Friday, February 19, 2010

Consumer Can Pursue Claim That “Greenlist” Label Was Misleading

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

A class action complaint alleging that a “Greenlist” label used by household cleaning products manufacturer S.C. Johnson was deceptively designed to look like a third party seal of approval could not be dismissed on the grounds that injury was not sufficiently alleged and that no reasonable consumer could have found the label misleading, the federal district court in San Jose has ruled.

Under the California Unfair Competition Law and False Advertising Law, suit may only be brought by a person who has suffered injury in fact and has lost money or property as a result of a violation.

The consumer sufficiently alleged that he did not receive the benefit of the bargain in that SCJ's Windex cost more than similar products without misleading labeling, according to the court.

On the question of whether the label was misleading, SCJ pointed out that the Greenlist label made no mention of a third party, described Greenlist as a “rating system” not a seal of approval, and directed consumers to SCJ's own website for further information. However, given the alleged context, it was plausible that a reasonable consumer would interpret the Greenlist label as being from a third party, the court found.

While the attributes identified by SCJ were relevant to the inquiry and might weaken the case for deceptiveness, they did not allow a ruling on the issue as a matter of law.

Guidelines issued by the Federal Trade Commission provided that a product label containing an “environmental seal,” such as a globe icon with the text “Earth Smart” around it, “is likely to convey to consumers that the product is environmentally superior to other products” and would be deceptive “[i]f the manufacturer cannot substantiate this broad claim,” the court noted.

The opinion in Koh v. S.C. Johnson & Son, Inc., No. C-09-00927 RMW, ND Cal., appears at CCH Advertising Law Guide ¶63,741

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