ESG Enforcement Tracker

Key facts:

On 29 August 2024, the DC Court of Appeals reversed the dismissal of a complaint alleging deceptive environmental marketing by Coca-Cola. The complaint, brought by Earth Island, highlighted statements which supposedly misled customers to believe that Coca-Cola was taking steps to substantially mitigate its environmental harms. Through two of those statements, Coca-Cola had set down the following goals:

• “Make 100% of our packaging recyclable globally by 2025. Use at least 50% recycled material in our packaging by 2030.”
• “Part of our sustainability plan is to help collect and recycle a bottle or can for every one we sell globally by 2030.”

Earth Island alleges that Coca-Cola is not taking the steps necessary to meet its concrete benchmarks, and that its statements “greatly overstate the efficacy of recycling in addressing the plastic crisis”. Coca-Cola did not dispute that its packaging ends up in the natural environment, but said that it was taking steps to meet that challenge, meaning its representations were not misleading.

In 2022, the DC Superior Court reasoned that Earth Island had not pled a plausible claim for relief under the CPPA. It held that Coca-Cola’s statements were merely aspirational, and did not appear on the product label itself. It observed that the statements were cherry-picked from various sources, and could not be “cobbled together to allege one general misrepresentation”.

In reversing the decision of the trial court, the Court of Appeals addressed three issues. Firstly, whether Earth Island had standing to bring the suit under the CPPA. Secondly, whether Earth Island had pled a plausible claim for relief. Thirdly, whether the First Amendment barred the suit.

1. Standing
Coca-Cola argued that Earth Island lacked standing to bring its complaint because it had not identified a class of consumers likely to be misled by Coca-Cola’s statements. The Court of Appeals, however, held that such a class had been identified – a subset of the general public of the District of Columbia who “care deeply about environmental issues”.

2. Plausible claim for relief

Coca-Cola had argued that:

• its own statements were “classic puffery – generic statements of values, goals and aspirations that cannot be objectively proved true or false, and cannot deceive a reasonable consumer.”;
• its environmental statements did not relate to ‘goods or services’, in that they do not tell consumers anything about the goods they will receive; and
• a CPPA misrepresentation claim could not be based on an amalgamation of statements.

However, the Court of Appeals disagreed with all of these arguments and found that Earth Island had plausibly alleged that Coca-Cola’s mass production of single-use plastics with no intention of stopping ran contrary to Coca-Cola’s representation of itself as a company focused on working towards a more sustainable environment.

3. The First Amendment
Coca-Cola argued that its speech fell within the First Amendment. The Court disagreed. While the Court held that it had to take care not to intrude on Coca-Cola’s freedom of speech, it reasoned that the First Amendment “does not prohibit the State from insuring that the stream of commercial information flow cleanly as well as freely”.

On those grounds, the Court reversed the dismissal of Earth Island’s complaint, and remanded the case for hearing, which is expected to take place.