United States: Green Is In The Eye Of The Beholder: Without A Third-Party Seal Of Approval, Companies Should Think Twice About Labeling Their Products As "Green", "Sustainable" Or "Environmentally-Friendly."
Next November, a federal court in California is scheduled to
preside over an important "greenwashing" class action
lawsuit. In Koh v. S.C. Johnson & Son, Inc., No.
C-09-00927 RMW, a plaintiff, on behalf of himself and other
individuals that purchased various S.C. Johnson & Son household
cleaning products, sued that company, alleging that the
company's "Greenlist(tm)" labeling system was false
Some background on "Greenlist(tm)" is helpful to
understanding the plaintiffs' allegations. S.C. Johnson &
Son developed its Greenlist process and labeling system as a way to
rate its products in terms of their impact on the environment. In
January, 2008, the company began marketing and selling Windex in
packages that, according to the U.S. District Court for the
Northern District of California, "prominently
display[ed]" the company's Greenlist label. The front of
the label contained "a stylized drawing of two leaves and a
stem." The reverse side of the label, which allegedly could be
viewed through the back of the Windex packaging, read,
"Greenlist(tm) is a rating system that promotes the use of
environmentally responsible ingredients. For additional
information, visit [S.C. Johnson & Son's website]."
Eventually, S.C. Johnson & Son started affixing its Greenlist
label to other products that it sold.
The class of plaintiffs contends that S.C. Johnson & Son
"deceptively designed [its Greenlist label] to look like a
third party seal of approval, which it is not." Their basis
for seeking to hold the company liable for misleading them is as
follows. They maintain that "among today's
environmentally-conscious consumers, products seen as
'green,' or environmentally friendly, often command a
premium price and take market share away from similar,
non-'green' products." They claim that S.C. Johnson
& Son capitalized on this trend, charging higher prices for
products with a Greenlist label than for comparable products with
no "green" credentials. They allege that they would not
have purchased S.C. Johnson & Son's Greenlist products, had
they known that the Greenlist label was the result of the
company's own review process, and that, as a
consequence, they suffered an economic loss by purchasing those
products instead of cheaper products with no "green"
In January, 2010, S.C. Johnson & Son asked the court to
dismiss the claims against it, arguing that no reasonable consumer
could consider its Greenlist label deceptive. The company pointed
out that the label made no mention of third party certification and
that the label described Greenlist as a "rating system,"
not a "seal of approval." The court, however, rejected
the company's argument, ruling instead that "it is
plausible that a reasonable consumer would interpret the Greenlist
label as being from a third party." Moreover, drawing from
Federal Trade Commission guidelines recognizing that certain icons
and language convey the message that a product is
"environmentally superior," the court suggested (1) that
the Greenlist label's stylized drawing of two leaves and a stem
perhaps conveys the message that Greenlist products are
environmentally superior, and (2) that, unless S.C. Johnson and Son
can substantiate that message, a jury could find that the Greenlist
label is deceptive. The court's denial of S.C. Johnson &
Son's motion to dismiss means that the plaintiffs' claims
are legally sufficient to be presented a jury. Assuming this case
proceeds as scheduled, a California jury will determine whether
S.C. Johnson & Son's Greenlist labeling system was
Although liability based on misleading labeling is nothing new,
the Koh case is noteworthy because it involves the
possibility of liability based on a company's characterization
of its product as environmentally friendly. It is difficult to
imagine a more subjective characterization of a product, and it is
almost certain that, with consumers putting so much emphasis on
perceived environmental sustainability, there will be more
litigation in this area. Yet, one thing is clear already: if S.C.
Johnson & Son is found liable in the Koh case, it will
be because the company (1) used its own review and
labeling process and (2) failed to clearly identify that process as
its own. Perhaps S.C. Johnson & Son nevertheless can escape
liability by persuading the jury that the Greenlist label is not
misleading or that Greenlist products are, in fact, environmentally
superior to comparable products with no "green"
credentials, but doing so will require the time and expense
associated with complex commercial litigation; moreover, the jury
might not accept either argument. Thus, companies should be
exceedingly careful when marketing and selling environmentally
friendly products or services, if that characterization is not
supported by an independent third party.
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With publication of final regulations by the United States Environmental Protection Agency ("EPA") in the Federal Register, the rules under Section 316(b) of the Clean Water Act governing the use of cooling water at existing power plants and industrial facilities are effective on October 14, 2014 (the "Final Rule").