H&M has beaten a proposed class action lawsuit over its alleged scheme of greenwashing its fast fashion wares. By marketing its Conscious collection products as “sustainable” or “environmentally friendly” when they are not, the plaintiffs argued in the suit they filed last year that H&M was running afoul of California and Missouri state laws. In an order on May 12, Judge Rodney Sippel of the U.S. District Court for the Eastern District of Missouri disagreed and sided with the Swedish fast fashion giant, dismissing Mark Doten’s claims due to a lack of personal jurisdiction, and fellow Plaintiff Abraham Lizama’s causes of action for failure to adequately allege his claims against H&M.
After finding that Doten set out “no allegations or argument that H&M is subject to general jurisdiction in Missouri” and that there was “no dispute that Doten’s claims do not arise out of or relate H&M’s contacts with Missouri because he alleges that he is a California resident who made a ‘conscious choice’ purchase in California,” Judge Sippel turned to the claims brought by Lizama. In response to the complaint, H&M (successfully) argued that Lizama’s claims fail because it “never made a misrepresentation of fact regarding its Conscious collection,” an essential element of his consumer fraud claims under Missouri’s Merchandising Practices Act (“MMPA”), as well as his common law claims for unjust enrichment, negligent misrepresentation, and fraud.
(Lizama alleges that by way of various marketing claims on its product labels, advertising, and website, H&M engages in greenwashing and misleads consumers into thinking its Conscious collection wares are “sustainable and environmentally friendly.” Despite such marketing, he alleges that H&M’s Conscious collection “actually contains a higher percentage of synthetics” – such as recycled polyester – “than [H&M’s] main collection,” making it anything but “sustainable.”)
Before diving into the claims that H&M makes in its marketing, the court said that “it is important to note the statements it did not make.” For instance, Lizama “repeatedly uses the phrase ‘environmentally friendly’ in the complaint” even though H&M “never actually claims that its Conscious collection items are ‘environmentally friendly.’” At the same time, Lizama alleged that H&M’s Conscious collection-centric labeling and advertising is “false, misleading, and deceptive’ [because it] tricks consumers into thinking that ‘the products are more sustainable.’” However, H&M “does not represent that its products are ‘sustainable’ or even ‘more sustainable’ than its competitors,” according to the court. “Rather, H&M states that its Conscious collection garments contain ‘more sustainable materials’ and that the line includes ‘its most sustainable products.’”
In contrast to Lizama’s allegations, the court maintained that “no reasonable consumer would understand [H&M’s] representations to mean that the Conscious clothing line is inherently ‘sustainable’ or that H&M’s clothing is ‘environmentally friendly’ when neither of those representations were ever made.” Instead, the “only reasonable reading of H&M’s advertisements is that the Conscious collection uses materials that are more sustainable than its regular materials,” Judge Sippel held, dismissing Lizama’s claims of consumer deception “based on statements that H&M never made.”
The court also noted that H&M “actually tells its consumers … that ‘fashion has a huge impact on the environment’ and that ‘the only trends worth following [are] recycling and repairing’ clothes.” Given these and other disclosures on H&M’s website, “a reasonable consumer would not be misled into thinking that purchasing any new article of clothing (even from the Conscious choice line) was ‘environmentally friendly.’”
In terms of the claims that H&M does make, such as that “[e]ach Conscious Choice product contains at least 50% more sustainable materials – like organic cotton or recycled polyester,” the court found that Lizama’s claims fail here, as he “does not contend that he was unable to determine the composition of materials used to make the sweater he purchased, nor does he allege that the actual composition differs from the representation made by H&M.” Moreover, Lizama failed to identify “any material facts regarding the composition or environmental impact of H&M’s Conscious choice materials that are not already known to the reasonable consumer prior to purchase.”
And in terms of Lizama’s claim that H&M’s alleged misrepresentations constitute an “unfair practice” under the MMPA because they violate the Federal Trade Commission (“FTC”)’s Green Guides by “imply[ing] environmental benefits that do not exist,” the court was unconvinced. “Here, H&M has not made any unqualified environmental benefit claims,” per Judge Sippel, who held that “rather than representing the Conscious collection as unconditionally sustainable,” H&M has “clearly qualified its use of such terms, explaining that its conscious choice items are made with ‘a little extra consideration for the planet’ because they use ‘more sustainable materials’ than its regular collection.”
