Danone Waters of America promotes its brand of Evian water as “carbon neutral.”  Earlier this year, a federal court in New York allowed a lawsuit against Danone to continue, holding that the  company's “carbon neutral” claim was potentially misleading since it may confuse consumers about whether any carbon is actually emitted during the production of the product.  

On a motion to reconsider, the court changed its mind and just dismissed the case.  Here's why. 

Evian's packaging indicates that its bottles are “carbon neutral.”  The plaintiffs sued, alleging that the claim misleading, because it's not clear whether the “carbon neutral” claim means that no carbon was emitted during production or that the company has offset its emissions through investment in carbon offsetting projects.  

In its initial decision, the court focused on the fact that “carbon neutral” is a technical and scientific term that was “unfamiliar to and easily misunderstood” by reasonable consumers.  Following guidance from the Federal Trade Commission's Green Guides, which advises against making general environmental benefit claims, the court held that “carbon neutral” was an ambiguous term that could plausibly mislead reasonable consumers. 

On the motion for reconsideration, the court came to a different conclusion.  The court held that, in light of the fact that Evian's “carbon neutral” claim is ambiguous, reasonable consumers would have consulted the back label of the product to try to determine what the claim means.  This is certainly not the first court to hold that, when a packaging claim is ambiguous, reasonable consumers should look at the back of the label to clear up any potential confusion.  What's significant about this decision is that the court isn't at all troubled by the fact that there's no information on the back of the label that actually explains what “carbon neutral” means.  Instead, the court felt that just providing a link to Evian's website, which provides more information about its carbon offsetting work, was sufficient.  The court explained, “These sorts of disclosures mitigate concerns of consumers being misled at the point of sale.”  The court held then, that, “a reasonable consumer would be expected to look beyond the front label to learn more about the representation and consult other information available.”  

Interestingly, the court also completely disregarded survey evidence that indicated that a substantial number of consumers were actually misled by the claim.  The court held that, in light of the fact that the “carbon neutral” claim is ambiguous, it wasn't reasonable for consumers to assume that the claim meant something specific.  The only reasonable thing to do, in this case, was to consult the back of the label and other available information.  In other words, if consumers were confused, it's their own fault. 

The court also thought it just wasn't reasonable for consumers to understand “carbon neutral” to mean that no greenhouse gasses are emitted during the production of the product in light of the fact that the front of the label indicates that Evian water is sourced from the French Alps.  The court writes, “though the consumer survey does provide some evidence that some consumers might not understanding what ‘carbon neutral’ means, it ultimately does not fully answer the relevant question that must be resolved – would the label have misled a reasonable consumer acting reasonably under the circumstances.  The court now holds that a reasonable consumer would have inquired further and consulted the additional information available.” 

At first glance, this case is very good for marketers – and seems to open the door to qualifying ambiguous packaging claims using a wider variety of methods.  The issue, though, is that it signals a widening gap between what federal courts consider to be an acceptable disclosure and what the Federal Trade Commissions would think is sufficient.  It's highly unlikely that the FTC – in enforcing Section 5 -- would accept almost any of the reasoning in this case.