"ambiguity" in consumer protection cases is something different from "ambiguity" in Lanham Act cases: the case of "Naturally Derived"

Kent v. Conopco, Inc., 2025 WL 3296002, No. 25-cv-03660-JCS (N.D. Cal. Nov. 26, 2025)

The court allows a claim against “Naturally Derived” personal care products to proceed. “There is no asterisk on the front label linking the claim to a definition elsewhere on the front or back label; nor is there a definition of the term ‘Naturally Derived’ on the front label.” The back label does purport to describe what “naturally derived” means.” E.g.: Love Beauty & Planet Plant-Based Vanilla Body Wash’s back label says, ‘92% of our formula is naturally derived, meaning it’s unchanged from nature or keeps over 50% of its original structure after some processing. This includes water and ingredients from plant, mineral and fermentation sources.’ ”

For some of the products, “naturally derived ingredients” in the list of ingredients are denoted with an asterisk. Plaintiffs allegedly falsely or misleadingly identify synthetic ingredients as naturally-derived, including cocoamidopropyl betaine, sodium lauroyl isethionate, sodium methyl cocoyl taurate lauric acid, citric acid, and stearamidopropyl dimethylamine, cetearyl alcohol, and behentrimonium chloride. Many of these ingredients are allegedly non-naturally occurring chemicals made by chemically modifying naturally-occurring plant oils.

The products are allegedly “predominantly composed of ingredients produced using industrial chemical processes.” By way of example, the complaint alleged that, “of the twenty (20) ingredients listed for the Dove Men + Care Eucalyptus and Birch 2-in-1 Shampoo and Conditioner, fourteen (14) are industrially-produced chemicals that most consumers would not identify as ‘natural’ or ‘naturally derived,’ including one (citric acid) produced using industrial fermentation processes.” Plaintiffs alleged that “[s]imilar analyses hold true for all the ‘X% Naturally Derived’ Products.” They also alleged that the claims would be false even if they were based on ingredient weight.

Conopco allegedly used the British Standards Institute’s ISO 16128 to make its claims. That standard allegedly “defines ‘derived natural ingredients’ as ‘cosmetic ingredients of greater than 50 % natural origin, by molecular weight, by renewable carbon content, or by any other relevant methods, obtained through defined chemical and/or biological processes with the intention of chemical modification.’ ” But, plaintiffs alleged, this standard is a proprietary standard that is not available to the public and thus, “for all intents and purposes, the public is entirely ignorant of how [Conopco] calculates the percentage of ingredients that is naturally derived/natural origin and what [Conopco] is communicating when it makes the naturally derived/natural origin claims.”

The standard allegedly expressly states that it “is not designed for use in labeling and product communications.” Indeed, as alleged, “ISO 16128’s definition of ‘natural origin index’ is very complicated and entirely beyond the ability of an ordinary consumer to understand.” It is allegedly not a government standard, but instead, “was designed solely by cosmetic industry scientists, without involvement of any consumer advocates or persons familiar with consumer advertising” with the apparent purpose of “provid[ing] an expansive definition [of] ‘natural origin’ to encourage manufacturers to use ‘natural’ materials as ingredients for manufacturing.” Plaintiffs further alleged that ISO 16128 is “inappropriate for use in labeling because it does not require uniform calculations”: users can include or exclude added water at will. They can also use any of three criteria: “molecular weight,” “renewable carbon content”, or “any other relevant methods” to calculate percentage, but the standard does not define “renewable carbon content,” nor what the “any other relevant methods” may be. The complaint also pled that “[l]aypeople are not versed in assessing molecular weights.”

They brought the usual California claims.

The court found the labels to be plausibly deceptive. In the 9^th Circuit, consumer protection claims can be maintained if the front label is plausibly misleading—that is, if it’s plausible that a reasonable consumer would conclude that the front label contains all the relevant information and believe a false claim as a result. If a reasonable consumer who cared about the fact at issue would necessarily conclude that they needed to look at the back label to clarify matters, though, and the back label clears things up, the claim is merely ambiguous and not misleading.

This is a different framing of “ambiguity” than Lanham Act “ambiguity,” though it may not produce hugely different results in practice. A front label is not ambiguous under consumer protection law merely because it has more than one plausible meaning (the Lanham Act standard). “Nature Fusion” is fatally ambiguous: “so devoid of any concrete meaning that there was nothing ‘from which any inference could be drawn or on which any reasonable belief could be based about’” a personal care product’s ingredients. “[A] front label is ambiguous when reasonable consumers would necessarily require more information before reasonably concluding that the label is making a particular representation. Only in these circumstances can the back label be considered at the dismissal stage.” “[F]ront-label ambiguity is determined not by whether a consumer ‘could’ look beyond the front label, but whether they necessarily would do so.” And context can also matter to whether something is plausibly misleading, such as one’s background knowledge about the exotic product Manuka honey, and whether the product is a specialty one or would be bought by a busy consumer with kids in tow.

The consumer protection concept of “ambiguity” therefore determines whether a claim can be pursued under state law at all, whereas the Lanham Act concept uses ambiguity as a screen for whether evidence of actual consumer response is required, or whether proof of falsity alone will show deceptiveness; that is, a Lanham Act-ambiguous claim can still be litigated and proved deceptive. By contrast, consumer protection ambiguity is more like a puffery defense: if a claim is so mushy that it doesn’t have a specific enough meaning to be factual on its own (without consulting the back label), then it’s too ambiguous to sue over.

