False advertising and labeling consumer class actions filed against consumer packaged goods companies have surged in the last few years, with more than 300 new cases filed each year since 2021. More than a quarter of these have been filed in California federal courts. A key question in many of these cases is what information the reasonable consumer would read and rely on from the product packaging. In June 2023, the Ninth Circuit weighed in on this topic, providing helpful guidance to companies.
In McGinity v. P&G, the Court was asked to rule on whether shampoo and conditioner products manufactured by Pantene, labeled with the words “Nature Fusion” over imagery containing an avocado on a field of gold and green, misrepresented the ingredients of the products. See 69 F.4th 1093 (9th Cir. 2023). The plaintiff alleged that the packaging represented to consumers that the products were either completely or substantially “natural,” but that this was false or misleading because the products contained synthetic ingredients. The plaintiff asserted that if he had known that the products were not “from nature or otherwise natural,” he would either not have purchased the products or have paid a premium for them. The District Court was not persuaded by this logic and dismissed the plaintiff’s complaint. Plaintiff’s appeal followed.
The Ninth Circuit affirmed the dismissal. The Court found that, at most, the front labels were ambiguous. The ambiguity meant that the panel “must consider what additional information other than the front label was available to consumers of the P&G products.” Here, the ambiguity was cured by information found on the back of the products’ labels. Specifically, the Court found that the back label made it “clear to a reasonable consumer that the avocado oil is the natural ingredient emphasized” and that the ingredient list on the back label “clarifies that the rest of the ingredients are artificial,” thus resolving any ambiguity.
The Court found that this case was in the vein of Moore v. Trader Joe’s Co., 4 F.4th 874, (9th Cir. 2021), where the court found that context could be used to determine if ambiguity would mislead a reasonable consumer. The Court distinguished its prior precedent of Williams v. Gerber Prods. Co. (9th Cir. 2008), because in that case the information on the back label negated information found on the front of the packaging.
Thus, McGinity confirms the Ninth Circuit’s position that ambiguous labels may not be actionable if the back label can be used to cure the ambiguity.
Notably, another development from McGinity for manufacturers to monitor is the Ninth Circuit’s apparent openness to considering greenwashing claims. While the panel in this case did not rule on the greenwashing claims brought by the plaintiff, the concurrence written by Judge Gould and joined by Judge Berzon seemed concerned with the potential for consumers to be misled by emphasis on words such as “Nature” on product packaging.