While environmental regulation may be slowing down in the US, sustainability litigation is still going strong. Greenwashing presents a major litigation risk for companies that falsely or improperly promote sustainable aspects of their products or services. You may already be aware of the usual plaintiffs: NGOs, state and federal Regulators, and disgruntled customers, but have you considered your competitors? A recent California lawsuit between Moldex-Metric Inc. and Protective Industrial Products Inc. gives an example of what happens when a competitor feels the impacts of a rival’s alleged greenwashing. A recent Mintz memo discusses the case:
“Last month, an earplug maker sued a rival in federal district court in California, alleging that the competitor had engaged ‘[i]n a calculated ‘greenwashing’ scheme to capture market share from competitors . . . by falsely advertising its [] products with numerous unqualified environmental benefit claims.’ Specifically, the complaint brought claims under the Lanham Act (false advertising) and California state law (unfair competition). Notably, California law contains specific provisions that explicitly prohibit misleading environmental marketing claims (e.g., California Business and Professions Code § 17580.5), making it an especially potent jurisdiction in which to assert these types of claims.”
While it’s rare for a competitor to sue a rival for greenwashing, this kind of litigation isn’t completely unheard of. Companies are known to bring antitrust litigation against their competitors when they believe a competitor benefits from an unlawful anticompetitive edge, and this greenwashing case operates on similar principles. Moldex-Metric believes that Protective Industrial Products is unfairly benefiting from false or misleading marketing and seeks to rectify that in court.
Competitors make especially challenging plaintiffs in greenwashing actions because they operate in the same sector or industry as the defendant. This gives them a better understanding of which sustainability claims are feasible and when a company might be misrepresenting its products.
If Moldex-Metric is successful, we could see more companies adopt to root out greenwashing among their competitors.
Our members can learn more about greenwashing litigation here.
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