Case Information
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA
CLOROX COMPANY, Case No. 19-cv-01452-EMC Plaintiff, ORDER GRANTING IN PART AND v. DENYING IN PART DEFENDANT’S
MOTION TO DISMISS RECKITT BENCKISER GROUP PLC, et Docket No. 44 al., Defendants.
The Clorox Company (“Clorox”) brings suit against Defendant Reckitt Benckiser, LLC
(“Reckitt”) for false advertising under the Lanham Act and California’s Unfair Competition Law and False Advertising Law. Currently before the Court is Reckitt’s motion to dismiss Clorox’s complaint. For the reasons discussed below, the Court GRANTS in part and DENIES in part Reckitt’s motion.
BACKGROUND
Factual and Procedural Background
The complaint alleges the following. Docket No. 1 (“Compl.”). Clorox produces and sells household cleaning and disinfecting products under the Clorox brand. Id. ¶ 2. Reckitt [1] produces and sells household cleaning, sanitizing, and disinfecting products under the Lysol brand . Id. Clorox and Lysol are the top two brands in the United States market for household cleaning products, as measured by sales revenue. ¶ 15.
Clorox claims that Reckitt has undertaken multiple false and deceptive advertising campaigns designed to erode consumer confidence in Clorox and boost sales of Lysol products. Id. ¶ 6. The advertisements purport to reveal deficiencies in Clorox products while claiming the superiority of Lysol products. Id. ¶ 20. Each challenged advertisement is described in detail below. Clorox alleges that its goodwill and business have been injured due to Reckitt’s advertisements because they lead customers to doubt the efficacy and safety of Clorox products. Id. ¶ 110. Clorox also claims that the advertisements have diverted its sales to Reckitt. Id. ¶ 111.
Clorox filed the complaint on March 20, 2019, asserting three causes of action: (1) false advertising in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (2) violation of California’s Unfair Competition Law (“UCL”), Business and Professional Code § 172000, et seq ; and (3) violation of California’s False Advertising Law, Business and Professional Code § 175000, et seq . Reckitt filed the instant motion to dismiss on May 6, 2019. Docket No. 44 (“Mot.”). Advertisements at Issue Clorox’s complaint identifies six categories of offending Reckitt advertisements. 1. “Bleach Indicator Test” Advertisements for Lysol Daily Cleanser The “Bleach Indicator Test” television advertisement depicts a side-by-side test of Clorox Clean Up and Lysol Daily Cleanser. Compl. ¶ 38. One cutting board is first cleaned with Clorox Clean Up and another cleaned with Lysol Daily Cleanser, then an apple slice is placed on each cutting board. . The apple slice placed on the board cleaned with the Clorox product turns brown, while the other apple slice does not. Id. ¶ 39. Four individuals labeled as “real people” negatively react to the browned apple. Id. ¶ 40. One person says, “I wouldn’t even want to touch this.” Docket No. 56 (“Opp.”) at 4. Another says, “What do you do with that? Like who’s going to eat that?” Id. Finally, a voice-over states, “unlike Clorox Clean Up, Lysol Daily Cleanser has only three simple ingredients and leaves surfaces free from harsh chemical residue.” Compl. ¶ 41.
Reckitt has a similar advertisement on YouTube which depicts “real people” applying a “bleach indicator test” to food preparation surfaces treated with Clorox Clean Up and Lysol Daily Cleanser. ¶ 43. When the Clorox product activates the test and the Lysol product does not, the “real people” indicate that they prefer the Lysol product. Id .
