Lack of evidence on lost goodwill leads to remittitur (but also proposed doubling of lost profits)

Sterilite Corp. v. Olivet International, Inc., No. 1:22-cv-10327-JEK, 2025 WL 3460553 (D. Mass. Dec. 2, 2025)

A jury awarded Sterilite $11 million in damages for Olivet’s willful infringement of the trade dress in Sterilite’s storage cabinets and drawers: $2,656,711 in lost profit damages and an additional $8,343,289 in damages for loss of goodwill. The jury also found that Olivet tortiously interfered with Sterilite’s business relationship with Walmart and awarded Sterilite an additional $5.2 million in lost profits for its wastebasket lids.

The court granted Olivet’s motion for remittitur with respect to the loss of goodwill damages but denied as to the lost profits for Sterilite’s cabinets and drawers. The Court reserved judgment on Sterilite’s motion for enhanced damages: If Sterilite opted for a new trial, its motion for enhanced damages would be denied without prejudice. But if Sterilite accepted remittitur, Sterilite’s motion for enhanced damages would be granted and Sterilite’s damage award in lost profits for its cabinets and drawers would be doubled to account for the difficult-to-quantify reputational harms caused by Olivet’s trade dress infringement.

The standard: The court must view the evidence in the light most favorable to the verdict, and it may not upset the jury’s assessment of damages unless that assessment “is ‘grossly excessive, inordinate, shocking to the conscience of the court, or so high that it would be a denial of justice to permit it to stand.’ ”

Lost profits: To demonstrate causation under the Lanham Act, Sterilite “must demonstrate that the [infringement] actually harmed its business.” While Sterilite “must prove the profits [it] would have made but for [Olivet’s] infringement,” it need not “ ‘negate every conceivable intervening factor which might have caused a decline in sales.’ ” Olivet argued that, during the COVID-19 pandemic, Sterilite was unable to fulfill its customers’ orders and therefore decided to allocate its stock of cabinets and drawers among different customers. It thus supplied only 63% of the cabinets and drawers that Walmart demanded, and Walmart decided to look to other suppliers of cabinets and drawers. An email from Walmart stated that it had decided “to exit the Sterilite business in plastic shelving” “[a]s a result of [Sterilite’s] inability to keep pace with customer demand,” “poor instock, not accepting [fines] due to loss sales, and poor communications as a business partner.” But the jury heard this evidence and rejected Olivet’s theory of causation. There was evidence that Olivet sought “to follow [Sterilite’s] spec detail exactly” in order “to replace Sterilite” at Walmart, and Olivet replaced Sterilite only three months after that notification; a Sterilite witness wrote that, “in [his] 30 years’ experience it takes longer than 60 days to design, engineer, build molds, prepare with inventory, to put yourself into position to serve Walmart well for a program of this magnitude.” The jury could have accepted that “had Olivet not agreed to replicate Sterilite’s products for Walmart (and at a lower price), Walmart would not have terminated Sterilite’s business on those products and Sterilite would not have lost the associated profits.”

But awarding over $8.3 million for lost goodwill was “sheer speculation,” given that “no witness or evidence attempted to quantify the value of Sterilite’s reputation before and after Olivet’s trade dress infringement.” Because “[r]eputational damages are often difficult to quantify,” plaintiffs “need not prove such damages with exacting precision.” Still, while “ ‘mathematical precision’ ” is not required, plaintiffs “ ‘must provide sufficient evidence to take the amount of damages out of the realm of speculation and conjecture.’ ”

“The evidence at trial supported, and Olivet does not contest, that Olivet’s trade dress infringement harmed Sterilite’s reputation. Customer complaints and witness testimony demonstrated that Sterilite’s brand suffered from customer confusion over Olivet’s inferior cabinets and drawers.” Product reviews “revealed that customers attributed Olivet’s inferior products to Sterilite. One customer complained, for instance, about ‘how cheaply these ones were made compared to the first set [she] bought.’”

However, not a single witness testified about the approximate dollar amount of Sterilite’s lost goodwill or how that amount could be calculated. “Nor did Sterilite produce any evidence of how much it spent promoting its cabinets and drawers before Olivet’s infringing conduct, or how much it spent or would need to spend on corrective advertising after that infringing conduct.” The award exceeded the $7,863,871 that Sterilite sought in total lost profits for its cabinets, drawers, and wastebasket lids, but the wastebasket lids were not even a part of the trade dress infringement claims presented to the jury. Thus, Olivet met its “substantial” burden to show that, viewing the evidence in the light most favorable to Sterilite, the jury’s loss of goodwill damages award was excessive, speculative, and unsupported by the record.

