Settlements allowing competitors to use term doesn’t insulate Clorox from its own possible deception

Gregorio v. Clorox Co., 2018 WL 732673, No. 17-cv-03824
(N.D. Cal. Feb. 6, 2018)
Gregorio alleged that, to capitalize on consumer demand for
“natural” home cleaning products, Clorox falsely advertised its “Green Works”
cleaning products as “natural” or “naturally derived.” The “naturally derived”
representation appears above the cleaning product type:

The back label of each green works products has an
ingredients list, and refers consumers to two websites. The website concedes that the green works products are not
entirely naturally derived: “[T]he products are “95% to 99% naturally derived …
such as filtered water, plant-based cleaning agents, essential oils, corn-based
ethanol and wood-based fibers. The other ‘1% to 5%’ are a combination of
preservatives, fragrances and dyes.”  The website lists each particular products’ ingredients, but doesn’t
indicate whether the ingredient is natural or non-natural.
Plaintiffs alleged that the products fail to meet reasonable
consumers’ expectation and definition of all-natural products, and they brought
the usual California claims, as well as New York claims and Magnuson-Moss
Warranty Act claims (the last of which was dismissed for failure to allege key
facts about the value of the transactions).
Clorox argued that reasonable consumers wouldn’t have been
misled by “naturally derived.”  It
pointed to various disclosures, and to three class action settlements involving
competitors’ products that used the terms “100% natural” or “all natural.”  In the settlements, competitors agreed to
stop using the terms “100% natural” and “all natural” and instead use the terms
“naturally derived” or “natural,” as well as to provide additional ingredient
information on their websites. Clorox already does these things. Clorox argued
that these court-approved settlements showed that a reasonable consumer would
not be misled, “particularly given that one of those cases was pursued and
settled by the same lawyers pursuing this case.”
True, the companies party to the settlements “now have
strong defenses against any future class action challenging their use of ‘naturally
derived,’” which Clorox doesn’t have, and if the plaintiffs here win, . “Clorox
may no longer be allowed to use the exact same phrase as its competitors can
use with theoretical impunity.”  That’s
unfair, but there’s no authority showing that potential unfairness overrides
the reasonable consumer test.  “Further,
private settlements cannot and do not serve as a substitute for the court’s own
determination regarding whether it is plausible that Clorox’s labeling would
deceive a reasonable consumer. In fact, those settlements—involving different
parties, litigating over different products, displaying different allegedly
deceptive terms—barely amount to persuasive authority that a reasonable
consumer would not be misled by the labeling at issue here.”  Plus, “by their very nature settlements are a
product of compromise that involve numerous variables.”  Too bad for Clorox.
Further, the complaint plausibly alleged misleadingness. “It
is not unreasonable as a matter of law to expect a product labeled ‘naturally
derived’ to contain no synthetic ingredients. It is also far from unreasonable
to expect the same product to contain only ‘naturally derived’ ingredients—a
representation apparently contradicted by defendant’s own website.” Though
“100% natural” and “all natural” would also be misleading, “the court is not
free to dismiss claims because defendant chose not to use a potentially more
misleading phrase.”  The ingredient list
didn’t shield Clorox from liability, because reasonable consumers expect it to
include more detailed information, not to contradict other representations on
the packaging. A jury would have to decide.
Nor would the court stay the case under Clorox’s hail-Mary
attempt to invoke the primary jurisdiction doctrine, based on the FDA’s
rulemaking regarding “natural” foods that began in November 2015. The FDA doesn’t
regulate the cleaning products at issue here.

from Blogger

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