Plaintiff Claims Bottled Water Manufacturer Engaged in Fraudulent “Greenwashing” Campaign

June 2, 2011 | Erin Herbold-Swalwell

 

Manufacturers have increasingly marketed their products as “green” in the hopes of attracting consumers that into the “green movement.”  Companies use visual images such as a green raindrop or other comparable logo, or make claims that their product promotes “cleaner air” or “reduces CO2 emissions” in order to market their products as “environmentally superior.”

In response to claims of deceptive, misleading and false representations- known as “greenwashing”- the Federal Trade Commission (FTC) issued the “Green Guides.” Green Guides are regulatory guidelines for marketing environmentally sensitive products.  But, some consumers have alleged that the processes used to create “environmentally superior” products do the same amount of damage to the environment as their environmentally unfriendly counterparts, and investigative journalist John Stossel has pointed out as much in recent years.

Here, the plaintiff attempted to certify a class action against a bottled water manufacturer. The plaintiff asserted that the defendant committed fraud, was unjustly enriched by false claims of environmental superiority and violated California’s Unfair Competition (UCL) and False Advertising laws (FAL). The plaintiff’s complaint alleged that she was “greenwashed” into buying the defendant’s bottled water by deceptive and conspicuous placement of a “Green Drop” seal of approval. According to the plaintiff, the “green drop” deceptively portrays the product as environmentally sound and superior to other bottled water products.

At trial, the plaintiff presented photographic evidence, showing the product labels and a claim made by the defendant that “every drop is green.” Additionally, the plaintiff claimed that she personally relied on the defendant’s representations and purchased the defendant’s bottled water twice a week for two years- paying a 15% premium for the product. The trial court dismissed the plaintiff’s attempts to certify the class action.

The plaintiff appealed and a California Court of Appeals reviewed the case based on the “reasonable-consumer standard” for deceptive advertisement in California. The California UCL prohibits “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising and any act prohibited by the [FAL].” The FAL prohibits ads which are untrue or misleading and sets a standard for manufacturers to use “reasonable care” in advertising. Though the plaintiff did not bring suit under federal law, she did cite several federal statutory provisions, including the FTC “Green Guides.” Prior to the suit, the California legislature adopted and incorporated most of the Green Guides into state law under the definition of “environmental marketing claims.” On appeal, the plaintiff argued that “general environmental benefit claims,” are deceptive when they expressly or materially imply to a reasonable consumer a substantial environmental benefit.

The appellate court recognized that while the demand for “green” products is on the rise, “spawning a competitive green marketing strategy,” the plaintiff’s claims did not rise to the level of violating the reasonable consumer standard. To satisfy the standard in California, the plaintiff must show “potential deception of consumers acting reasonably in the circumstances.” The test applies to the “ordinary consumer.” Importantly, the court determined that the defendant’s symbol was only a symbol of the company’s product.  It bore no name or recognized logo of any group and didn’t indicate that it was anything other than a symbol.  So, according to the court, no reasonable consumer would believe that the defendant’s product was environmentally superior to other bottled water products. 

Thus, the court dismissed the plaintiff’s attempts to certify a class against the defendant under state law. While the court agreed that “labels matter,” the label on the bottled water was an attempt to market and no reasonable consumer would be “misled to think that the green drop represents a third-party endorsement of the product.” The court also dismissed the plaintiff’s claims of fraud and unjust enrichment. To prove fraud, a plaintiff must prove misrepresentation and that the client justifiably relied on the false advertising. The plaintiff did not have sufficient evidence to satisfy the required elements for a finding of fraud. Hill v. Roll International Corporation, et al., No. A128698, 2011 Cal. App. LEXIS 653 (Cal. Ct. App., May 26, 2011).