Wednesday, July 03, 2019

Keurig unsuccessfully argues that false advertising law unconstitutionally compels speech

Smith v. Keurig Green Mountain, Inc., No. 18-cv-06690-HSG, 2019 WL 2716552 (N.D. Cal. Jun. 28, 2019)

Smith brought a putative class action against Keurig, alleging that its “recyclable” single-serve plastic coffee pods were mislabeled as such because they are not in fact recyclable, due to their size, composition, and a lack of a market to reuse the pods. Although the pods at issue are made from Polypropylene (#5) plastic—a material currently accepted for recycling in approximately 61% of U.S. communities—domestic municipal recycling facilities (MRFs) are allegedly not equipped to capture materials as small as the Pods and separate them from the general waste stream. Keurig’s instructions allegedly further impede the Pods’ recyclability by advising users that they need not remove the Pods’ paper filter, which ensures contamination. And due to the Pods’ design, their foil lids are allegedly difficult to remove, posing another risk of contamination.

Smith alleged reliance and that she wouldn’t have bought them/paid what she did for them absent the false representations. She allegedly desired to continue purchasing recyclable single-serve coffee pods and would purchase such products properly manufactured and labeled by Keurig in the future. She brought the usual constitutional claims.

The court declined to dismiss the complaint. Keurig argued that, because advertising for the Pods contained the disclaimer “check locally” regarding recyclability, Smith either ignored the qualifying statements or bought the Pods knowing that they may not be recyclable at her local MRF. She still alleged injury in fact.  She alleged that, in fact, the pods weren’t recyclable across the board, making a “check locally” disclaimer misleading.

Keurig also argued that its recyclable and nonrecyclable pods cost the same, so she couldn’t have been injured. This wrongly assumed that her only choice was between Keurig pods, but other coffee products are available and she allegedly would have sought them instead had she known the truth.

As for standing for injunctive relief, Keurig argued that there was no informational injury here, because the pods would have to be enlarged to make them recyclable so Smith can’t be fooled again.  But “Keurig could plausibly make recyclable Pods without changing their size: MRFs could evolve to be able to capture small plastics such as Pods, such that all Keurig would need to do is make it easier to clean out the Pods and remove their foil lids.”

Keurig also argued that its labeling was truthful and consistent with the FTC’s Green Guides.  Those say: “[i]f any component significantly limits the ability to recycle the item, any recyclable claim would be deceptive. An item that is made from recyclable material, but, because of its shape, size, or some other attribute, is not accepted in recycling programs, should not be marketed as recyclable.” They also state that when recycling facilities are available to less than 60% of consumers where the item is sold, all recyclability claims should be properly qualified.  Keurig couldn’t rely on the Green Guides at this stage of the proceedings.  “Setting aside the adequacy of Keurig’s qualifying statements, the Green Guides state that if a product is rendered non-recyclable because of its size or components—even if the product’s composite materials are recyclable—then labeling the product as recyclable would constitute deceptive marketing. And, among other things, the complaint alleges that the size and design of the Pods render them non-recyclable. Thus, even following Keurig’s logic that the Green Guides might operate as a liability shield, the allegations in the complaint are not precluded based on the Green Guides’s plain text.”

Keurig argued that it was implausible that a reasonable consumer under the circumstances—i.e. a consumer who wants to preserve the environment—would not understand the recyclability of the Pods in light of the disclaiming language that they are “[n]ot recyclable in all communities” and the directive for consumers to “check locally” to determine recyclability at their local MRFs. But, again, the complaint pled that the disputed Pods are not recyclable at all. Cases where disclaimers were sufficient to render an advertisement not false or misleading were thus irrelevant, and common sense “would not so clearly lead a person to believe that a package labeled ‘recyclable’ is not recyclable anywhere.”

Keurig also made an argument that we should expect more of: that Smith’s citation of the Green Guides sought to unconstitutionally compel Keurig’s speech by requiring a change in its labeling.  (Citing National Institute of Family & Life Advocates v. Becerra, 138 S. Ct. 2361 (2018), which is not a commercial speech case.) Keurig contended that California doesn’t have a compelling governmental interest in mandating the wording of Keurig’s qualifying statements, and that it would be unduly burdensome to require Keurig to [avoid deception and] monitor the number of MRFs at which the Pods are recyclable and revise its labeling accordingly.  Given the allegations of the complaint, Smith wasn’t seeking to compel Keurig to finetune its qualifying statement; she was seeking to stop Keurig from mislabeling the pods as recyclable. “And Keurig cites to no persuasive case law for the principle that a prohibition against deceiving consumers constitutes compelled speech.” [This argument is a reminder that all the action is in what constitutes “deceiving” consumers.  Of course a prohibition on deceiving consumers restricts speech! And if you want to get deception-adjacent, then the law is likely to constrain exactly what you can say.  Courts retain the intuition that there’s something different about saying “if you want to talk about X when you’re selling a product, you have to do it with these words/rules because otherwise you deceive consumers” from saying “salute the American flag or get expelled,” but given cases like NIFLA we are definitely heading for more fights attempting to recharacterize deception protections as unwarranted speech restrictions.]

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