2. “Spray Away” Advertisements for Lysol Daily Cleanser A Reckitt advertisement disseminated on social media platforms shows an image of Clorox Clean Up and its list of ingredients being sprayed and wiped away with Lysol Daily Cleanser. Compl. ¶ 49. The advertisement then flashes banners stating: “Lysol Daily Cleanser[;] Only 3 ingredients,” “Kills 99.9% of germs (when used as directed),” and “No harsh chemical residue.” Id. ¶ 50. A Facebook advertisement juxtaposes the safety warnings of Clorox Clean Up and Lysol Daily Cleanser and concludes with this same statement. Id. ¶ 54. 3. “Fake It,” “Game Over,” and “Spray Away” Advertisements for Lysol Disinfectant
Spray A television advertisement shows a group of children pretending to have colds to get out of going to school. Compl. ¶¶ 62–63. The mother sprays a counter with Lysol Disinfectant Spray and an announcer states, “You can’t protect them from an imaginary cold. But with Lysol you can help protect them from a real one.” Id. ¶ 64. Then the ad shows a split screen with the Clorox and Lysol symbols on either side, and “germs” on both sides of the screen; the germs on the Lysol side of the screen disappear while those on the Clorox side remain. Id. ¶¶ 65–66. In place of the germs, the Lysol screen displays the statement, “KILLS THE #1 CAUSE OF THE COLD” and an announcer states, “Lysol Disinfectant Spray kills the number one cause of the cold and Clorox Wipes don’t.” Id. ¶¶ 66–67. After the commercial had been running for several months, in response to a protest by Clorox, Reckitt revised the side-by-side images to clarify in “minuscule type” that the comparison was between Clorox Disinfecting Wipes and Lysol Disinfecting Spray . Id. ¶ 69.
Another television commercial entitled “Game Over” portrays a videogame-like scene in which the Lysol Disinfecting Spray shoots down germs (assumed to be rhinovirus) while Clorox Disinfecting Wipes do so with less efficiency, thereby losing the game. ¶ 72. The screen then flashes “Lysol wins” and a second screen depicts the Lysol spray and states “Kills the #1 cause of the cold. Clorox wipes don’t.” .
The “Spray Away” online advertisement shows Lysol Disinfecting Spray and the statement “Lysol Kills the #1 cause of colds.” Id. ¶ 74. Next, the Lysol spray sprays a container of Clorox Disinfecting Wipes off the screen. Id . The screen flashes, “Clorox wipes don’t.” Id .
4. “Strength Test” Advertisement for Lysol Wipes
This commercial depicts four people at the gym putting disinfectant wipes to a “strength test” by using them to pick up kettlebell weights. Compl. ¶¶ 84–85. The Clorox wipe rips immediately while the Lysol wipes holds the weight for several seconds. Id. ¶ 86. A disclaimer states, “Dramatization. Based on lab results. Supervised demonstration. Do not attempt.” Id.
A second, nearly identical version of this advertisement consists of different people at the gym doing the same strength test and contains the same disclaimer; a voice-over declares “Lysol for the win,” and labels the Lysol wipe the “winner.” Id. ¶ 88.
A different Facebook advertisement claims, “Lysol wipes are stronger than competition” and depicts a Lysol wipe intact next to a torn “competitive” wipe that “appears below a version of the famous Clorox chevron, in which the Clorox brand name has been replaced with the words ‘vs leading competitor.’” . ¶ 89. 5. “No Scrubbing” Advertisements for Lysol Power Toilet Bowl Cleaner A television commercial shows a woman squirting Lysol Power Toilet Bowl Cleaner into a toilet and flushing it; the toilet bowl instantly becomes clean without the use of a brush. Compl. ¶ 96. She says, “that was surprisingly not terrible.” Id. It then depicts the results of a side-by-side efficacy test comparing Lysol Power Toilet Bowl Cleaner and Clorox Regular Liquid Bleach. Id. ¶ 97. The results show the Lysol surface is clean and the Clorox surface is dirty. Id. ; see also id. , Exh. 6. A small disclaimer states, “Cleaning Power vs. Clorox Regular Liquid Bleach on limescale and rust stains. Results after contact with product for 10 minutes, followed by rinsing.” Id. ¶ 98. A small banner states, “10X more cleaning power than Clorox.” Id. ¶ 97.
A similar commercial shows the same side-by-side test in which the Clorox side fails to clear limescale buildup while the Lysol side cleans it completely. Id. ¶ 99. A voiceover states, “Clorox Toilet Bowl Cleaner with Bleach is no match against limescale,” and a banner that states, “10X” flashes across the screen. A “minuscule” disclaimer states that the results involve Lysol Power Toilet Bowl Cleaner and Clorox Toilet Bowl Cleaner Clinging Bleach Gel, which is a distinct product from the “Clorox Toilet Bowl Cleaner with Bleach” product referenced in the voice-over. Id. ¶ 100.
