Litigation Minute: Companies Selling Products in California Must Justify Environmental Marketing Claims12 April 2022
WHAT YOU NEED TO KNOW IN A MINUTE OR LESS
When companies make advertising claims (including websites, social media, print, and product labels) that a product is beneficial to or not harmful to the natural environment, California law requires those companies to maintain written records supporting the validity of the claims. This requirement extends to manufacturers and distributors.1 As marketing trends continue to embrace consumers’ environmental concerns as they relate to food and beverage sourcing and production, food and beverage companies should be aware of their recordkeeping obligations in California. They should also consider how product-specific marketing claims might trigger these obligations (or create litigation exposure) when referencing a product’s impact on the natural environment.
What Claims Does This Law Cover?
The law expressly covers the following claims: “Environmental choice,” “ecologically friendly,” “earth friendly,” “environmentally friendly,” “ecologically sound,” “environmentally sound,” “environmentally safe,” “ecologically safe,” “environmentally lite,” “green product,” use of the chasing arrows symbol to indicate recyclability, and any other direction to a consumer to recycle the product. The law, however, also includes the catchall phrase, “or any other like term,” meaning that the statute covers any similar phrases.
What Documents Are Companies Required To Maintain?
If a product contains the above phrase(s), or any other like term, a manufacturer or distributor must maintain all records that support the validity of the claim as follows:
- The reason(s) the company believes the claim to be true
- Any significant adverse environmental impacts directly associated with the product or its production
- Any measures taken to reduce the environmental impact of the product or its production
- Violations of any federal, state, or local permits directly associated with the product or its production
- Whether the product conforms to Federal Trade Commission (FTC) Guidelines for use of the terms “recycled,” “recyclable,” ‘biodegradable,” “photodegradable,” or “ozone friendly”
- Whether use of the term “recyclable” or the chasing arrows symbol conforms to state regulations
How Do Courts Analyze “Other Like Terms” Not Listed in the Statute?
Under the phrase “other like terms,” companies still must maintain records if they make claims about products that would lead a reasonable consumer to believe that the product is either beneficial or not harmful to the natural environment. Further, companies may still be liable under other consumer statutes including the California Legal Remedies Act, False Advertising Law, or Unfair Competition Law. For example, a company was sued in California for placing a green droplet on its bottled water label and marketing the product with the phrase, “every drop is green.” The plaintiff claimed that the droplet and phrase represented that the water was environmentally superior to other waters and endorsed by an environmental organization. Applying the reasonable consumer standard, however, the court ruled that merely a green droplet and a generic reference to “green” were not enough to mislead a reasonable consumer to believe that the product was environmentally superior or endorsed by any environmental group.2
Food and beverage companies should remain vigilant, however, as trends indicate more lawsuits attacking environmental marketing claims intended to attract environmentally conscious consumers. For example, plaintiffs in California recently filed a class action lawsuit against Red Lobster for marketing certain seafood products as “sustainable” when they allegedly were sourced from suppliers that use environmentally harmful practices.3 Red Lobster has moved to dismiss this case, partially in reference to its satisfaction of the recordkeeping requirements of Cal. Bus. & Prof. Code § 17580.
Does The Law Provide Safe Harbor for Certain Claims?
Yes. California law prohibits making untruthful or misleading “environmental marketing claims,” as defined under the FTC guidelines.4 If a company makes environmental marketing claims that do not comply with FTC guidelines, then that is a regulatory issue, and the law provides safe harbor from consumer-based lawsuits. Those claims, however, must be claims about the natural environment, such as “earth friendly” or “ecologically safe.” These statutes do not provide safe harbor for claims made about a product’s impact on individual consumer health (e.g., “non-toxic” or “formaldehyde free”) or sustainability-related claims (e.g., “sustainably sourced’), so plaintiffs may target these claims as deceptive in class action lawsuits.5
Manufacturers should carefully scrutinize their environmental impact claims and how consumers might argue that the product failed to meet their expectations.