H&M’s statement that “[e]ach Conscious Choice product contains at least 50% more sustainable materials – like organic cotton or recycled polyester,” in particular, is not deceptive, according to the court, as “those percentages are accurate and it is uncontested that the use of those materials is more environmentally beneficial than the use of virgin or non-organic counterparts.” The fast fashion giant similarly did not run afoul of the FTC’s ban against overstating an environmental attribute or benefit by “imply[ing] environmental benefits if the benefits are negligible,” Judge Sippel held. Instead, “H&M has clearly defined the basis for its ‘more sustainable materials’ representation by specifically identifying the proportion of those ‘more sustainable materials’ used in each garment – such as ‘59% Recycled polyester’ – and explaining why certain materials are preferable to others as well as the environmental impacts of each.”
With the foregoing in mind, the court dismissed the plaintiffs’ claims under the MMPA and California’s business code, as well as unjust enrichment, negligent misrepresentation and fraud claims since Lizama “has failed to establish that H&M’s representations were not factually [in]accurate.”
THE BIGGER PICTURE: Not the only greenwashing lawsuit currently under way, H&M is still facing a separate suit for allegedly “taking advantage of consumers’ interest” in sustainability and products that “do not harm the environment” by incorporating “‘environmental scorecards’ for its products called ‘Sustainability Profiles’” into the labeling, packaging, and marketing materials for hundreds of its offerings – only to ultimately remove them after being called out for using “falsified information that did not comport with the underlying data.” More recently Nike was hit with a similar lawsuit over its alleged pattern of deceiving consumers by falsely marketing its offerings as “sustainable,” made with “sustainable materials,” and environmentally friendly when its products “do not live up to these claims.”
Despite an influx of sustainability-focused litigation, the likelihood of success for plaintiffs is hardly a sure thing. Coca-Cola, for instance, beat the false advertising lawsuit that Earth Island Institute waged against it over various sustainability claims, with the D.C. Superior Court tossing out the case in November on the basis that many of the beverage giant’s claims were “general, aspiration corporate ethos” statements that do not include any “promises or measurable data points” that can be proven to be inaccurate. Coca-Cola landed another win in November, beating the lawsuit waged against it by the Sierra Club over its allegedly deceptive marketing on water bottles.
Before that, Allbirds side-stepped a false advertising lawsuit accusing it of failing to live up to the claims that it makes in its marketing, including ones about the carbon footprint of its popular footwear, and its “sustainable” and “responsible” manufacturing practices. In an order in April 2022, Judge Cathy Seibel of the U.S. District Court for the Southern District of New York granted Allbirds’ motion to dismiss upon finding that the plaintiff failed to plausibly allege that the statements that Allbirds makes about the environmental impact of its products and animal welfare are materially misleading. Among other things, Judge Seibel found that “in advertising [its] product’s carbon footprint calculations, Allbirds describes the exact components of the calculation, and [the plaintiff] provides no facts suggesting that [it] is not calculating the carbon footprint as advertised,” noting that Allbirds “does not mislead the reasonable consumer because it makes clear what is included in the carbon footprint calculation, and does not suggest that any factors are included that really are not.”
Meanwhile, Canada Goose ultimately avoided a trial in the lawsuit waged against it for allegedly misleading consumers about the nature of the trapping methods used to source the fur for its jackets by claiming that it is dedicated to “the ethical, responsible, and sustainable sourcing and use of real fur.” While the case survived a motion to dismiss (with the court finding that the plaintiff’s allegations were “thin,” but he nonetheless, plausibly alleged that a reasonable consumer would be misled by Canada Goose’s advertising claims), the parties ended up settling out of court last year.
Regardless of these outcomes, it is clear that class action plaintiffs are looking for opportunities to wage lawsuits against companies over their environmental, social, and governance claims. “Companies relying on environmental attributes, such as carbon offsets, to reach climate change goals” and/or that are making use of allegedly “environmentally friendly” materials and marketing such efforts “should be as careful and specific as possible when making these claims to avoid negative press and/or regulatory or legal violations,” Eversheds Sutherland stated in a note. And in addition to ensuring that claims are accurate and can be substantiated at the time that they are published, “Periodic reviews are warranted to keep up with a rapidly evolving landscape.”
ONE LAST TAKEAWAY: The frequency with which lawsuits in this realm are being filed, and the mixed outcomes in greenwashing litigation seems to suggest that companies and courts, alike, could benefit from stronger guidance on how to effectively make – and gauge the veracity of – ESG marketing claims. The FTC’s impending revamp of the Green Guides, which have prompted many stakeholders to call for legal definitions for sustainability and related terms, will ideally prove useful on this front.
The case is Abraham Lizama, et al., v. H&M Hennes & Mauritz LP, 4:22-cv-01170 (E.D. Mo.).
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