Literal greenwashing--well, the washing part anyway

Koh v. S.C. Johnson & Son, Inc., 2010 WL 94265 (N.D. Cal.)

Koh sued for violations of California’s UCL, FAL, and CLRA, along with common-law fraud and unjust enrichment based on SCJ’s alleged “greenwashing” of Windex and Shout. In 2008, SCJ began to sell Windex in packaging that prominently displays the Greenlist label, and it’s used the label on other products, including Shout. Koh alleged that the label is deceptively designed to look like a third party seal of approval, which it is not, and it falsely represents that the products are environmentally friendly.

Koh alleged that today’s environmentally-conscious consumers will pay a premium price for “green” products, which they will buy in preference to non-green products. SCJ competes with ecofriendly brands such as SimpleGreen and Seventh Generation, and a major SCJ competitor, Clorox, announced that its Green Works cleaning products would launch with a Sierra Club seal of approval. As a result of the Greenlist label, Koh alleged, SCJ could charge as much as 50% more than non-green-labeled products. He alleged that he wouldn’t have bought Greenlist-labeled Windex at its premium price if he had known that Greenlist was a label applied by SCJ, not a third party, and that Windex is not environmentally friendly.

SCJ argued that Koh had not sufficiently alleged injury and that no reasonable consumer could have found the label misleading. In this case, the court found that Koh had sufficiently alleged loss: courts have held that being induced to purchase a product one would not otherwise have purchased is not “loss of money or property” within the meaning of the UCL and FAL as long as the purchaser received the benefit of the bargain. Here, however, Koh sufficiently alleged that he didn’t receive the benefit of the bargain because Windex cost more than similar products without misleading labeling.

SCJ then argued that the Greenlist label makes no mention of a third party, describes Greenlist as a “rating system” and not as a seal of approval, and directs consumers to SCJ's own website for further information. This is a question of fact not subject to resolution on a motion to dismiss. Given the context described in the complaint, it’s plausible that a consumer could interpret the label as being conferred by a third party. The court also referred to FTC guidelines for products with “environmental seals,” which state that such labels are likely to convey environmental superiority, and that the labels are deceptive in the absence of substantiation for this broad claim.

SCJ also argued that Koh couldn’t sue over Shout’s labeling because he didn’t allege that he purchased Shout. Koh argued that this was appropriately dealt with as a matter of class certification, later on. Though he wouldn’t have standing in a suit over Shout alone, he alleged that SCJ used the Greenlist label on multiple products, including one that he bought, “and there is no brightline rule that different product lines cannot be covered by a single class.” So the court decided to wait until the class certification stage to decide the issue.