So Sterilite could go for a new trial—with no new witnesses or evidence, so that doesn’t seem desirable—or accept remittitur and get its motion for enhanced damages granted. The Lanham Act provides that “[i]n assessing damages the court may enter judgment, according to the circumstances of the case” and “subject to the principles of equity,” “for any sum above the amount found as actual damages, not exceeding three times such amount.” That sum “shall constitute compensation and not a penalty.”

The court “is bound by ... the jury’s finding of willfulness, which affect[s]” its determination of the appropriate “equitable remedy.” But willfulness alone is insufficient to justify an enhancement of damages. “The role of deterrence must be carefully weighed in light of the statutory prohibition on the imposition of penalties.” Sterilite argued that Olivet engaged in “egregious” pretrial discovery misconduct that forced it to file multiple motions to compel production. But courts are “reluctant to approve increased damages intended solely as punishment for conduct unrelated to the trademark infringement or to the actual damages caused by it.” “That is particularly so where, as here, Sterilite could have requested other sanctions for the alleged discovery violations at the time those violations occurred.”

“[T]he pertinent inquiry remains whether the jury’s award appropriately compensates Sterilite.” To enhance an award “based on the same conduct that established Olivet’s liability for willful infringement, without any connection to the alleged inadequacy of the award itself, improperly ‘appear[s] to be punitive.’”

Sterilite argued that the award missed some infringement, but “Sterilite repeatedly represented to the jury that [its expert’s] assessment of $2,656,711 in damages was all that it sought in lost profits for its cabinets and drawers.” Any new post-trial theories of damages were waived and too speculative.

What about Olivet’s allegedly improved relationship with Walmart? The Second Circuit affirmed trebling damages “reflect[ing] the intangible benefits that accrued to [the defendant] as a result of its false advertising,” particularly given that the parties were “direct competitors in a two-player market” and the defendant “usurp[ed] ... [the plaintiff’s] market share.” While Sterilite and Olivet are competitors, they are not the only two manufacturers of plastic household products. So Sterilite was already compensated for its losses.

Finally, though, the evidence supported the conclusion that Olivet’s infringement damaged Sterilite’s reputation, and “damages for loss of reputation ... are inherently indeterminate” and thus difficult to quantify. “If Sterilite were to reject remittitur and opt for a new trial, the jury could weigh the value of that loss of goodwill and, if appropriate, award damages. In that case, equity would not justify granting Sterilite’s request for enhanced damages on the basis of that same loss of goodwill.” But if it accepted remittitur, it wouldn’t have been compensated for reputational harm, and the court would double lost profit damages.

thorough opinion allows CT's greenwashing claims against Exxon to proceed

State v. Exxon Mobil Corp., 2025 WL 3459468, No. HHDCV206132568S (Conn. Super. Ct. Nov. 26, 2025)

The court allows greenwashing claims against Exxon to proceed under the Connecticut Unfair Trade Practices Act (CUTPA). The state alleged a decades-long “systematic campaign of deception” about the impact of its fossil fuel products on the earth’s climate and a more recent “greenwashing” campaign designed to bolster its image as an environmental steward in order to attract consumers.

The state focused particularly on an advertising campaign that began in 1970 and continued until 2007 or later, including advertorials in the New York Times nearly every Thursday between 1972 and 2001 with knowingly false claims such as

• Claiming that “a greenhouse effect” that could “melt the polar ice caps and devastate U.S. coastal cities” was a “lie” and a “myth of the 1960s and 1970s.”

• Describing predictions concerning the impact of global warming as “media hype” creating “an unwarranted sense of crisis.”

• Promoting the delay of any response to climate change based on a supposed “lack of scientific data.”

• Using scientific data in a misleading fashion to suggest that fossil fuels had little to do with global warming and that “little if any warming” had occurred.