Additionally, the “10X More Cleaning Power than Bleach” claim also appears on various in-store displays and on product packaging. Id. , Exh. 8; id. ¶ 101. Clorox also claims Reckitt uses the phrase “10X Cleaning Power” on its product packaging . Id . ¶ 105.
6. Non-Comparative Advertisements
An advertisement shows actors spraying and immediately wiping surfaces clean, and an announcer states that Lysol Daily Cleanser kills “99.9% of germs.” Compl. ¶ 57.
Another online advertisement shows a boy sneezing at a table, then displays the Lysol Disinfecting Spray with the words, “kills over 100 illnesses causing germs” and a disclaimer that “Lysol Disinfecting Spray kills germs on hard surfaces when used as directed.” Id. ¶ 79. The next
screen depicts Lysol Disinfecting Spray along with Lysol Disinfecting Wipes and the tagline “What it takes to protect.” Id. ¶ 80. A near-identical advertisement shows a different boy sneezing on a couch . . ¶ 81. LEGAL STANDARD Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include “a short and plain statement of the claim showing that the pleader is entitled to relief.” A complaint that fails to meet this standard may be dismissed pursuant to Rule 12(b)(6). Fed. R. Civ. P.
12(b)(6). To overcome a Rule 12(b)(6) motion to dismiss, a plaintiff must plead “enough facts to
state a claim to relief that is plausible on its face.”
Bell Atlantic Corp. v. Twombly
,
On a Rule 12(b)(6) motion, the Court “accept[s] factual allegations in the complaint as true
and construe[s] the pleadings in the light most favorable to the nonmoving party.”
Manzarek v. St.
Paul Fire & Marine Ins. Co.
,
Claims sounding in fraud or mistake are subject to the heightened pleading requirements of
Federal Rule of Civil Procedure 9(b), which requires that a plaintiff alleging fraud “must state with
particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). To comply with this
heightened pleading standard, the plaintiff must allege the “who, what, when, where, and how” of
the alleged fraud.
Vess v. Ciba-Geigy Corp. USA,
UCL and FAL claims sounding in fraud are also subject to the Rule 9(b) standard.
See
Davidson v. Kimberly-Clark Corp.
DISCUSSION
Clorox’s Failure to Distinguish Between Reckitt Defendants Reckitt’s motion initially faulted Clorox for failing to distinguish between Reckitt and Reckitt Benckiser Group PLC in its pleadings. Mot. at 11. However, Clorox has since dismissed Reckitt Benckiser Group PLC from the action. Docket No. 55. Accordingly, Clorox’s formerly undifferentiated allegations are no longer an issue; Reckitt is unambiguously the only defendant alleged to be responsible for the false advertisements. [2]
Lanham Act
Clorox alleges that Reckitt’s advertisements violate Section 43(a) of the Lanham Act,
which “authorizes suit against persons who make false and deceptive statements in a commercial
advertisement about their own or the plaintiff’s product.”
Jarrow Formulas, Inc. v. Nutrition
Now, Inc.
,
itself to the defendant, or by lessening of goodwill associated with the plaintiff’s product.” at 835 n.4.
Reckitt asserts that Clorox has failed to establish the first, third, fourth, and sixth elements of its Lanham Act claim. 1. Falsity Falsity can be established in two ways. First, a plaintiff may demonstrate that a challenged
statement was “literally false, either on its face or by necessary implication.”
Southland Sod
Farms v. Stover Seed Co.
Clorox’s Lanham Act claim is premised on both “literally false” and “likely to mislead”
theories of falsity. At the outset, Reckitt contends that all of Clorox’s claims based on a “likely to
mislead” theory fail because the complaint does not allege specific facts showing that Reckitt’s
advertisements conveyed misleading messages that deceived a significant number of people. Mot.
at 4. Reckitt is correct that “[w]hen the alleged representation is not an overt false statement[,] the
evidentiary showing required to sustain a Lanham claim is higher and proof that the advertising
actually conveyed the implied message and thereby deceived a significant proportion of the
recipients becomes critical.”
Genus Lifesciences Inc. v. Lannett Co.