The risk—and I do think it’s a significant one—is that courts might use “ambiguity” the same way across regimes despite the different meaning and function of the concept in the two areas. I have argued that courts should not be so rigid in their use of the literal/implicit falsity divide in Lanham Act cases, and this development in consumer protection law adds to the reasons to do so: ambiguity in consumer protection law (understood broadly to include the Lanham Act) should be a single concept.

Back to the case at bar: This front label was plausibly misleading, so the court declined to consider the back label at this stage. Plaintiffs alleged that a reasonable consumer would understand from the phrase “x% naturally derived” that the specified percentage of the product, whether evaluated by weight or by the number of ingredients, is made of ingredients that are not synthetic but that in fact, because of the inclusion of synthetic ingredients in the definition of “naturally derived” used by Conopco, the percentage of the product that is made from synthetic ingredients is much higher than the label suggests. It was indeed plausible that a reasonable consumer would believe that “naturally derived” means non-synthetic. In some cases, qualifying language indicating the percentage of the product that was plant-based can be enough to avoid misleadingness—but that depends on the plaintiff’s theory of the case. Where the plaintiff’s theory isn’t about “100% natural” or similar claims, the percentage doesn’t help if it’s an allegedly false percentage. Additionally “this case involves everyday products and not the niche product at issue in the Trader Joe’s case [Manuka honey] that resulted in a higher standard of care from the reasonable consumer.”

Even considering the back labels, they didn’t resolve any ambiguity in a way that avoided plausible misleadingness, given the plaintiffs’ allegations that the definition Conopco used was unsuitable and misleading.

However, plaintiffs’ omission-based claims failed. (They were a repackaged “the back label definition is bad” theory.)

The court also refused to reject a UCL unfairness theory at this stage based on the allegation that Conopco’s conduct violates FTC regulations and policy set forth in the Green Guides.

However, the common law fraud and negligent misrepresentation claims fail to state a claim under California’s economic loss rule.

"unfair competition" CGL insurance exclusion applies only to competitor claims, not consumer claims

Athena Cosmetics, Inc. v. Great American E&S Ins. Co.,  2025 WL 3304392, No. 2:24-cv-08010-AH-AGRx (C.D. Cal. Nov. 24, 2025)

Three underlying putative class actions targeted Athena’s sale of “lash enhancement serums from Athena that contained compounds found in prescription drugs and were known to cause adverse side effects to the face and eye area.” They alleged “false, misleading, unfair, and deceptive sale of beauty products without disclosing dangerous risks and side effects of the products’ key ingredient” and “unfair competition or unfair or deceptive acts or practices” in violation of various states’ consumer protection statutes. Although the underlying complaints alleged that the plaintiffs experienced “physical impact” on their face and eye area, they explicitly did “not seek to recover for physical injuries.”

Great American denied a duty of coverage to its insured, Athena, under a Commercial General Liability Policy stating that Great American “will pay those sums that [Athena] becomes legally obligated to pay as damages because of ‘bodily injury’ ... to which this insurance applies” and “will have the right and duty to defend [Athena] against any ‘suit’ seeking those damages.” The Policy defines “bodily injury” to mean “injury, sickness, or disease sustained by a person, including death of a person,” as well as “mental anguish, mental injury, or shock, if directly resulting from physical injury, sickness, or disease to that person.” There’s also an exclusion for any “Claim or Suit Alleging Infringement of Intellectual Property or Violation of Laws Concerning Unfair Competition or Similar Laws,” which excludes coverage for bodily injury or property damage “alleged in any claim or ‘suit’ that also alleges any: ... (2) violation of any statute, common law, or other laws or regulations” “concerning unfair competition, antitrust, restraint of trade, piracy, unfair trade practices, or any similar laws or regulations.”

Two questions: First, did the underlying lawsuits create a duty to defend, or did they not claim “bodily injury”? The court’s answer: there was a duty to defend given that the underlying complaints alleged such injury, even though they disclaimed recovery for damages for physical injury (presumably to allow a bigger class). An “insured is entitled to a defense if the underlying complaint alleges the insured’s liability for damages potentially covered under the policy, or if the complaint might be amended to give rise to a liability that would be covered under the policy.” In other words, under California law, “the insurer’s duty is not measured by the technical legal cause of action pleaded in the underlying third-party complaint, but rather by the potential for liability under the policy’s coverage as revealed by the facts alleged in the complaint or otherwise known to the insurer.” The insurer cannot “duck coverage simply because the complainants sought the tactical advantage of bringing their claims through a class action.” In addition, the complaint also alleged mental distress, which was covered under the policy’s broad definition of physical injury.

Second, was a noncompetitor consumer protection suit one for “unfair competition” or “unfair trade practices”? The court’s answer: no. The exclusion, which must be interpreted narrowly, was focused on competitor-type behavior, got its tenor from “antitrust,” “restraint of trade,” and “piracy.” Consumer protection claims brought by consumers weren’t excluded. Great American argued that nothing in the exclusion limits its application to disputes among business competitors. But Standard Fire Ins. Co. v. Peoples Church of Fresno, 985 F.2d 446 (9th Cir. 1993), interpreted “unfair competition” in the context of a CGL policy and described common law unfair competition as “synonymous with the act of ‘passing off’ one’s goods as those of another,” limiting the term to “the common law tort which includes competitive injury as an element,” at least where it was listed alongside of “libel, slander, defamation, violation of right of privacy, piracy, misappropriation of idea, and infringement of copyright, title or slogan.” And “piracy” was also in the policy here. Thus, none of the “similar laws or regulations” listed along with “unfair competition” in this policy referred to conduct directed at consumers.

The “objectively reasonable expectations of the insured” would not consider “unfair competition” to broadly exclude consumer fraud-related claims.