Friday, July 19, 2019

Lysol can't quickly clean up this mess of anti-Clorox ads

Clorox Co. v. Reckitt Benckiser Gp. PLC, 2019 WL 3068322, No. 19-cv-01452-EMC (N.D. Cal. Jul. 12, 2019)

Clorox sued Reckitt for false advertising of its Lysol cleaning products under the Lanham Act and California’s UCL/FAL. The court found tiny parts of the complaint insufficiently pled but kept most of the claims intact.

First, the court determined that Rule 9(b) applied to the false advertising claim, as to the California claims, because intentional misrepresentation was alleged.

Next, Reckitt argued that all Clorox’s misleadingness claims failed because the complaint didn’t allege specific facts proving significant consumer deception.  But proof is for summary judgment/trial, not the pleadings. “[A]t the pleading stage the plaintiff need only allege specific misleading statements and explain why they are misleading in accordance with Rule 9(b).”

On to specifics: Ads: (1)“Bleach Indicator Test” depicting a side-by-side test of Clorox Clean Up and Lysol Daily Cleanser.. One cutting board is first cleaned with Clorox Clean Up and another cleaned with Lysol Daily Cleanser, then an apple slice is placed on each cutting board; the former turns brown and the latter doesn’t. Four individuals labeled as “real people” negatively react to the browned apple, e.g., “I wouldn’t even want to touch this.” Voice-over: “unlike Clorox Clean Up, Lysol Daily Cleanser has only three simple ingredients and leaves surfaces free from harsh chemical residue.” A similar ad used a “bleach indicator test” instead.

This was sufficiently alleged to be false for three reasons: (1) It plausibly necessarily implied that Clorox Clean Up was unsuitable or unsafe for use in kitchens, even though the EPA has in fact deemed the product safe for kitchen use. “[A]n advertisement can be literally false where it necessarily implies to customers that a product is unsafe to consume.” Given the images of food turned brown and people recoiling in disgust, it was reasonable to infer falsity by necessary implication. 

(2) It plausibly falsely indicated that the result of the test depicted—that Lysol Daily Cleanser apparently leaves no residue that would affect an apple slice—was inaccurate. According to Clorox, Lysol Daily Cleanser contains hypochlorous acid, “a form of bleach,” so a “properly chosen and calibrated ‘bleach indicator test’ would detect the residue left by Reckitt’s product,” but Reckitt’s chosen test was deliberately designed not to do so. A “tests prove” claim is false where the tests “are not sufficiently reliable to permit one to conclude with reasonable certainty that they established the claim made.” Clorox plausibly alleged that Reckitt’s test is not sufficiently reliable to permit one to conclude with reasonable certainty that Lysol Daily Cleanser leaves no bleach residue.  (Note the elision of the key question here: what exactly does the ad claim that “tests prove”?  The ad doesn’t explicitly say there’s bleach on one slice and not on the other.)

(3) It was literally false because it necessarily implied that Lysol Daily Cleanser and Clorox Clean Up are comparable products but that the Clorox product leaves a harsh residue. But they have different formulations and purposes. “Although usable in kitchens, Clorox Clean Up is a heavier duty product than Lysol Daily Cleanser” with stronger ingredients not for everyday use, so attempts to “position Lysol Daily Cleanser as a ‘simpler’ or ‘less harsh’ substitute for CCU misrepresents the facts and deceives customers.”  [Gotta admit, less harsh sounds true but also necessarily misleadingly comparative, given the background expectation that a thing will be compared with a thing in its class, e.g., what are the harshest daily cleaners? Clorox alleged that it did market an actually competing product, which makes the misinterpretation even more likely.] LDC couldn’t be substituted for CCU because the former was much more diluted and lacked a surfactant/detergent for intensive cleaning. [This seems eminently correct as to indications but possibly not descriptively true—I might want to know how many consumers are unaware of the difference.] Apples-to-oranges comparisons can be literally false by necessary implication “where non-comparable products are portrayed as otherwise equivalent (except for the superior or inferior aspect being illustrated in the advertisement).” Thus, “plaintiffs can establish literal falsity under the Lanham Act by alleging that two products portrayed as comparable in an advertisement are not actually comparable – that the advertisement omits differences which would have been material to recipients.”  Clorox sufficiently alleged lack of comparability, especially given the availability of a closer Clorox comparator.

