Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Shampoo products’ back-label explanations of ‘natural’ claims save P&G from liability, (Apr 1, 2025)

By Patricia K. Ruiz, J.D.

The court found ingredients that the consumers deem “synthetic” may still properly be characterized as “naturally derived” or of “natural origin” under the explanations on the products’ back labels.

The U.S. District Court for the Northern District of California granted a motion to dismiss without leave to amend by a manufacturer of shampoo products. The court found that the consumers’ claims for relief under the Consumer Legal Remedies Act (CLRA); Unfair Competition Law (UCL); False Advertising Law (FAL); common law fraud, deceit, and/or misrepresentation; and negligent representation failed as a matter of law (McWhorter v. The Procter & Gamble Co., No. 3:24-cv-00806-AMO (N.D. Cal. Mar. 28, 2025)).

Natural origin claims. Consumers who purchased Herbal Essences and Pantene shampoo products filed suit against The Procter & Gamble Company (P&G), alleging that, contrary to P&G’s statements, aside from water, natural oils, and natural fragrances, none of the ingredients contained in the products purchased are “natural source ingredients,” nor are they made or derived using “limited processing.” They argued that, by defining “natural source of ingredients” as those which “maintain ≥50% of their natural origin material” after processing,” P&G obfuscates the fact that these “natural source ingredients” are actually man-made chemicals, synthesized using industrial chemical processes.” The court found neither consumer appeared to have read the explanations of the natural origin claims that appear on the back label of each product they purchased, nor have they alleged they performed any analysis or testing of the products before filing their complaint.

Claims. First, the consumers claimed that they understood the natural origin claims to mean that the product was comprised of ingredients of which 90 to 96% were natural origin; however, the theory is based solely on the number of ingredients in each product. For example, they contended that, if a given shampoo is represented to be 96% natural origin and lists 20 ingredients, a reasonable consumer would believe at least 19 of the ingredients were of natural origin, no matter how much of each ingredient is present in the product. Second, the consumers asserted that if the natural origin claims are instead based on the composition of each product as a whole by weight, the claims are literally false if water is excluded from the analysis, because, in that case, more than 90% of the ingredients in the products are not natural but are of industrial origin.

Third, the consumers alleged that a consumer may interpret the product labels to state that a certain percentage of the products were extracted directly from plants or exclude industrial chemical modifications, both of which would still render the natural origin percentage statements false. Fourth, the consumers alleged, upon information and belief, that even if the natural origin claims are based on composition by weight and water is included, the claim is not true.

P&G moved to dismiss for failure to state a claim and for lack of standing. The court found the claims to be legally insufficient and did not reach the issue of standing for products the consumers did not purchase and for pursuing equitable relief.

Judicial estoppel. First, the court found that judicial estoppel did not bar P&G’s arguments. In a previous lawsuit, P&G took the position that false claims about the proportion of natural ingredients in its Nature Fusion shampoo product would be unambiguous affirmative representations subject to the rule that with an affirmative representation, revealing the deception in the fine print on the back of the box does not cure that representation. By contrast, in the instant case, P&G argued that its claims that certain proportions of its products’ ingredients are naturally derived/of natural origin shows only that the front label may contain an ambiguity about how that proportion is calculated, such that the back labels must be considered. Moreover, in the previous case, P&G identified as non-natural most of the ingredients in the products highlighted in the instant case, which it now contends are naturally derived. The court determined these arguments do not establish a “clearly inconsistent position,” as required for judicial estoppel, as “naturally derived” and “natural origin” do not mean the same thing as “natural.” An ingredient that the consumers deem “synthetic” may still properly be characterized as “naturally derived” or of “natural origin” under the explanations on the products’ back labels.

Reasonable consumer standard. P&G argued that the consumers’ California statutory claims fail because none of the theories advanced demonstrate that a reasonable consumer would find the product labels false or misleading. The court found that the natural origin claims are ambiguous such that a reasonable consumer must review the back label for additional information about the meaning of the natural origin claims. The products’ front labels state that a certain percentage of the product—less than 100 percent—is made from “naturally derived ingredients” or is of “natural origin.” The provision of a percentage with these labels communicates to the consumer that the product is not all-natural or at least raises enough ambiguity that the consumer must review the back label for more information about the product composition. Additionally, the addition of asterisks on the labels signal to a reasonable consumer that they must look to other parts of the product label to understand the label’s statements fully. Because the back label sufficiently explained what P&G meant, the court found that the consumers failed to establish that the product labels were false or misleading.

Omission. The court found the consumers alleged no facts to establish P&G’s duty to disclose, warranting dismissal of the omission claim. Further, the court found the consumers failed to identify an actionable omission.

Negligent misrepresentation. The court found the consumers failed to state an independent basis for their damages apart from their economic loss. The California Supreme Court has held that, in general, there is no recovery in tort for negligently inflicted “purely economic losses,” meaning financial harm unaccompanied by physical property or damage; this rule functions to bar claims in negligence for pure economic losses in deference to a contract between litigating parties. Tort claims for monetary losses are barred when they arise from—or are not independent of—the parties’ underlying contracts, the California Supreme Court has held.

Fraud. The court found the consumers’ fraud claim failed, as a disclaimer that a document does not address regulatory requirements does not mean that P&G knowingly misrepresented any of its marketing statements.

The Case is No. 3:24-cv-00806-AMO.

Judge: Olguín, A.

Attorneys: Anthony J. Patek (Gutride Safier LLP) for Loraine McWhorter. Amy S. Heath (Covington & Burling LLP) for The Procter & Gamble Co.

Companies: The Procter & Gamble Co.

Cases: Advertising StateUnfairTradePractices CaliforniaNews