Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Clorox may be liable for falsely advertising its cat litter, (Aug 2, 2013)

By Jody Coultas, J.D.

Cat litter purchasers had standing to assert consumer protection law claims against The Clorox Company for allegedly deceptive advertising that its cat litter was more effective than another company’s litter and for charging a premium price for the cat litter, the federal district court in San Francisco has held (In re Clorox Consumer Litigation, July 31, 2013, Conti, S.). However, claims under the New York, Florida, and Texas consumer protection laws were dismissed with leave to amend to show that the deceptive acts occurred in those states.

Clorox advertised that its Fresh Step litter was the only cat litter that uses carbon, was better at eliminating cat waste odors than other brands of cat litter that use baking soda. A study commissioned by a Clorox competitor found that Clorox's advertisements were false. The purchasers alleged that Clorox charges a premium for Fresh Step, and that they would not have paid that premium but for Clorox's claims that carbon-based cat litter was superior to baking soda based cat litter.

The purchasers had Article III standing to assert the consumer protection law claims, according to the court. To have standing, a plaintiff must have suffered an injury in fact that could be redressed by a favorable decision and that was caused by the alleged deceptive acts. Clorox argued that the purchasers failed to plead injury because they did not allege that Fresh Step did not work as advertised in reducing odors or that they personally found Fresh Step to be less effective than other cat litter brands. The purchasers’ injury was based on Clorox allegedly deceiving them into paying a premium for a cat litter that studies had shown was less effective at eliminating cat odors than other non-carbon-based cat litters. The purchasers did not need to allege that they personally experienced the inferiority of Fresh Step since they have alleged that the studies show that Clorox's carbon-based cat litter was objectively worse at fighting cat odors.

New Jersey claims. The court declined to dismiss the New Jersey Consumer Fraud Act (CFA) claim. Clorox argued that the purchasers could not state a CFA claim under the benefit of the bargain theory because the claims were based solely on the assertions of the study and because they had no basis to claim that the box of litter they purchased was less effective than another brand of litter. However, this argument merely repackaged the standing issue that the court had previously decided.

New York claims. The New York purchasers failed to meet the pleading standard of the New York General Business Law (GBL) requiring the deceptive acts to occur in New York, according to the court. First, the court noted that the GBL allowed claims based on purchasers paying a higher price for a product as a result of false advertising. To qualify as a prohibited act under the GBL, the deception of a consumer must occur in New York. The court declined to infer from the pleadings that the New York purchasers viewed Clorox's advertisements and purchased Fresh Step in New York because they were residents of the state.

Florida claims. The Florida Deceptive and Unfair Trade Practices Act claim could only be brought by Florida residents in connection with activities occurring in Florida. The Florida purchasers did not allege where they viewed the allegedly deceptive advertising, or where they purchased Fresh Step. The purchasers’ argument that they alleged that Clorox disseminated false information "throughout the United States" was unavailing. However, the purchasers were granted leave to amend to connect the claims to Florida.

Texas claims. The Texas Deceptive Trade Practices Act was dismissed with prejudice to the extent that was premised on unconscionable conduct, but upheld otherwise by the court. Clorox argued that the purchasers failed to identify what characteristics, uses, and benefits were allegedly falsely represented. However, the purchasers specifically alleged that Clorox falsely represented that Fresh Step was better at reducing odors than other baking-soda-based cat litters. However, the purchasers’ attempt to characterize Clorox's alleged conduct as "grossly unfair" was a stretch, especially since the purchasers conceded that Fresh Step was effective at reducing cat odor. Therefore, it was not unconscionable to charge a premium of a few cents per pound for an effective cat litter.

The case is No. 12-00280 SC.

Attorneys: Anthony David Phillips (Berman DeValeri) for Megan Sterritt. Kenneth Kiyul Lee (Jenner & Block LLP) for The Clorox Company.

Companies: The Clorox Company

Cases: Advertising StateUnfairTradePractices CaliforniaNews