H&M is facing another class action lawsuit over its marketing of fast-fashion apparel and accessories as sustainable. According to the complaint that they filed in a federal court in Missouri on November 3, Abraham Lizama and Marc Doten (the “plaintiffs”) allege that H&M has engaged in “unlawful, unfair, deceptive, and misleading business practices” by way of the marketing and sale of its “self-proclaimed sustainable clothing line called the ‘Conscious Choice’ Collection.” While products in this collection are not “sustainable” or “environmentally friendly,” the plaintiffs claim that the Swedish apparel giant markets them as such, thereby, running afoul of various states’ laws, including those in California and Missouri.
Setting the stage in their complaint (and mirroring similar claims made in other sustainable marketing-focused complaints filed over the past couple of years, in particular), Lizama and Doten claim that “in recent years, consumers have become significantly more aware of and sensitive to the impact of clothing and household products on the environment.” Consumers are “seek[ing] out and will[ing] to pay a premium for products that are responsibly made, including products that will not negatively affect the environment,” the plaintiffs state, asserting that “as a result, demand has increased for ‘green’ products that are sustainable and environmentally friendly.”
“In response to consumers’ desire for more sustainable and environmentally friendly clothing products,” and knowing the pricing power that comes with marketing products as such, Lizama and Doten allege that “many companies” – including H&M – “greenwash their products by deceptively claiming that their clothing is made from materials that are more sustainable and environmentally friendly.” Specifically, they assert that H&M “markets and labels products [as] ‘Conscious Choice’” even though they “not made from sustainable and environmentally friendly materials.”
H&M further pushes its “false” sustainability narrative, the plaintiffs claim, by way of green-hued hangtags; statements on its website about its supposed sustainability credentials; and “marketing, advertisements, and social media” campaigns that “center around ‘green’ imagery of Conscious-clad models surrounded by lots of grass and plush green plants.”
Against this background, H&M’s “sustainability” marketing and labeling – which it allegedly uses to “increase profits and to gain an advantage over its lawfully acting competitors” – serves to “deceive consumers” like the plaintiffs, who argue that they would not have bought the “Conscious Choice” products had they known that they were “not made from sustainable and/or environment friendly materials.” Or if they did buy them, they would have opted to pay “a substantially reduced price.”
Price Premium Claims
Since they “reasonably” relied on H&M’s marketing and paid a premium as a direct result of its “misrepresentations,” the plaintiffs argue that they – and other class members – “have suffered economic losses and other general and specific damages, including but not limited to the amounts paid for the products [and] premiums paid for the products.” The price premium element here is significant, as it is at the heart of the plaintiffs’ ability to show that they have suffered the necessary injury to have standing to sue.
Not an untested claim, other plaintiffs have successfully made similar price premium-based arguments in connection with companies’ allegedly deceptive sustainability marketing campaigns. For instance, a U.S. District Court for the Southern District of New York judge found this summer that a consumer who alleged that bottling company Niagara made the “false and misleading” representation that its water bottles are “100% Recyclable” adequately pled standing for damages (but not injunctive relief) by alleging that she paid a price premium based on that misrepresentation.
Before that, a federal district court in Illinois determined in a case against supermarket chain ALDI that it was enough for the plaintiff to allege that she paid a premium for what she believed was a “sustainably sourced” product, thereby, “going beyond merely alleging that she would not have bought the product absent the allegedly deceptive practice.” To allege injury under a price premium theory, “a plaintiff must allege not only that the defendants charged a price premium, but also a ‘connection between the misrepresentation and any harm from, or failure of, the product,” the court stated.
With the foregoing in mind, the plaintiffs claim that H&M engaged in negligent misrepresentation and fraud, and violated Missouri’s Merchandising Practices Act, California’s Unfair and Deceptive Acts and Practices Law, California’s Consumers Legal Remedy Act, and California’s Business and Professions Code, which generally prohibit parties from engaging in “unlawful, unfair and/or fraudulent business practices,” and making “misleading statements and fraudulent omissions regarding the quality and characteristics of” its products.
In addition to class action certification, the plaintiffs are seeking monetary damages (of more than the $5 million class action threshold), and an order requiring H&M to “immediately cease and desist from selling its misbranded products in violation of law” and to undertake a “corrective advertising campaign,” among other things.
A Rising Number of Cases
For the most past, brands have been able to market their offerings with often-vague sustainability-centric buzzwords without pushback from regulators or consumers, but that is swiftly changing. Lizama and Doten’s lawsuit against H&M marks the second “misleading” marketing suit that has been lodged against the fast fashion behemoth in the past several months; it was sued this summer for allegedly using “falsified [sustainability] information that did not comport with the underlying data.” (That case is still underway in the U.S. District Court for the Southern District of New York.)
A growing list of other companies have also been sued on relatively similar grounds – with mixed results. A case lodged against Canada Goose in 2020 over “misleading” claims that it is dedicated to “ethical, responsible, and sustainable sourcing,” for instance, survived a motion to dismiss earlier this year before settling out of court. Around the same time, Allbirds escaped the false advertising suit it was facing, with a New York federal court granting its motion to dismiss this spring.
Ultimately, experts anticipate that regulators and environmental groups – and seemingly, class action plaintiffs, as well – will devote increasing attention to the validity of claims made by companies in regard to their environmental, social, and governance efforts. “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 recent 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.”
A rep for H&M told TFL in response to the lawsuit, “We are taking the allegations very seriously and are looking into them thoroughly.”
The case is Abraham Lizama, et al., v. H&M Hennes & Mauritz LP, 4:22-cv-01170 (E.D. Mo.).
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