Greenwashing: Exxon allegedly promotes its “minor and insignificant alternative fuels program to obscure its continued focus on its fossil fuel business and mislead the public into believing that the defendant is making serious efforts to address climate change.” The ads also allegedly mislead consumers into believing that “certain of its fossil-fuel-based products can help consumers reduce greenhouse gas emissions and improve fuel economy.” Exxon allegedly “sought to falsely induce purchases and brand affinity by portraying ExxonMobil as a company working on a solution to climate change through selling ‘green’ products.”

The materially false claims allegedly included: 

a. that ExxonMobil was uncertain that climate change was real, occurring or would occur in the future;

b. that ExxonMobil was uncertain that human activity, including the combustion of fossil fuels, contributed to climate change;

c. that there was time to wait before taking action;

d. that there was a balanced debate amongst scientists about whether climate change was occurring, its relationship to human activity, and whether its effects would be positive or negative;

e. that ExxonMobil’s research supported the assertions in (a) – (d).

The state sought penalties based on the number of false ads, as well as injunctive relief against making the claims and requiring disclosure of Exxon’s relevant internal research. It disclaimed seeking any damages caused by Exxon’s contribution to climate change.

Exxon argued that federal law preempted claims seeking monetary relief for injuries allegedly caused by interstate and international greenhouse-gas emissions. Although the court followed the framework in City of New York v. Chevron Corp., 993 F.3d 81 (2d Cir. 2021), finding preemption, it distinguished the claims at bar. The Chevron case involved claims for “(1) public nuisance, (2) private nuisance, and (3) trespass under New York law stemming from the [defendants’] production, promotion, and sale of fossil fuels. The [plaintiff] requested compensatory damages for the past and future costs of climate-proofing its infrastructure and property, as well as an equitable order ascertaining damages and granting an injunction to abate the public nuisance and trespass that would go into effect should the [defendants] fail to pay the court-ordered damages.”

Here, the deceptive marketing claims and, to some extent, the nature of the relief sought counseled against preemption. The state’s CUTPA claims didn’t amount to state regulation of “the production, sale and use of fossil fuels,” but were limited to “regulating the associated marketing conduct.”

Indeed, in Connecticut v. Exxon Mobil Corp., 83 F.4th 122, 142 (2d Cir. 2023), the Second Circuit addressed federal removal jurisdiction in this case in a decision that resulted in remand to state court. The court said, “Each of the three necessary elements of Connecticut’s deception claim is one that a court could ... resolve[ ] ... without reaching the federal common law of transboundary pollution.... We entirely agree with the district court’s analysis of this point: Connecticut alleges that ExxonMobil lied to Connecticut consumers, and that these lies affected the behavior of those consumers. The fact that the alleged lies were about the impacts of fossil fuels on the Earth’s climate is immaterial.” So too with the unfairness claim.

On the merits, the complaint stated a claim. Exxon argued that the statements were made outside of Connecticut. CUTPA defines “trade” and “commerce” as: “the advertising, the sale or rent or lease, the offering for sale or rent or lease, or the distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity or thing of value in this state.” The federal courts have “held that CUTPA does not require that a violation actually occur in Connecticut, if the violation is tied to a form of trade or commerce intimately associated with Connecticut, or if, where Connecticut choice of law principles are applicable, those principles dictate application of Connecticut law.” Based on the allegations of the complaint, some of the alleged tortious conduct occurred in Connecticut (advertorials in papers delivered to Connecticut), and that was enough.

Were the claims made in “trade or commerce”? Lafferty v. Jones, 229 Conn. App. 487, 327 A.3d 941 (2024), held that Alex Jones’s defamatory and harassing speech, which was motivated by desire to sell products, but otherwise unrelated to those products, fell outside the scope of “trade” and “commerce” in CUTPA. “[N]othing in the defendants’ speech, in and of itself, concerning the Sandy Hook massacre made any mention of their products.” That wasn’t the case here. “The speech at issue in the present case is expressly alleged to be about the defendant’s products, if not specifically then genetically.” [ed. note: generically?] After all, “advertising” “is not limited to direct and express solicitations for the sale of a product,” but includes “[a]ny form of public announcement intended to aid directly or indirectly in the sale of a commodity....” At least without a more developed factual record, the court wasn’t going to reject the claims here.

Were the statements falsifiable, or just opinion or true? Were they immaterial? The complaint adequately alleged deceptiveness; many of these disputes were for the factfinder. In determining whether a claim is falsifiable or opinion, Connecticut requires “analysis of three basic, overlapping considerations: (1) whether the circumstances in which the statement is made should cause the audience to expect an evaluative or objective meaning; (2) whether the nature and tenor of the actual language used by the declarant suggests a statement of evaluative opinion or objective fact; and (3) whether the statement is subject to objective verification.”