No. 18-cv- 07603-WHO,
However, that evidentiary showing is not required to survive a motion to dismiss. Actual
deception is a question of fact, and at the pleading stage the plaintiff need only allege specific
misleading statements and explain why they are misleading in accordance with Rule 9(b). This is
illustrated by
JHP Pharmaceuticals, LLC v. Hospira, Inc.
,
The Court now proceeds to analyze the falsity of each challenged advertisement. “Bleach Indicator Test” Advertisements for Lysol Daily Cleanser Clorox has sufficiently alleged that the “Bleach Indicator Test” advertisement comparing the effect of Clorox Clean Up and Lysol Daily Cleanser on apples is false in three ways. First, Clorox contends that the advertisement is literally false because it necessarily implies that Clorox Clean Up is unsuitable or unsafe for use in kitchens, even though the Environmental Protection Agency (“EPA”) has in fact deemed the product safe for kitchen use. Compl. ¶ 46. Courts have determined that an advertisement can be literally false where it necessarily implies to customers that a product is unsafe to consume. See, e.g. Gen. Mills, Inc. v. Chobani, LLC , 158 F. Supp. 3d 106, 119 (N.D.N.Y. 2016) (finding plausible the allegation that an advertisement claiming plaintiff’s yogurt “contains the same ‘stuff [that] is used to kill bugs’” “unambiguously
convey[s] the literally false message that [the yogurt] . . . is unsafe to consume”). The Bleach
Indicator Test depicts Clorox Clean Up turning food brown, causing people to recoil and exclaim,
“I wouldn’t even want to touch this,” and “What do you do with that? Like who’s going to eat
that?” Compl., Exh. 2. It is reasonable to infer that these “words [and] images, considered in
context, necessarily imply [the] false message” that Clorox Clean Up is unsuitable or unsafe for
kitchen use.
Time Warner Cable, Inc. v. DIRECTV, Inc.
,
This “apples-to-oranges” theory of falsity underpins many of Clorox’s claims in this
lawsuit. Courts have held that misleading comparisons of this type are literally false by necessary
implication where non-comparable products are portrayed as otherwise equivalent (except for the
superior or inferior aspect being illustrated in the advertisement). For example, in
Groupe SEB
USA, Inc. v. Euro-Pro Operating LLC
, the plaintiff (the maker of Rowenta-branded irons) sued
the defendant (the maker of Shark-branded irons) for advertising that Shark irons deliver “#1
MOST POWERFUL STEAM” in the form of “more grams per minute . . . when compared to
leading competition in the same price range,” while explicitly referencing Rowenta products. 774
F.3d 192, 195 (3rd Cir. 2014). But the Rowenta irons were in fact in a different price range.
Id.
at
202. The Third Circuit found that “based on a facial analysis of the product name or advertising,
. . . the consumer will unavoidably receive a false message . . . that the Shark steam irons offer the
most powerful steam, even when compared to Rowenta steam irons.”
Id
. Omitted from the
advertisement and thus presumably unknown to a significant proportion of the recipients,
William
H. Morris Co.
,
These cases reflect that plaintiffs can establish literal falsity under the Lanham Act by
alleging that two products portrayed as comparable in an advertisement are not actually
comparable – that the advertisement omits differences which would have been material to
recipients.
See Groupe SEB USA, Inc.
,
Clorox has sufficiently alleged that Clorox Clean Up and Lysol Daily Cleanser are not
comparable. There are differences in positioning, formulation and intended purpose of the Clorox
and Lysol products which were hidden from the recipients. Namely, Clorox alleges that Clorox
Clean Up is a product “with the unique cleaning and disinfecting powers of bleach.” Compl. ¶ 3.
In contrast, Lysol Daily Cleanser is a “heavily diluted product that is intended, as its name
suggests, for everyday use as opposed to intensive cleaning and disinfection.” Compl. ¶ 22.
Clorox Clean Up is formulated with 1.84% bleach whereas Lysol Daily Cleanser is formulated
with only 0.017% hypochlorous acid, a chlorine-based antimicrobial agent similar to bleach.
Compl. ¶¶ 31, 33. Clorox Clean Up also contains a detergent or surfactant that breaks down
grease, dirt, and soils, while Lysol Daily Cleanser does not. Compl. ¶ 51. In short, Clorox
contends Lysol Daily Cleanser is not a substitute for or comparable to Clorox Clean Up because
“it contains a much lower concentration of active ingredient, and is neither intended nor suitable
for intensive cleaning or disinfection.” Compl. ¶ 22. The formulation and intended use of the two
products are different.
