Plaintiffs sued Scotts, Lowe’s, and Home Depot, alleging
that Scotts EZ Seed, made by Scotts and sold at Lowe's and Home Depot stores, doesn’t
grow grass as advertised. EZ Seed is a
“combination mulch-grass seed product” labeled as growing grass “50% thicker
with half the water” compared to “ordinary seed.” Other label claims: “WaterSmart”; “Grows
Anywhere! Guaranteed”; “Makes the Most Of Every Drop”; “Grows in Tough
Conditions! Guaranteed!”; “Drought tolerant”; “[t]he revolutionary seeding mix
that takes care of the seed for you, so you can grow thick, beautiful grass
ANYWHERE,” including “Dry, sunny areas,” “Dense shade,” and “Even grows on
pavement!”; and “premium quality … developed to thrive in virtually every
condition—harsh sun, dense shade, and even spreads to repair wear and tear. The
result—thicker, beautiful, long lasting grass!”
There was also a graphic purporting to show EZ Seed
outperforming ordinary seed, labeled “50% THICKER WITH HALF THE WATER††.” Below
the pictures were disclosures: “††Results 32 days after planting; each watered
at half the recommended rate for ordinary seed. Results may vary. *Subject to
proper care.”
Scotts also offers a “No Quibble Guarantee,” which provides:
“If for any reason you, the consumer, are not satisfied after using this
product, you are entitled to get your money back. Simply send us the original
evidence of purchase and we will mail you a refund check promptly.”
Home Depot and Lowe’s allegedly used in-store displays
containing the same statements and reviewed and approved false and misleading
materials for EZ Seed, including ads that bore their respective names/marks.
The plaintiffs, who each resided in New York or California, alleged
that they bought EZ Seed in reliance on these representations and that it
failed to perform as promised. They
cited studies by “the largest turfgrass development institution in North
America” that suggested that EZ Seed failed to grow any grass when given half
the amount of water recommended for ordinary seed over a thirty-two day period.
One plaintiff sought a refund for four canisters, but Scotts only refunded the
purchase price of two canisters.
Plaintiffs sued for violations of the Magnuson-Moss Warranty Act (MMWA),
breach of warranty, California’s CLRA, UCL, and FAL, and NY GBL §§ 349 & 350,
and related common-law claims.
Plaintiffs argued that the various statements on EZ Seed’s
label and ads were written warranties under the MMWA because they promised that
EZ seed would “meet a specific level of performance over a specified period of
time,” as stated in the statutory definition.
They also alleged that the No Quibble guaranty was a promise to refund
under the MMWA.
The court found that some statements arguably promised a
specific level of performance, such as “50% thicker with half the water,” but
didn’t provide a specific period of time.
The FTC has interpreted the MMWA to mean that “[a] product information
disclosure without a specified time period to which the disclosure relates is …
not a written warranty.” This may seem
arbitrary, but a line must be drawn and this is it. The only representation that came close to
including a specific period of time was “50% thicker with half the water,” because
directly below those words were images purporting to show EZ Seed having grown
significantly more grass than ordinary seed “32 days after planting.” Thus,
plaintiffs argue defendants promise that EZ Seed grows 50% thicker with half
the water in 32 days. But the “32 days”
language was immediately followed by “each watered at half the recommended rate
for ordinary seed. Results may vary.” Thus, the label expressly cautioned purchasers
that they might not get the promised result in 32 days.
The No Quibble guaranty might be a warranty under the MMWA,
though. One plaintiff alleged that she
“sought a money-back refund for the four EZ Seed canisters she had purchased
pursuant to the Scotts No Quibble Guarantee. However, Scotts refused to honor
the No–Quibble Guarantee for two containers of the EZ Seed.” The court would
draw the reasonable inference that she properly
requested a refund, and Scotts failed to honor her request; that was entirely
plausible. Maybe the facts wouldn’t bear
that out, but that was for later.
