, Minnesota, New York, and Rhode Island, “which have, to varying extent, adopted the Federal Trade Commission (‘FTC’)’s Green Guides’ non-binding standards as enforceable state law.” Meanwhile, laws in several other states, including California, incorporate compliance with the Green Guides as a safe harbor.
So, how does one make a “greenwashing” claim under the Environmental Marketing Claims Act, in particular, and what defenses do companies have against such lawsuits?
Making a Claim – First things first, Cal. Bus. & Prof. Code § 17580, et seq. – which codified the Green Guides into law in California as of January 1, 2022 – makes it unlawful “for a person to make an untruthful, deceptive, or misleading environmental marketing claim, whether explicit or implied.” For the purpose of this section of the statute, an “environmental marketing claim” includes any claim contained in the “Guides for the Use of Environmental Marketing Claims” published by the FTC, and plaintiffs can rely on a violation of the so-called “greenwashing statute” (section 17580.5) to take action against misleading environmental marketing and climate claims.
> To state a claim for false advertising under section 17580.5, a plaintiff must show that: (1) the statements in the advertising are untrue or misleading and (2) the defendants knew, or by the exercise of reasonable care should have known, that the statements were untrue or misleading.
Meanwhile, section 17580(a) requires that when certain environmental advertising claims are made for consumer goods, such as statements that goods are “environmental choice,” “ecologically friendly,” “earth friendly,” “environmentally friendly,” “ecologically sound,” “environmentally sound,” “environmentally safe,” “ecologically safe,” “environmentally lite,” or “green product,” the advertising party must be able to substantiate the validity of its representations. Accordingly, companies are required to maintain “records documenting and supporting the validity of” representations concerning environmental harm or benefit.
(If a product is labeled or marketed with any of the aforementioned terms, the relevant manufacturer and distributors must maintain all records that support the validity of the claim, including: (1) the reason(s) the company believes the claim to be true; (2) any significant adverse environmental impacts directly associated with the product or its production; (3) any measures taken to reduce the environmental impact of the product or its production; (4) violations of any federal, state, or local permits directly associated with the product or its production; (5) whether the product conforms to the FTC’s Green Guides for use of the terms “recycled,” “recyclable,” ‘biodegradable,” “photodegradable,” or “ozone friendly”; and (6) whether use of the term “recyclable” or the chasing arrows symbol conforms to state regulations.)
A Safe Harbor & Defenses – In the event that a company lands on the receiving end of a greenwashing-centric claim under California’s Environmental Marketing Claims Act, it is not without potential defenses. For instance, “if a company makes environmental marketing claims that do not comply with FTC guidelines, then that is a regulatory issue, and the [Environmental Marketing Claims Act] provides safe harbor from consumer-based lawsuits,” K&L Gates’s Matthew Ball and Damon Pitt stated in a note. However, in order to fall within the safe harbor, the claims at issue must be “about the natural environment, such as ‘earth friendly’ or ‘ecologically safe.’”
Since the California statute does “not provide safe harbor for claims made about a product’s impact on individual consumer health (e.g., ‘non-toxic’) or sustainability-related claims (e.g., ‘sustainably sourced’),” Ball and Pitt note that “plaintiffs may target these claims as deceptive in class action lawsuits.”
At the same time, California law generally maintains that compliance with the Green Guides is a defense to a charge of deceptive environmental marketing under the so-called “greenwashing” statute, with section 17580.5(b) establishing a defense “to any suit or complaint brought under [section 17580.5(a)]” if the “environmental marketing claims conform to the standards or are consistent with the examples contained in” the FTC’s Green Guides. In short: Compliance with the Green Guides is a defense to any claim brought under section 17580.5.
THE BIGGER PICTURE here is that environmental claims are increasingly subject to scrutiny across the country. “Recent state laws have been enacted that impose stringent requirements on recyclability and other claims, and new requirements for extended producer responsibility and mandated recycled content minimums are being adopted or considered,” according to Keller & Heckman’s Sheila Millar, Jean-Cyril Walker, and Anushka Rahman, who note that “at the same time, businesses are working on sustainability programs, including evaluating both products and packaging.”
While consumers “can benefit from understanding important environmental attributes of products and packaging,” settlements like the $10 million one that Keurig Green Mountain, Inc. entered into last year for “deceptively advertising” the recyclability of its K-Cups pods’ companies need to “demonstrate care in the claims [they are making with regards to ESG] and that the use of thoughtful, appropriately placed qualifiers are key to minimizing the risk of such false advertising challenges.”
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