Recent Cases on “Green” Messaging in Food and Beverage Company Advertising

Rene Befurt, Anne Cai, Rebecca Kirk Fair & Helene Rowland*

I. Why They Made the List

Several recent lawsuits around “green” messaging in company advertising raise the question of how we can reliably evaluate “reasonable” consumers’ understanding of or reactions to sustainability or environmental messages. The allegations in these matters have pertained to a wide range of topics. Some of the messages under scrutiny include broad marketing language on product packaging, across advertising campaigns, and in other marketing materials to signal to consumers the company’s and product’s positive attitude towards environmental topics. Other messages are more specific and include promises such as that the product’s packaging—a plastic bottle—is 100% recyclable. Unsurprisingly, lawsuits that examine and probe sustainability or environmental messages are on the rise and have garnered the attention of potential plaintiffs and defendants alike.[1] In addition, government institutions continue to scrutinize companies for aspects related to environmental, social, and governance (ESG) topics, including consumer-facing messages about environmental friendliness and sustainability. This year, the Federal Trade Commission (FTC) is in the process of updating their Guides for Use of Environmental Marketing Claims (commonly known as the “Green Guides”), potentially incorporating additional guidelines to critically examine companies’ “green” messaging.

One remarkable recent matter is Earth Island Institute v. The Coca-Cola Company. Plaintiff alleged that various instances of marketing language used by Coca-Cola—including in advertisements related to sustainability and combatting pollution—falsely represent Coca-Cola as “sustainable” and “taking responsibility” for waste as a means to “cultivate[] an environmentally friendly image for . . . climate-concerned consumers to continue to purchase its products and services.”[2] Other cases have addressed more specific consumer-facing messages, such as Duchimaza v. Niagara Bottling, in which plaintiff alleged that advertising with a “100% Recyclable” claim on a plastic water bottle was misleading to consumers,[3] and White v. Kroger, in which plaintiff alleged that the claim “reef friendly” on sunscreen products could be misunderstood.[4] In both Duchimaza v. Niagara Bottling and White v. Kroger, the courts relied in part upon the FTC’s Green Guides, which provide guidance to marketers based on the FTC’s “current views about environmental claims,” including “how reasonable consumers likely interpret certain claims.”[5] While Niagara Bottling successfully pointed to the Green Guides to defend its use of the phrase “100% Recyclable,”[6] the Green Guides were also recently cited as evidence against Kroger’s “reef friendly” claim in the court’s decision to deny a motion to dismiss the litigation.[7]

These recent decisions, and other similar cases underway,[8] demonstrate the importance of assessing the understanding and behavior of a “reasonable” consumer at different points of the purchase funnel. Given the ongoing evolution of companies’ ESG marketing claims, consumers’ perceptions and preferences, and guidelines such as the FTC Green Guides, future matters could benefit from the development and application of frameworks to assess the perceptions and materiality of ESG claims, including approaches that incorporate empirical evidence such as well-structured survey research.

II. Discussions

A. Procedural Background and Rulings: Earth Island Institute v. The Coca-Cola Company

In June 2021, plaintiff Earth Island Institute filed a complaint in the Superior Court of the District of Columbia, alleging that Coca-Cola engaged in false and deceptive marketing by “representing itself as a sustainable and environmentally friendly company, despite being one of the largest contributors to plastic pollution in the world.”[9] More specifically, plaintiff cited to Coca-Cola advertising campaigns across media platforms—such as claims related to “sustainability” and “taking responsibility” for plastic waste—alongside failed Coca-Cola sustainability initiatives and environmental metrics. The “environmentally friendly image” of Coca-Cola presented through these claims, plaintiff alleged, falsely motivated consumers “to continue to purchase [Coca-Cola’s] products and services.”[10]

Coca-Cola filed a motion to dismiss in June 2022; in November of the same year, the court ultimately dismissed the case as aspirational, citing “no plausible framework to determine whether a reasonable DC consumer could be misled by a general impression,” and noting that no statements appeared on actual products.[11] The court’s ruling also cited to specific advertising claims, holding that “[c]ourts cannot be expected to determine whether a company is actually committed to creating a ‘world without waste’ or ‘to doing business the right way.’”[12] The case is currently on appeal to the DC Court of Appeals.