See
Compl. ¶¶ 22, 31, 33, 44. In fact, “Clorox markets a range of other
cleaning products such as Clorox Anywhere, a light-duty cleanser and sanitizer formulated with a
much lower concentration of bleach than CCU (0.0095%, as opposed to 1.84%)” that is more
comparable to Lysol Daily Cleanser. Compl. ¶¶ 23, 31. Thus, the ad showing different results
was misleading, because it implies the two products are comparable in function and intended use
when in fact they are not. As in
Doctor’s Associates
, Reckitt chose to compare a more heavy-duty
product, Clorox Clean Up, with a lighter, daily use product, Lysol Daily Cleanser, instead of
comparing truly comparable products of both companies.
In response, Reckitt claims that Clorox Clean Up is in fact comparable to Lysol Daily Cleanser because the EPA has approved the Clorox Clean Up as “Gentle & Powerful Enough for Daily Use,” similar to the Lysol product. Reply at 6 (alterations omitted). As an initial matter, Reckitt cites no authority for the proposition that the EPA’s categorization of products makes
those products comparable for Lanham Act purposes. More fundamentally, Reckitt’s argument raises a factual dispute that is improper for a motion to dismiss. Reckitt did not ask the Court to take judicial notice of the EPA’s label approvals submitted with the Reply as Exhibits 6–9. Even if it had, the Court cannot accept the truth of the contents of the exhibits and create a factual dispute at this juncture. The Ninth Circuit recently cautioned: “[t]he overuse and improper application of judicial notice and the incorporation-by-reference doctrine . . . can lead to unintended and harmful results. Defendants face an alluring temptation to pile on numerous documents to their motions to dismiss to undermine the complaint, and hopefully dismiss the case at an early stage. Yet the unscrupulous use of extrinsic documents to resolve competing theories against the complaint risks premature dismissals of plausible claims that may turn out to be valid after discovery.”
Khoja v. Orexigen Therapeutics, Inc
.,
“Spray Away” Advertisements for Lysol Daily Cleanser
Clorox has sufficiently alleged that the “Spray Away” advertisements comparing Lysol Daily Cleanser and Clorox Clean Up are false in two ways. First, like with the Bleach Indicator Test, this advertisement allegedly compares apples-to-oranges. The advertisement compares the two lists of ingredients of the products and flashes banners stating “Lysol Daily Cleanser[;] Only 3 ingredients,” “Kills 99.9% of germs (when used as directed),” and “No harsh chemical residue,” Reckitt represents that Lysol Daily Cleanser “is a replacement for, and performs the same functions as, Clorox Clean Up.” Compl. ¶¶ 49, 51. As explained above, Clorox alleges that the positioning, formulation, and purpose of Clorox Clean Up and Lysol Daily Cleanser are materially different, and thus an advertisement that juxtaposes the products and implicitly represents that the products are comparable is false. See Compl. ¶¶ 22, 31, 33, 44. Reckitt’s response, again, is to insist that the two products are in fact comparable because the EPA has approved both for use as daily-use household cleaners. Reply at 6. This does not, however, negate Clorox’s plausible claim in the complaint that by omitting mention of material differences between the products, the ad misleads consumers.
Second, Clorox alleges that the Facebook advertisement, which juxtaposes the safety warnings of Clorox Clean Up and Lysol Daily Cleanser and concludes with the same banner
(“Only 3 ingredients,” “Kills 99.9% of germs,” and has “No harsh chemical residue”) is likely to mislead consumers because it suggests that the Lysol product is “simpler” and has “fewer safety risks” and “impugns the safety of CCU by suggesting that consumers should shy away from products that require cautionary disclosures.” Compl. ¶ 55. Clorox asserts that contrary to the implicit message of the ad, CCU is in fact safe for household use according as approved by the EPA. Compl. ¶ 56. Clorox also claims that in fact the active ingredient in the Lysol product, hypochlorous acid, is no gentler than the bleach in Clorox Clean Up. . These allegations are sufficient to explain why the “Spray Away” commercials mislead consumers by suggesting that Clorox Clean Up is less safe for household use. “Fake It,” “Game Over,” and “Spray Away” Advertisements for Lysol
Disinfectant Spray
Clorox has also adequately alleged that the “Fake It,” “Game Over,” and “Spray Away”
advertisements are literally falsity by necessary implication.
