Walmart Settles $925,000 Plastics “Greenwashing" Lawsuit in California
Product Stewardship and Sustainability Report
On January 31, 2017, Wal-Mart Stores, Inc. (Walmart) settled a consumer class protection lawsuit brought by 23 District Attorneys offices in California alleging that Walmart sold plastic products that were misleadingly labeled as “biodegradable” and “compostable.” As part of the settlement, Walmart agreed to pay $875,000 in civil penalties and to pay $50,000 to CalRecycle, the state recycling agency, to support testing of plastic products that are marketed as compostable or degradable.1
This lawsuit is the latest brought by California since the state passed laws governing so-called “green marketing” claims for plastic products.2 Green marketing, broadly speaking, is the marketing and advertising of products as environmentally safe or even environmentally beneficial. A product is deemed by some to be “greenwashed” if its environmental claims are false, fraudulent, or unable to be confirmed through an acceptable scientific or technical method. California’s green marketing laws governing plastics initially were limited to plastic bags and containers, but effective January 1, 2013, they were expanded to include all plastic products, regardless of whether the product is made of plastic alone or in combination with any other material.3
California’s green marketing laws are more prescriptive and demanding than those enforced by the United States Federal Trade Commission (FTC). The FTC has had regulations governing green marketing claims for all products since at least 1992, when it issued its first “Green Guide.” The Green Guide was last updated in 2012. Notably, the Green Guide’s regulations governing “compostable” and “degradable” claims are more general and less prescriptive than California laws governing such claims on plastic products. For example, the Green Guide requires only that claims regarding the compostable or biodegradable characteristics of products be based on “competent and reliable scientific evidence to support those claims.” 19 C.F.R. §§ 260.7(b), 260.8(b). Relatedly, the Green Guides require that for a marketing claim regarding compostability and degradability not to be misleading, the products must be able to be broken down in a “safe and timely manner,” id. § 260.7(b), or “within a reasonably short period of time after customary disposal, id. § 260.8(b).
In stark contrast to the Green Guides, California’s plastics green marketing law obligates the regulated community to meet what the state has deemed to be reliable technical standards before certain green marketing terms may be used. The legislature has identified standards for use of the term “compostable” but has yet to identify standards for the term “biodegradable.” See, Cal. Pub. Res. Code §§ 42355, 42357(a), 42357(b). This means that marketing claims that plastic products are “biodegradable,” “degradable,” or “decomposable,” or that “in any way imply that the plastic product will break down, fragment, or decompose in a landfill or other environment” are currently banned.4
In short, it will take another act of the California legislature before anyone may claim that a plastic product sold in the state is “biodegradable,” regardless of whether there is “competent and reliable scientific evidence” to support such a claim. In light of strong consumer sentiment in favor of “green” products, and also in light of recent public attention to the automotive industry and elsewhere regarding green marketing claims,5 it is unlikely that California will approve technical standards to allow such claims without significant scrutiny. We can likewise expect other states to continue to scrutinize green marketing claims under their own authority as well.
1 People of the State of California v. Wal-Mart Stores, Inc. et al. (Sup. Ct. Napa County, 2017, No. 89). See also “DA Announces Settlement with Walmart over ‘Greenwashing’ Claims,” Alameda County District Attorney’s Office Press Release February 1, 2017 (Press Release), available at http://www.alcoda.org/newsroom/categories/press_releases.
2 See, e.g., People of the State of California v. Enso Plastics, LLC, et al. (Sup. Ct. Orange County, 2011, No. 518091) (bringing claim against companies claiming their water bottles were biodegradable and recyclable).
3 See California Senate Bill 567 (signed into law by Governor Brown on October 8, 2011).
4 Id. § 42357(b); see also Press Release, supra note 1 (“California law imposes an outright ban on the sale of plastics labeled ‘biodegradable’ (or labeled with similar language . . . .”).
5 For example, the FTC filed a lawsuit under the Federal Trade Commission Act (FTCA) against Volkswagen with respect to environmental claims made by Volkswagen regarding its diesel emissions that proved to be false. That case resulted in billions of dollars in penalties against Volkswagen. See Federal Trade Commission v. Volkswagen Group of America Inc., 16-cv-1534 (N.D. Cal.).