B. Procedural Background and Rulings: Duchimaza v. Niagara Bottling

Plaintiff Eladia Duchimaza filed a class action complaint against Niagara Bottling in the United States District Court for the Southern District of New York in July 2021. Duchimaza alleged that the “100% Recyclable” claim on Niagara Bottling’s plastic water bottles was false and misleading, as 1) not all elements of the plastic bottle were recyclable (e.g., the bottle caps), 2) a percentage of the plastic bottles and caps sent to recycling centers do not end up recycled because they are lost or contaminated, and 3) recycling facilities in the United States do not have the capacity to recycle all recyclables consumed domestically.[13]

Citing to the Green Guides, Niagara Bottling filed a motion to dismiss in October of 2021. The Green Guides define “recyclable” as a term of art:

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. . . . Marketers should clearly and prominently qualify recyclable claims to the extent necessary to avoid deception about the availability of recycling programs and collection sites to consumers.[14]

To address Duchimaza’s arguments, Niagara Bottling argued that the required prominent qualifiers regarding the availability of recycling programs do not always have to be added to a label, as the Green Guide established two exceptions to the rule. First, Niagara Bottling argued that recycling facilities were available to Duchimaza,[15] and the Green Guides indicate that marketers could use a “recyclable” claim without such qualifiers if “recycling facilities are available to a substantial majority of consumers or communities where the item is sold.”[16] Second, Niagara Bottling argued that bottle caps and labels are “minor incidental components,” which, according to the defendant’s reading of the Green Guides, therefore are not required to be recyclable, even in the presence of a “recyclable” claim.[17] These arguments resonated with the court, which agreed that Niagara Bottling’s “100% Recyclable” claim was not likely to mislead a “reasonable” consumer, and dismissed the case in August of 2022.

C. Procedural Background and Rulings: White v. Kroger

In October 2021, plaintiff Phillip White filed a class action complaint against Kroger and Fruit of the Earth (“Kroger”) in the United States District Court for the Northern District of California, alleging that Kroger’s “reef friendly” claim on certain sunscreen products was misleading to the “reasonable” consumer. Specifically, plaintiff asserted that the “reef friendly” label misleads consumers into “believing that the Products only contain ingredients that are reef-safe or otherwise cannot harm reefs,” while “the Products actually contain . . . chemical ingredients that are not safe for reefs because they can harm and/or kill reefs.”[18]

In February 2022, Kroger filed a motion to dismiss the litigation, arguing that the “reef friendly” claim constituted “non-actionable puffery upon which no reasonable consumer could rely.”[19] In March of 2022, however, the court denied the motion to dismiss. In their decision, the court cited to the Green Guides as “undermin[ing] any argument that ‘reef friendly’ can be dismissed as mere puffery.” As of early May 2023, the litigation remains ongoing.

III.   Impact

These cases demonstrate the wide range of ESG claims that could potentially be subject to litigation, from specific terms on product packaging to more generalized marketing claims. In each of these cases, the courts relied on assessments of how a “reasonable” consumer would perceive a claim. As companies’ ESG marketing strategies, consumer preferences and understanding of ESG claims, and guidelines such as the FTC Green Guides evolve, future cases relating to ESG claims may require identifying appropriate frameworks for analysis of consumer perceptions and purchasing behavior. Similarly, future cases may benefit from additional empirical evidence measuring to what extent, if any, certain claims can be linked to consumers’ information processing at all. As indicated by the FTC’s process and goals for its periodic updates for the Green Guides to reflect “current” understanding[20] and to reflect phrases that may not have been “common when the Guides were last reviewed,”[21] environmental claims and related consumer perceptions form a changing landscape.