See Southland Sod Farms
108 F.3d
at 1139–40;
Aussie Nads U.S. Corp. v. Sivan
,
advertisement shows Lysol Disinfecting Spray spraying a container of Clorox Disinfecting Wipes and states, “Clorox wipes don’t [kill the #1 cause of colds],” makes the same explicit comparison. Compl. ¶ 74.
Once again, Clorox alleges that these comparisons are false because the two products are not in fact comparable as the advertisements suggest. Compl. ¶ 70. Clorox asserts the ads “leave consumers with an unmistakable false impression” that Lysol products in general are more effective at eliminating germs than Clorox products. Opp. at 6; Compl. ¶¶ 70, 73. Clorox Disinfecting Wipes and Lysol spray “are distinct products that are not positioned for the same usage occasions.” Compl. ¶ 61. Clorox explains that its wipes are “pre-moistened, anti-microbial wipes that consumers use to clean and disinfect surfaces throughout the home,” Compl. ¶ 60, but the Lysol spray “belongs in a different product category and has different usage instructions.” Compl. ¶ 21. Specifically, wipes are formulated to target different germs than disinfecting sprays. Compl. ¶ 70. The wipes are neither labeled nor EPA-approved to eradicate rhinovirus; the sprays do disinfect against rhinovirus. Compl. ¶¶ 21, 70. The key difference is between wipes and sprays, not Clorox and Lysol. Indeed, both companies offer more comparable products. Compl. ¶ 70. If Reckitt had compared both companies’ sprays , Clorox asserts that its “Clorox 4-in-One Disinfecting Spray, the product most comparable to the Lysol Disinfecting Spray product,” is also “EPA-approved to disinfect against rhinovirus.” . And if Reckitt had compared the companies’ wipes , Clorox alleges that “neither product is approved for use against rhinovirus, so Lysol Disinfecting Wipes have no advantage in that regard . . . [and] Clorox Disinfecting Wipes are EPA-approved to eradicate more illness-causing germs than Lysol wipes. Compl. ¶ 71. Thus, advertisements comparing Clorox wipes with Lysol’s spray arguably falsely implied to the consumer that the Lysol product was more effective than its Clorox counterpart, by comparing non-comparable products. These allegations are sufficient to establish falsity.
“Strength Test” Advertisement for Lysol Wipes The “Strength Test” advertisements show Clorox wipes ripping when trying to support a kettlebell while Lysol wipes remain intact for much longer. Clorox’s claim that the advertisement is literally false because it insinuates that Lysol wipes are “of higher quality, are more durable, and are more resistant to tearing during use than Clorox wipes” fails. Compl. ¶ 90. Clorox has made no factual allegations that Lysol wipes are not of higher quality, more durable, and more resistant to tearing than Clorox. The complaint states only that the Clorox wipes are unlikely to rip under typical use conditions. Compl. ¶ 91. Because no claim of unfair comparison is made, the advertisement is not misleading in this respect.
There is more merit to Clorox’s contention that the “strength test” conducted in the advertisement is unreliable and therefore literally false. Clorox claims that the test “is not capable
of replication, because neither product is actually long enough to serve as a ‘handle’ when holding
a kettlebell weight.” Compl. ¶ 93. Because Clorox has alleged a factual basis for putting into
doubt whether the test is “sufficiently reliable to permit one to conclude with reasonable certainty
that [it] established the claim made,” it has done enough to plead that the test is literally false.
Southland Sod Farms
,
Clorox sufficiently pleads that the television commercials comparing Lysol Power Toilet Bowl Cleaner and Clorox Regular Liquid Bleach are false for three reasons. Compl. ¶ 97.
First, Clorox alleges that Reckitt’s comparison is “mismatched . . . to support the false
claim that Lysol Power Toilet Bowl Cleaner enjoys an unqualified performance advantage over a
comparable Clorox product.” