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Keurig agrees to pay $10 million to settle recycling class action lawsuit

On February 24, 2022, Keurig Green Mountain, Inc. (Keurig) agreed to pay $10 million to adjust a long-running class action lawsuit that alleged the coffee company misrepresented the recyclability of its K-Cups pods by misleadingly labeling and marketing them as “recyclable” when the pods were in fact not accepted for recycling in many areas. The rules follow dismissal of motion to dismiss in 2021. This is the second recent multimillion-dollar settlement Keurig has paid for its recyclability claims. In January, Keurig colonized with the Competition Bureau Canada for $2.3 million (plus a $10 million pledge to the Polypropylene Recycling Coalition) over similar complaints about the lack of recyclability of coffee pods after the Competition Bureau concluded that the pods were not widely accepted for recycling in Canada.

the class action complaint, filed in the Northern District of California on Dec. 28, 2018, accuses Keurig of misleadingly advertising its K-Cup pods as “recyclable.” The company packaged the pods with the slogan “Have your cup and recycle it too” in large print, and included detailed recycling instructions, including a “check locally” notice. Under California State law, Cal. Bus. & Code Prof. § 17580.5companies can defend themselves against charges of deceptive environmental marketing claims if they can show that their advertisements meet the standards set out in the Federal Trade Commission Guides to using environmental marketing claims (Green Guides). The Green Guides state that recyclability claims should be qualified if recycling facilities are not available to a “substantial majority” of consumers, and that “if a product is rendered unrecyclable due to its size or constituents. ..then labeling the product as recyclable would constitute misleading marketing.Keurig argued that it met the Green Guides standard for qualified claims by placing a notice on its K-Cup packaging that alerted consumers to “check locally” relevant recycling facilities.

The plaintiffs countered that the qualifying terms were not specific enough to avoid giving consumers the misleading impression that the pods were uniformly recyclable and failed to disclose “the extremely limited possibility that the products will ultimately be recycled”. Although polypropylene is accepted for recycling at more than half of recycling facilities in the United States, the complaint alleges that K-Cups were not recyclable by many municipal recycling facilities for several reasons: small size pods meant that many recycling facilities were unable to process them; the presence of food residues and metal contaminants in used pods made them unsuitable for recycling; and the lack of a market to convert the pods into reusable material meant that most pods ended up in landfills.

In addition to the $10 million payment, the settlement prohibits Keurig from labeling, marketing, advertising or claiming that its K-Cups are recyclable absentee qualifiers. The terms of the settlement specify how and where Keurig must use qualifying language, specifying that the packaging of K-Cup products must contain the qualifier “Check locally – Not recycled in many communities.” This language should be placed close to and printed in twice the font size of any recycling claim language. The settlement further requires Keurig to modify its other advertisements and website copy to ensure consumers understand that the company’s pods may not be recyclable in their area.

As we have previously discussed, environmental claims are coming under increasing scrutiny. Recent state laws have been enacted that impose strict requirements for recyclability and other claims, and new requirements for Extended Producer Responsibility and mandatory recycled content minimums are being passed or implemented. ‘exam. At the same time, companies are working on sustainability programs, including assessing both products and packaging. Consumers can benefit from understanding the important environmental attributes of products and packaging, but as this regulation and other cases demonstrate, care in claims and the use of thoughtful and appropriately placed qualifiers are key to minimizing the risk of challenges related to misleading advertising.

© 2022 Keller and Heckman LLPNational Law Review, Volume XII, Number 60

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