Based on our review of the cases above, building appropriate frameworks to evaluate a “reasonable” consumer’s perceptions and behavior relating to express or implied ESG claims requires consideration of the messaging content and the particular scenario. To evaluate whether consumers are deceived, or if there is a material impact on their choices or their brand associations, the following contextual factors throughout the purchase funnel and buying process[22] may be helpful in presenting a thoughtful and thorough assessment to the court:

  1. Consumers’ prior knowledge and expectations of ESG: As ESG is an evolving field, changes in the extent of consumers’ prior knowledge of or expertise in the topic may affect how they perceive and behave in response to ESG claims. For example, consumers’ reactions to a marketing claim made by a company may depend on whether they have a previously held concrete belief or expectation about the implications of the claim, as opposed to a more general interpretation or even no interpretation at all.
  2. Whether/how consumers conduct research for the product category or industry: Assessing consumers’ perceptions and behavior related to ESG claims should also take into consideration the nature of how consumers buy in the product category. For instance, whether the product category is a high-involvement one for consumers, the types of information consumers seek out or consider, actual consumers’ general interest in environmental and sustainability topics, and the importance of various other factors including word-of-mouth are all contextual factors that can play a role in how consumers understand and account for ESG claims.
  3. Consumers’ prior associations with a particular company, brand, or product category: Consumers’ prior associations with the company, brand, or even product category more broadly including other competitors may affect their attitudes towards brands, and choosing or rejecting a brand’s products. For some companies, ESG claims may be highly credible to consumers, whereas other companies may struggle in building trust with consumers regarding ESG topics.
  4. Claims implied by the advertising context: Beyond concrete express claims, consumers may perceive implied claims when viewing a company’s advertising. Accordingly, the Green Guides indicate that even if a company’s claims about specific attributes are substantiated through evidence, marketers should be cautious and consider “if an advertisement’s context implies other deceptive claims.”[23]

Various methods can be used to assess consumer understanding and behavior tailored to the context of each case, including methods of empirical evidence such as conducting rigorous survey research of relevant consumers. Depending on the context and key allegations in each case, empirical research methods such as online survey experiments can provide crucial data to answer questions such as how general ESG advertising messaging affects consumers’ perceptions of particular companies, brands, or products; whether and to what extent such messaging misleads consumers relative to the facts of the real world; and whether these ESG claims are material to consumers’ decision-making. Such methods and frameworks, when appropriately designed, can be applied to both future litigations about specific claims or broader advertising claims (such as in Earth Island Institute v. The Coca-Cola Company).

 

*   Rene Befurt is a Principal at Analysis Group and a leading member of the Surveys & Experimental Studies practice. Dr. Befurt is an expert in applying marketing research methods to strategic business problems and litigation matters. He has served as an expert witness in numerous survey and sampling matters, and he assists academic affiliates in the conceptualization, administration, and evaluation of surveys. His specialty in consumer surveys is the development and evaluation of survey experiments and choice modeling approaches. Anne Cai is a Manager at Analysis Group and a core member of the Surveys & Experimental Studies practice. Ms. Cai applies consumer behavior and marketing research methods to litigation issues and strategic business problems, including false advertising, product liability, trademark infringement, patent infringement, and competition matters. She has extensive experience developing and evaluating quantitative and qualitative research to assess marketing, branding, and consumer perception and behavior. She specializes in survey research such as experimental studies, social media analyses, and statistical methods. Rebecca Kirk Fair is a Managing Principal at Analysis Group and a leading member of the Surveys & Experimental Studies and Antitrust & Competition practices. Ms. Kirk Fair specializes in applying market research to the evaluation of competition and substitution patterns to examine potential competitive effects in mergers and but-for outcomes in antitrust litigation. She has significant experience in cartel matters, in which she has analyzed economic and statistical issues, provided expert testimony, and supported academic experts in prominent cases involving technology, consumer products, and financial services. Helene Rowland is a Senior Analyst at Analysis Group and a core member of the Surveys & Experimental Studies practice. Ms. Rowland’s experience includes a wide spectrum of analytical applications, as well as the design and evaluation of empirical quantitative and qualitative research studies to assess consumer perception and behavior around topics related to marketing and branding.

 

[1]   See Tim Quinson, A Class-Action Wave Is Coming for ESG Claims, Bloomberg (Jan. 25, 2023), https://www.bloomberg.com/news/articles/2023-01-25/class-action-wave-is-coming-for-esg-claims-green-insight (increasing ESG dispute exposure).