“It may be that some of the statements referenced in counts one and two of the complaint are expressions of opinion but … this court is being asked to make that judgment based only on the allegations of the complaint.” The complaint sufficed, especially given allegations that Exxon’s internal research disagreed with its ads. Interpretation of CUTPA is supposed to be guided by FTC interpretations, and the FTC has long held that “[c]laims phrased as opinions are actionable... if they are not honestly held, if they misrepresent the qualifications of the holder or the basis of his opinion or if the recipient reasonably interprets them as implied statements of fact.”

The disclosure-based claims also survived because, even though there’s no duty to disclose in many circumstances, one who decides to speak may not omit material facts if the omission misleads reasonable consumers about the import of the affirmative claims, and that was alleged here.

And materiality was properly alleged, given that materiality is a lower standard than reliance:

The FTC’s publication of the Green Guides reflects a recognition that environmental issues are a matter of interest and concern to consumers and that, therefore, the defendant’s alleged greenwashing efforts are material, at least potentially so. It is fair to be skeptical that consumers would choose to purchase gasoline from the defendant based on an erroneous impression that the defendant is proactively and earnestly engaged in efforts to reduce greenhouse gas emissions through the development of alternative energy sources and other more eco-friendly fossil fuel products. It is not a question of reliance by the consumer, however, only a question whether the consumer is influenced by the defendant’s allegedly misleading environmental marketing. That is a question of fact, not a question of law.

Unfairness claims survived for much the same reasons. CUTPA’s unfairness standard is taken from the FTC:

(1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise—in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other businesspersons].... All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three....

Did the First Amendment bar the claim? Not at this stage. Commercial speech “can include material representations about the efficacy, safety, and quality of the advertiser’s product, and other information asserted for the purpose of persuading the public to purchase the product.” And “[a]dvertisers should not be permitted to immunize false or misleading product information from government regulation simply by including references to public issues.” Interestingly, the court relied heavily on Jordan v. Jewel Food Stores, Inc., 743 F.3d 509 (7th Cir. 2014) (an ad congratulating Michael Jordan on his career and bearing store branding, but not explicitly proposing a commercial transaction or mentioning a specific product, was commercial speech), and Kasky v. Nike, Inc., 45 P.3d 243 (2002) (Nike’s advertorials and letters to the editor claiming fair labor practices were commercial speech). Jordan: “An advertisement is no less ‘commercial’ because it promotes brand awareness or loyalty rather than explicitly proposing a transaction in a specific product or service.”Kasky: “speech is commercial if the speaker is a commercial person or entity, the intended audience is likely to be consumers of the speaker’s products or services, and the content of the speech includes ‘representations of fact about the business operations, products or services of the speaker... made for the purpose of promoting sales of, or other commercial transactions in, the speaker’s products or services.’”

In dismissing cert in Kasky as improvidently granted—basically because they couldn’t figure it out—Justice Stevens wrote:

Whether similar protection [as in defamation law] should extend to cover corporate misstatements made about the corporation itself, or whether we should presume that such a corporate speaker knows where the truth lies, are questions that may have to be decided in this litigation. The correct answer to such questions, however, is more likely to result from the study of a full factual record than from a review of mere unproven allegations in a pleading. Indeed, the development of such a record may actually contribute in a positive way to the public debate.

“Unfortunately, in the twenty-two years that followed the Court’s decision to dismiss the writ of certiorari in Kasky, it still has not addressed the ‘important,’ ‘difficult’ and ‘novel’ issues presented.” Preach!

Anyway, Exxon’s conclusory claim that the statements described in the complaint do not propose commercial transactions were insufficient. “[T]he mere presence of non-commercial information in an otherwise commercial presentation does not transform the communication into fully protected speech.”

Nor did the Noerr-Pennington doctrine, which protects the right to petition the government through lobbying, litigation, or other advocacy including publicity campaigns, bar the claims at this stage.

The court also rejected challenges to various smaller bits of the complaint, such as the state’s claim for relief seeking “an order that ExxonMobil fund a corrective education campaign to remedy the harm inflicted by decades of disinformation, to be administered and controlled by the State or such other independent third party as the Court may deem appropriate.” This wasn’t government-compelled speech or compelled subsidy of private speech; the funds would be used by the state to pay for corrective education.

Restitution/disgorgement: the state sought “payment of the monetary value of the defendant’s gain” to the state, acting on behalf of the citizens of the state. “[W]hen a public entity seeks disgorgement it does not claim any entitlement to particular property; it seeks only to deter violations of the [ ] laws by depriving violators of their ill-gotten gains.” This was a proper request.

Can the state reach decades back in its claims?  CUTPA’s three-year limitations period applicable to private enforcement actions does not apply to actions brought by the state. “The defendant presents scant authority in support of its proposition that an egregious delay by the sovereign violates due process.” It’s up to the legislature, not the judiciary, to abolish or modify the doctrine of nullum tempus (no limitations period runs against the state). Even if the court agreed that, at some point, nullum tempus must yield to due process, it couldn’t decide a laches-equivalent defense on a motion to strike. “The defendant is not precluded from raising due process concerns to temper the court’s consideration of the monetary relief sought by the plaintiff if the case reaches that juncture.”

wrongfully claiming Amazon ASIN might be false advertising, even with foreign TM rights

Best Glide Aviation Survival Equipment, Inc. v. Tag-Z, LLC, No. 1-23-cv-1080-DAE, 2025 WL 3454210 (W.D. Tex. Aug. 20, 2025)

This case involves an alleged abuse of Amazon’s system to keep out legitimate competitors. Amazon is so big it can help other, smaller would-be monopolists! The parties compete to sell military style P-38 and P-51 can openers, stamped with “U.S. Shelby Co.” Best Glide alleged that U.S. Shelby openers were originally manufactured by Mallin Shelby Hardware until 1983, when the company dissolved, and since then, they have been manufactured, distributed, and sold by various entities.

Best Glide alleged that it began such sales in 2009; that it was well known in the community for making such sales; and that the public has come to associate it as a provider of U.S. Shelby openers on its own website and on Amazon’s. (Seems unlikely, but I don’t think it needs to be true for Best Glide to be in the right here, given what comes next.)

Each product on Amazon has an Amazon Standard Identification Number (ASIN), “akin to a serial number.” Amazon’s Brand Registry Program allows a seller to become a brand owner by registering a brand name, registered trademark, and/or trademark application into the program. “Once entered in the program, a brand owner controls both the content of an ASIN and who is listed as a seller on an ASIN.” With a generic ASIN, no one seller controls the listing or who may be listed as a seller.

Tag-Z filed for, but later withdrew, a trademark application for “US Shelby.” It also filed trademark applications for “P-38” and “P-51.” Best Glide’s opposition to those applications is suspended pending resolution of this case. Tag-Z possesses German trademark registrations for “P-38,” “P-51,” “US SHELBY,” and “US SHELBY CO.” It allegedly used these to enter the Brand Registry Program and block US sales.

Specifically, Amazon informed Best Glide that Tag-Z had registered one or more of its marks in the program and thus was now the brand owner for the previously generic ASINs. This allegedly led to a marked decline in Best Glide’s sales.

Stretching the definition of “commercial advertising or promotion” a little, but not in any way I find troubling, the court found that Best Glide stated a claim for false designation of origin/association/endorsement and unfair competition/false advertising under the Lanham Act and coordinate state law claims.

The court lumped false designation of origin, association, or endorsement together under §43(a)(1)(A), then applied (B) standards to the claim, including materiality. (This is really mostly a (B) claim.)

The (A) claim was predicated on the idea that, by exploiting the Brand Registry loophole, Tag-Z was able to misrepresent that associated reviews should be attributed to it, when they in fact should be attributed to Best Glide; this was plausibly material “since it can be inferred that customers will be influenced by reviews believed to be associated with Defendant when they are in fact attributable to Plaintiff.”

Likewise, the (B) claim survived because it was plausible that the ASINs are commercial advertisements about the good’s designation of origin, association, or endorsement. They were plausibly (1) commercial speech, (2) for the purpose of soliciting business, and (3) sufficiently disseminated to a relevant public audience. ASINs are (as alleged) not only serial numbers, but the shorthand method of describing a product webpage. “[G]iven that consumers can see the associated ASINs on the Products’ webpage listing, the Court finds Plaintiff has pled the speech is sufficiently disseminated to the relevant public audience.” [Yeah, but is it plausible they’re paying attention? I think this could also be analyzed as a series of commercially motivated false statements to Amazon, which is such a big intermediary that misstatements to it are sufficiently disseminated to a relevant audience.] And “Defendant’s excluding other sellers from using the ASINs and thereby positioning itself to consumers as the exclusive seller of these Products with reviews which should be attributed to Plaintiff is sufficient to plead a misrepresentation.” [Note the one-from-column-A-and-one-from-column-B approach here: the commercial speech is the ASINs, but then the misrepresentations come in the reviews associated with the ASINs. I suppose this is analogous to situations where a pharmaco claims “genericity” for something that isn’t bioequivalent, etc.—the ASIN is sufficiently concentrated information, in this context, that it functionally contains the statements associated with it, here the reviews.]

The similar state law claims survived, but tortious interference with contract failed because the complaint (somehow?) didn’t allege the existence of a contract between Amazon and Best Glide. Moreover, Best Glide failed to allege that any contract between itself and Amazon obligated Amazon to allow it to sell products under specific ASINs. “In the absence of a contract requiring that obligation, Plaintiff cannot allege such a contract was breached.” Likewise, tortious interference with prospective economic relations failed for want of alleged interference with a specific prospective contract or client relationship.

Business disparagement also failed because no allegedly false statement was “about” Best Glide, much less defamatory.

"abortion pill reversal" proponents engaged in noncommercial speech, 2d Circuit agrees for PI purposes

National Institute of Family and Life Advocates v. James, --- F.4th ----, 2025 WL 3439256, No. 24-2481-cv (2d Cir. Dec. 1, 2025)

Unlike the similar California proceeding, the district court in NY granted a preliminary injunction against enforcement of consumer protection law against evidence-free “abortion reversal” claims, because there weren’t allegations of commercial benefit from promoting those claims. “The NIFLA plaintiffs are non-profit, faith-based organizations that have made, and seek to continue to make, statements regarding abortion pill reversal.” At this stage, they were likely to succeed on their First Amendment claim because their APR-related statements are noncommercial speech. The statements were religiously, not economically, motivated; the NIFLA plaintiffs didn’t provide APR and only refer individuals to third-party providers who could then administer APR; and they received no remuneration for their services, including no referral fees or commissions. The NIFLA plaintiffs didn’t charge for access to APR “information” or any of their pregnancy-related or parenting services.

“To hold otherwise could potentially subject a sweeping range of non-profits to regulation of their speech for providing the public with information and resources concerning critical services.” E.g., abortion information, LGBT rights groups in states that ban in-state gender-affirming care, or “a group that matches immigrants with organizations providing access to employment, English language classes, or immigration legal services.” “Expanding commercial speech in a way that covers public statements made by these types of organizations would push the commercial speech doctrine far beyond its ‘core’ of regulating commercial transactions.”

The AG argued that the speech should be considered commercial because “someone must bear the cost” of APR “be it insurance, the medical provider, or a charity,” and that the NIFLA plaintiffs offer services in the “stream of commerce” that have commercial value. “However, this would be true of any non-profit providing information, free services, and access to third-party providers; those services will inevitably have some commercial value and eventually someone will have to be paid for them.”

The AG also argued that “consumers will likely be led to believe that the NIFLA plaintiffs will arrange for them to receive [the APR protocol] because their intended statements invite consumers to access a network of physicians who are willing and able” to provide it, thus making the statements analogous to ads for other medical services. But the cases cited by the AG involved medical procedures or products offered in exchange for money. The NIFLA plaintiffs allege that they receive no direct or indirect payment for the services they provide or referrals they make. “Moreover, there is no evidence in the record, at this stage of litigation, to suggest that the NIFLA plaintiffs gain other types of economic benefits by engaging in this speech, such as an increased customer base or a capital increase through fundraising.” [If soliciting for nonprofits is noncommercial speech, why would ordinary fundraising be commercial speech as to statements about what the nonprofit does?]

The court emphasized that “no factor, including the speaker’s motivation, is dispositive to the noncommercial speech inquiry.” But it wasn’t just ideological motivation at issue here: the NIFLA plaintiffs were actually not providing or charging for services or getting direct or indirect compensation for their referrals.   

"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.