Reckitt argued that Clorox Clean Up was in fact comparable to Lysol Daily Cleanser because the EPA has approved the Clorox Clean Up as “Gentle & Powerful Enough for Daily Use,” but there was no authority holding that the EPA’s categorization of products makes those products comparable for Lanham Act purposes. Anyway, this was a factual dispute.

(2) “Spray Away” ads showing an image of Clorox Clean Up and its list of ingredients being sprayed and wiped away with Lysol Daily Cleanser. The ad then flashes banners stating: “Lysol Daily Cleanser[;] Only 3 ingredients,” “Kills 99.9% of germs (when used as directed),” and “No harsh chemical residue.” A Facebook ad juxtaposes the safety warnings of Clorox Clean Up and Lysol Daily Cleanser and concludes with the same statement.  Also sufficiently alleged falsity.

First, this was another plausibly apples-to-oranges comparison of LDC with CCU. Second, the Facebook ad juxtaposing the safety warnings was plausibly likely to mislead consumers because it suggests that the Lysol product is “simpler” and has “fewer safety risks” and “impugns the safety of CCU by suggesting that consumers should shy away from products that require cautionary disclosures.” Clorox also alleged that the active ingredient in the Lysol product, hypochlorous acid, was no gentler than the bleach in Clorox Clean Up.

 (3) “Fake It,” “Game Over,” and “Spray Away” ads: the first said that Lysol could “help protect” children from colds then showed a split screen with the Clorox and Lysol symbols on either side, and “germs” on both sides of the screen; the germs on the Lysol side of the screen disappear while those on the Clorox side remain. An announcer states, “Lysol Disinfectant Spray kills the number one cause of the cold and Clorox Wipes don’t.” Reckitt eventually added in “minuscule type” that the comparison was between Clorox Disinfecting Wipes and Lysol Disinfecting Spray. Two other ads had the same factual claims, presented differently (in one, a container of Clorox Disinfecting Wipes is sprayed off the screen by Lysol Spray).

Plausibly alleged to be literally false by necessary implication. Clorox again alleged an apples-to-oranges comparison of Clorox’s “pre-moistened, anti-microbial wipes that consumers use to clean and disinfect surfaces throughout the home” to a Lysol product in a different category with different usage instructions. Wipes are allegedly formulated to target different germs than disinfecting sprays. “The key difference is between wipes and sprays, not Clorox and Lysol.” Again, Clorox alleged that more comparable products were available—both parties’ sprays (neither of which are approved for rhinovirus) or their wipes (both of which are).

(4) “Strength Test” ads: Employed to pick up kettlebell weights, the Clorox wipe rips immediately while the Lysol wipes holds the weight for several seconds. A disclaimer states, “Dramatization. Based on lab results. Supervised demonstration. Do not attempt.” A Facebook ad said, “Lysol wipes are stronger than competition” and depicted a Lysol wipe intact next to a torn “competitive” wipe that “appears below a version of the famous Clorox chevron, in which the Clorox brand name has been replaced with the words ‘vs leading competitor.’ ”

Clorox’s claim that the ad falsely insinuates that Lysol wipes are “of higher quality, are more durable, and are more resistant to tearing during use than Clorox wipes” failed because Clorox didn’t allege that Lysol wipes are not of higher quality, more durable, and more resistant to tearing than Clorox. [Technically, it should be enough to allege that they are of equal quality—one might even hedge and allege that Clorox wipes are of at least equal quality to Lysol’s.] It wasn’t enough to allege that the Clorox wipes are unlikely to rip under typical use conditions.

However, the court was more receptive to the allegation that the “strength test” conducted in the advertisement was unreliable and therefore literally false. Clorox alleged that the test “is not capable of replication, because neither product is actually long enough to serve as a ‘handle’ when holding a kettlebell weight,” and thus it wasn’t “sufficiently reliable to permit one to conclude with reasonable certainty that [it] established the claim made.” This was more than the insufficient allegation “there was simply no way a valid test would show” results supporting an advertising claim.

(5) “No Scrubbing” ads: for example, a woman squirts Lysol Power Toilet Bowl Cleaner into a toilet and flushes; the toilet bowl instantly becomes clean without the use of a brush. The ad then depicts the unfavorable results of a side-by-side efficacy test comparing Lysol Power Toilet Bowl Cleaner and Clorox Regular Liquid Bleach. A small disclaimer states, “Cleaning Power vs. Clorox Regular Liquid Bleach on limescale and rust stains. Results after contact with product for 10 minutes, followed by rinsing.” A small banner states, “10X more cleaning power than Clorox.”  In another similar ad, a tiny disclaimer states that the results involve Lysol Power Toilet Bowl Cleaner and Clorox Toilet Bowl Cleaner Clinging Bleach Gel, but that’s is a distinct product from the “Clorox Toilet Bowl Cleaner with Bleach” product referenced in the voice-over.  The “10X More Cleaning Power than Bleach” claim also appears in stores.