[2]   Complaint at 2, 7, 30, Earth Island Inst. v. The Coca-Cola Co., Civil Action 21-1926 (PLF) (D.D.C. June 8, 2021).

[3]   Complaint at 1, Duchimaza v. Niagara Bottling, LLC, 21 Civ. 6434 (PAE) (S.D.N.Y. July 28, 2021).

[4]   Complaint at 1, White v. Kroger Co., 21-cv-08004-RS (N.D. Cal. Oct. 12, 2021).

[5]   Guides for the Use of Environmental Marketing Claims, 77 Fed. Reg. 62,121, 62,124–25 (Oct. 11, 2012) (to be codified at 16 C.F.R. pt. 260).

[6]   Order Granting Motion to Dismiss at 7–12, Duchimaza v. Niagara Bottling, LLC, 21 Civ. 6434 (PAE) (S.D.N.Y. Aug. 5, 2022).

[7]   Order Denying Motion to Dismiss at 4, White v. Kroger Co., 21-cv-08004-RS (N.D. Cal. Mar. 25, 2022).

[8]   See, e.g., Swartz v. The Coca-Cola Co., 21-cv-04643-JD (N.D. Cal. Nov. 18, 2022).

[9]   Complaint at 1, Earth Island Inst. v. The Coca-Cola Co., Civil Action 21-1926 (PLF) (D.D.C. Jun. 8, 2021).

[10]  Id. at 7.

[11]  Order Granting Motion to Dismiss at 12, Earth Island Inst. v. The Coca-Cola Co., Civil Action 21-1926 (PLF) (D.D.C. Nov. 10, 2022).

[12]  Id. at 10.

[13]  Complaint at 2, Duchimaza v. Niagara Bottling, LLC, 21 Civ. 6434 (PAE) (S.D.N.Y. July 28, 2021).

[14]  Guides for the Use of Environmental Marketing Claims, 77 Fed. Reg. 62,121, 62,129 (Oct. 11, 2012) (to be codified at 16 C.F.R. pt. 260). See also Order Granting Motion to Dismiss at 8, Duchimaza v. Niagara Bottling, LLC, 21 Civ. 6434 (PAE) (S.D.N.Y. Aug. 5, 2022).

[15]  Memorandum of Law in Support of Defendant’s Motion to Dismiss at 6–7, Duchimaza v. Niagara Bottling, LLC, 21 Civ. 6434 (PAE) (S.D.N.Y. Aug. 5, 2022).

[16]  Guides for the Use of Environmental Marketing Claims, 77 Fed. Reg. at 62,129 (emphasis added).

[17]  Memorandum of Law in Support of Defendant’s Motion to Dismiss at 7, Duchimaza v. Niagara Bottling, LLC, 21 Civ. 6434 (PAE) (S.D.N.Y. Aug. 5, 2022); Guides for the Use of Environmental Marketing Claims, 77 Fed. Reg. at 62,129.

[18]  Complaint at 8, White v. Kroger Co., 21-cv-08004-RS (N.D. Cal. Oct. 12, 2021).

[19]  Order Denying Motion to Dismiss at 4, White v. Kroger Co., 21-cv-08004-RS (N.D. Cal. Mar. 25, 2022).

[20]  Press Release, Fed. Trade Comm’n, FTC Seeks Public Comment on Potential Updates to its ‘Green Guides’ for the Use of Environmental Marketing Claims (Dec. 14, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/12/ftc-seeks-public-comment-potential-updates-its-green-guides-use-environmental-marketing-claims.

[21]  Press Release, Fed. Trade Comm’n, FTC Issues Revised “Green Guides” (Oct. 1, 2012), https://www.ftc.gov/news-events/news/press-releases/2012/10/ftc-issues-revised-green-guides.

[22]  Philip Kotler & Kevin Lane Keller, Marketing Management 173 (Pearson, 15th ed. 2016).

[23]  Guides for the Use of Environmental Marketing Claims, 77 Fed. Reg. 62,121, 62,122 (Oct. 11, 2012) (to be codified at 16 C.F.R. pt. 260).