Keurig Agrees to Pay $10 Million to Settle Class Action Over Charges of Misleading Recyclable Claims
On February 24, 2022, Keurig Green Mountain, Inc. (Keurig) agreed to pay $10 million to settle a long-running class action that alleged the coffee company deceptively advertised its K-Cups pods’ recyclability by misleadingly labeling and marketing them as “recyclable” when the pods were in fact not accepted for recycling in many areas. The settlement follows denial of a motion to dismiss in 2021. This is the second recent multimillion dollar settlement Keurig has paid out over its recyclability claims. In January, Keurig settled with Competition Bureau Canada for $2.3 million (plus an $800,000 donation pledge to the Polypropylene Recycling Coalition) due to similar complaints about the pods’ lack of recyclability 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 December 28, 2018, charges that Keurig deceptively advertised its K-Cup pods as “recyclable.” The company packaged the pods with the slogan “Have your cup and recycle it, too” in large type, and included detailed recycling instructions, including a “check locally” notice. Under California state law, Cal. Bus. & Prof. Code § 17580.5, companies can defend against charges of deceptive environmental marketing claims if they can show their ads meet the standards laid out in the Federal Trade Commission’s Guides for the Use of Environmental Marketing Claims (Green Guides). The Green Guides state that claims of recyclability should be qualified if recycling facilities are not available to a “substantial majority” of consumers, and that “if a product is rendered non-recyclable because of its size or components…then labeling the product as recyclable would constitute deceptive marketing.” Keurig argued that it met the Green Guides standard for qualified claims by putting a notice on its K-Cup packaging that alerted consumers they should “check locally” for relevant recycling facilities.
The plaintiffs countered that the qualifying language was not precise enough to avoid giving consumers the misleading impression that the pods were uniformly recyclable and failed to disclose “the extremely limited chance that the Products will ultimately be recycled.” Although polypropylene is accepted for recycling in more than half of recycling facilities in the U.S., the complaint alleges that K-Cups were not recyclable by many municipal recycling facilities for several reasons: the small size of the pods meant that many recycling facilities were unable to process them; the presence of food residue and metal contaminants in the used pods made them unsuitable for recycling; and the lack of any market to convert the pods to reusable material meant that most of the pods ended up in landfills.
In addition to the $10 million payment, the settlement bars Keurig from labeling, marketing, advertising, or otherwise claiming that its K-Cups are recyclable absent qualifiers. The settlement terms are precise about how and where Keurig must use qualifying language, specifying that packaging for K-Cup products must contain the qualifier “Check Locally – Not Recycled in Many Communities.” This language must be placed close to and be printed in a font size more than half as large as any recycling claim language. The settlement further requires that Keurig amends its other advertising and website copy to ensure that consumers understand that the company’s pods may not be recyclable in their area.
As we have discussed previously, environmental claims are increasingly subject to scrutiny. Recent state laws have been enacted that impose stringent requirements on recyclability and other claims, and new requirements for extended producer responsibility and mandated recycled content minimums are being adopted or considered. At the same time, businesses are working on sustainability programs, including evaluating both products and packaging. Consumers can benefit from understanding important environmental attributes of products and packaging, but as this settlement and other cases demonstrate, care in the claims made and use of thoughtful, appropriately placed qualifiers are key to minimizing the risk of false advertising challenges.