Environmental Claims in Labels: What You Need to Know to Avoid a Lawsuit

environmental claims

With increasing consumer interest in purchasing “environmentally-friendly” products, the risk of liability for companies making false or misleading environmental claims on packaging also increases. Companies looking to avoid liability have to be careful in ensuring that their labels comply with relevant competition and labelling statutes, and with the common law of the jurisdictions in which they operate. An environmental lawyer can help in ensuring compliance.

Given the absence of concrete industry standards, liability is largely assessed on a case-by-case basis. Although an environmental lawyer should be consulted in all cases that a company decides to make environmental claims, this article provides some insight based on recent litigation in the United States on the legal pitfalls for companies looking to make environmental claims in labels.

 

Smith v. Keurig Green Mountain, Inc.

In September 2020, the U.S. District Court for the Northern District of California certified a class action brought by the California purchasers of Keurig Green Mountain’s “K-Cups” single-serve coffee pods. Keurig’s coffee pods claimed to be recyclable but included the qualification that the consumer should “check locally”. Keurig contested the class action, claiming among other things that the plaintiff was not representative of the typical class member, some of whom might have seen the “check locally” label and checked for recycling facilities in their communities.

The court disagreed. It did not matter that the representative plaintiff did not see the “check locally” disclaimer to determine if local recycling facilities accepted the pods. What mattered was that the representative plaintiff was aware of Keurig’s representations that the coffee pods were recyclable and purchased them numerous times based on that belief. Furthermore, given the size of the coffee pods, they could not be recycled in most places thus defeating the purpose of checking locally.[i]

The court also noted the large, visible font on all of Keurig’s packaging that the product was recyclable.[ii] Contrasted with the very fine print qualifications on the updated packaging, such as “Recyclable where facilities exist” or “Check to see if recycling facilities exist in your area”, this was sufficient to demonstrate reliance.[iii]

 

Greenpeace Inc. v. Walmart Inc.

In December 2020, Greenpeace launched a lawsuit accusing Walmart of deceptive business practices for falsely labelling items such as plastic cups under Walmart’s own private label brands as recyclable. The lawsuit asserts that the products are not in fact recyclable because consumers do not have access to recycling programs that accept the products, and the products cannot be recovered from the waste stream and sorted by available facilities.

The packaging identified in Greenpeace’s complaint included the “check locally” and “not recycled in all communities” qualifications in fine print.[iv] Greenpeace alleges that these qualifications are deceptive because they do not provide sufficient clarity that the plastics used in these products are “rarely, if ever, recycled.” As such, the reasonable consumer may conclude that if a recycling facility exists in their community, the facility would be able to recycle the products.

 

National Advertising Division and Blueland Cleaning Products

Lastly, the U.S. National Advertising Division (NAD) recently recommended discontinuance of an advertiser’s “recyclable” claim where the advertising did not clearly communicate that the product may not be accepted at local recycling facilities.

Among other things, the advertiser had stated that its acrylic bottles containing a cleaning product were 100% recyclable but, qualified this claim by stating that the bottles “aren’t intended for you to recycle”. The NAD determined that this qualification did not clearly communicate that the bottles were primarily only “recyclable” through the advertiser’s take-back program, and not through local recycling facilities.

 

The Canadian Context: Relevant Legislation and Guides

In Canada, the Competition Act and the Consumer Packaging and Labelling Act both contain broad prohibitions against false and misleading environmental claims. Under the Competition Act, false or misleading environmental claims can be subject to both criminal and administrative sanctions. The failure to substantiate environmental claims through industry standard testing methods can also constitute a misrepresentation.[v]

The Competition Bureau, in partnership with the Canadian Standards Association, also released “Environmental Claims: A Guide for Industry and Advertisers” (the “Bureau Guide”) in 2008. The Bureau Guide provides some direction for industry on making environmental claims in compliance with the legislation. Specifically, it advises against broad environmental claims and emphasizes the importance of using qualifying statements.

Although it is not binding, the Bureau Guide may be cited by courts in their process of determining whether a claim is false or misleading. For companies operating in the U.S., the Federal Trade Commission’s “Green Guides” provide guidance on making environmental claims. Both the court in the Keurig case and the NAD referred to the Green Guides when determining the accuracy of the environmental claims made in labels.

 

Closing thoughts from an environmental lawyer on environmental claims

Given the significant changes to recycling systems resulting from the closing of several large recycling markets, such as China in 2018, both consumers and governments are becoming more aware and concerned regarding false or misleading environmental claims. As such, companies should be careful about the types of representations they make in their products’ packaging and consult an environmental lawyer to ensure that their environmental claims comply with the law.

Although the cases cited in this article refer to case law challenging recyclability claims, claims related to the biodegradability, compostability or other performance attributes (e.g., reusability, etc.) of packaging or products can also arise. Proper testing should be conducted wherever possible, and claims should be qualified to ensure they are not misleading the public in any way. If you have any doubts about environmental claims made in your products, or observed in the products of others, always consult an environmental lawyer for further guidance.

 

For questions or further consultation, please contact Denisa Mertiri at denisa@greenearthlaw.ca.

Denisa Mertiri would like to thank Janet Song for her assistance with this article.

 

[i] Smith v. Keurig Green Mountain, Inc., Case No. 18-cv-06690-HSG, (N.D. Cal. Sep. 21, 2020) at 5—6.

[ii] Ibid at 13.

[iii] Ibid at 12.

[iv] Greenpeace Inc. v. Walmart Inc., Complaint, online: <https://www.greenpeace.org/usa/wp-content/uploads/2020/12/Walmart-Complaintf.pdf> at para 44.

[v] Competition Act, R.S.C., 1985, c. C-34 at s. 74.01(1).