California's First District Court of Appeal held that a class action complaint did not state a cause of action because no reasonable consumer would interpret the green drop on Fiji water bottles to represent environmental superiority or a third party endorsement. In these days of "inevitable and readily available Internet criticism and suspicion of virtually any corporate enterprise," a reasonable consumer does not include "one who is overly suspicious."
On May 26, 2011, the First District Court of Appeal, in Hill v. Roll International Corporation, Case No. A128698, ___ Cal. App. 4th ___ (2011), affirmed the trial court's action dismissing Ayana Hill's class action complaint against Roll International Corporation and Fiji Water Company LLC (collectively, "Fiji"). Hill alleged that Fiji deceptively marketed its water. Taking as true all well pleaded facts in Hill's complaint, the First District agreed with the trial court that "no reasonable consumer would be misled to think that the green drop on Fiji water represents a third party organization's endorsement or that Fiji water is environmentally superior to that of the competition."
The Reasonable Consumer Test
The appellate court concluded that Hill's beliefs do not satisfy the reasonable consumer standard, as expressed in the Federal Trade Commission (FTC) guidelines, 16 C.F.R. Section 260.7(a) (2011) and as used in California's consumer laws, including California's Business & Professions Code Sections 17200, et seq., and 17500, et seq., and Consumers Legal Remedies Act. This rule derives from parallel parts of the FTC Act, 15 U.S.C. Sections 41, et seq., "which requires a plaintiff to show potential deception of consumers acting reasonably in the circumstances—not just any consumers." The court recognized that California courts "consistently have looked to the ordinary consumer within the larger population." The standard is not a least sophisticated consumer, unless the advertising is specifically targeted to such a consumer. Nor is the test "the impact on the unwary consumer, although a reasonable consumer 'need not be 'exceptionally acute and sophisticated' ' and might not 'necessarily be wary or suspicious of advertising claims.'" In turn, it commented that "in these days of inevitable and readily available Internet criticism and suspicion of virtually any corporate enterprise, that a reasonable consumer also does not include one who is overly suspicious."
Addressing whether the green drop on Fiji water bottles conveyed to a reasonable consumer that the product is endorsed by a third party organization for environmental superiority, the appellate court definitively concluded "No." Although the "context of the symbol is vitally important," the drop "bears no name or recognized logo of any group, much less a third party organization, no trademark symbol, and no other indication that it is anything but a symbol of Fiji water." In contrast, the FTC guidelines include—as likely to mislead because more suggestive of an environmental organization's seal—a "globe icon" with or without the words Earth Smart around it. "Fiji has just a green drop, the drop being the most logical icon for its particular product—water." Although reasonable consumers might view Fiji's drop, together with its green color, as referring to the environment, the FTC guides do not prohibit, "'touting' a product's 'green' features." The green drop appears next to the website, "fijigreen.com," further confirming that the green drop symbol is not related to an independent third party organization. The "Every drop is green" slogan allegedly used in some advertising, did not appear on the bottle and, even if seen by consumers, did not alter "the overall impression conveyed by the green drop and website address."
Hill Court Finds Kwikset Distinguishable Both Procedurally and Factually
The appellate court found the Hill complaint distinguishable from the complaint in Kwikset Corp. v. Superior Court (Benson), 51 Cal. 4th 310 (2011).1 Procedurally, Kwikset addresses the issue of standing, not the sufficiency of allegations under the reasonable consumer test. Factually, the products in Kwikset were labeled "Made in U.S.A.," but either contained parts made in Taiwan or involved subassembly performed in Mexico. The First District agreed wholeheartedly with Kwikset that "labels matter," and concluded that Fiji obviously put the green drop on the label for a marketing purpose. But the complaint in Hill was insufficient because "no reasonable consumer would be misled to think that the green drop represents a third party organization's endorsement or that Fiji water is environmentally superior to that of the competition."
This is one of many anticipated opinions addressing what constitutes an injury under California's consumer protection statutes in light of the California Supreme Court's decision in Kwikset.