Clorox pled falsity: (1) Again, apples-to-oranges: Clorox alleged that the formulation and purpose of the two products differ.  [I just love what you learn about the world in false advertising cases.]  Acid-based cleaners, such as Lysol Power Toilet Bowl Cleaner, are more effective against mineral-based deposits (like rust and limescale), whereas Clorox’s bleach-based Clorox Toilet Bowl Cleaner is more effective at removing organic stains (like mildew and mold). Again, the parties allegedly marketed more directly competing products. Again, Reckitt’s argument that the EPA approved both for use on mineral-based deposits wasn’t sufficient.

Reckitt argued that it added a “disclaimer expressly stat[ing] that the purported advantage relates only to rust and limescale and not to organic matter.” Clorox alleged that the disclaimers were “nearly illegible” and “minuscule” and thus plausibly useless.

Second, Clorox plausibly alleged misleadingness: “[t]hrough its depiction of a woman using a single squirt of the product to render her toilet immaculate,...[the ad indicates that] the Lysol product works instantly to removal all deposits from toilets.” First, “the product requires at least 10 minutes to remove some toilet bowl stains,” and second, it’s not [as] good at organic deposits, so it “cannot render toilets immaculate in seconds, as depicted in Reckitt’s advertising.”

Third, Clorox plausibly alleged that the claim “10X more cleaning power than Clorox” was literally false because Lysol products generally do not have a performance advantage over Clorox. Compared apples to apples, the Lysol product allegedly didn’t have an advantage in removing limescale and rust because they contain the same active ingredient, glycolic acid. So too with the claim “10X More Cleaning Power than Bleach,” because a reasonable consumer would likely believe that the comparison is in fact with its leading competitor, Clorox.

(6) Noncomparative ads: claims included: kills “99.9% of germs”; “kills over 100 illnesses causing germs” and a disclaimer that “Lysol Disinfecting Spray kills germs on hard surfaces when used as directed.”  One ad was ambiguous as to whether the ad was claiming that both touted products could
kill over 100 illness-causing germs, or whether they can do so together.  But it was plausible that it misleadingly implied that either product alone would be enough. Another ad claimed that Lysol Daily Cleanser kills “99.9% of germs” and the visual showed an actor spraying and immediately wiping the surface, whereas the EPA-approved use instructions on the label requires ten minutes of contact with a treated surface to achieve its disinfectant effect. That was plausibly misleading, though it wasn’t a comparison to Clorox.

Materiality: the court quoted precedent that materiality “is ‘typically’ proven through consumer surveys,” even though that is empirically false (this is a problem for the courts of appeal; the court here notes but does not give a reason for the shift in judicial treatment of materiality over time, from presuming materiality for literal falsity—often a matter of common sense—to a seemingly rigid insistence on separate evidence no matter what). Restoring some flexibility, a plaintiff can also establish materiality by showing that “the defendants misrepresented an inherent quality or characteristic of the product.” Clorox plausibly alleged that Reckitt’s advertisements attack Clorox products’ efficacy, safety, and durability. These were inherent qualities and characteristics of cleaning products, and would likely influence the purchasing decision of a consumer.

Injury: Clorox alleged direct diversion of sales and damage to its goodwill.  Reckitt argued that wasn’t enough, but for a competitor who’d been directly attacked it definitely was. In Vincent v. Utah Plastic Surgery Soc., 621 F. App’x 546 (10th Cir. 2015), the Tenth Circuit required the plaintiff to make some showing of “how much Plaintiff’s profits have decreased since Defendants began their advertising campaign,” to “quantif[y] or estimate the decreased in goodwill,” or to “quantify the number of potential customers who allegedly have been lost because of Defendant’s statements,” but the court wasn’t going to do that in the Ninth Circuit.

UCL/FAL: Reckitt argued that Clorox needed to allege its own reliance on Reckitt’s ads to state UCL/FAL claims.  That’s true for the FAL and UCL “unlawful,” but not for UCL “unfair.”  Also, whether the ads would deceive reasonable consumers was a fact question, as it usually is.

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