Turning to the state law warranty claims, the court found
that most were merely nonactionable puffery: “WaterSmart”; “Drought tolerant”;
“Grows Anywhere! Guaranteed!”; “Makes the Most Of Every Drop”; and “Grows in
Tough Conditions! Guaranteed!” However, some
statements could be express warranties under the UCC: (1) EZ Seed grows grass
“50% thicker with half the water” compared to “ordinary seed,” and (2) EZ Seed
is “developed to thrive in virtually every condition—harsh sun, dense shade,
and even spreads to repair wear and tear” and similar statements to the extent
they promised that EZ Seed would grow grass in both sunny and shady areas. These
statements promised specific, measurable performance, as did the No Quibble
guaranty.
The court did not find the claims that EZ Seed was “revolutionary”
and “takes care of the seed for you, so you can grow thick, beautiful grass
ANYWHERE” actionable. Apparently the
claim that EZ Seed would even grow grass on pavement was exaggerated puffery, though
to me the grow anywhere/even on pavement claim sounds exactly like a specific,
surprising but possible claim the advertiser would want a buyer to believe in
order to bolster its claims about ordinary performance, just like showing a
blender pulverizing unexpected ingredients. This
link to an Amazon page shows Scotts using a photo of the product growing on
pavement to prove how good it is, and here’s a Scotts on Facebook using a
different photo to make the same claim, “EZ Seed is guaranteed to grow
grass anywhere! Don’t believe us? Check out this photo, it even grows on
pavement.” I’m pretty sure the FTC would consider that non-puffery.
Amazon:
Facebook:
Anyway, these warranty claims were only stated against
Scotts, not Home Depot or Lowe’s, since they only appeared on EZ Seed’s
labeling. Plaintiffs failed to allege
that the other defendants independently made the same promises when selling EZ
Seed, as opposed to “merely passively displaying” Scotts’ promises.
Turning to breach of implied warranty, privity is usually
required for such claims. Plaintiffs
argued that here, the retailers acted as Scotts’ agent, but the court rejected
that theory. As against the retailers, who
argued that plaintiffs didn’t properly allege that EZ Seed failed its essential
purpose, the court refused to dismiss the claim. The purpose of EZ Seed was to grow grass;
plaintiffs alleged that it didn’t grow; this was enough to allege that it wasn’t
fit for the ordinary purposes for which it was used, and plaintiffs stated an
implied warranty of merchantability claim against Home Depot and Lowe's.
The court turned to the California consumer protection
statutes. Again, puffery was not
actionable, but some potentially actionable statements remained. The claim against Scotts survived, but not
against the retailers because of failure to plead fraud with particularity:
plaintiffs didn’t identify what statements the retailers allegedly made,
lumping them together with Scotts. Plus
plaintiffs didn’t plausibly allege that the retailers knew or should have known
of the falsity. (Sigh.)
The New York analysis was different because claims under §§
349 & 350 aren’t subject to Rule 9’s heightened pleading requirements. (This is purely historical/path-dependent, as
far as I can tell; neither state requires knowledge of falsity for core
liability, so application of Rule 9(b) depends on whether courts think terms
like “fraudulent” etc. matter more than whether an actual common law fraud type
claim is being brought; the court’s not wrong to cite differing precedents from
different coasts, but I don’t think there’s an actual rationale underlying that
difference.) Plus, these claims don’t
require reliance. (… Like some of the
California claims?) And New York doesn’t
require plaintiffs to plead that defendants knew or should’ve known that the
statements were false or misleading.
So, while the claims based on puffery were dismissed, the claims
based on nonpuffery remained, because plaintiffs properly alleged that the
challenged statements (1) were directed at consumers, (2) were misleading in a
material way, and (3) caused plaintiffs to be injured. The claims against Lowe’s were dismissed,
though, because the only plaintiff who allegedly bought EZ Seed at Lowe’s did
so in California. Given the different pleading
standards, though, the claim against Home Depot survived; plaintiffs didn’t
have to allege reliance on particular statements made by Home Depot or Home
Depot’s knowledge. Instead, they met the low pleading standard “by alleging
Home Depot included some or all of the actionable representations in its
in-store advertisements and on its website, and the plaintiffs who purchased EZ
Seed at Home Depot were injured because the product did not work.”
Posts
No comments:
Post a Comment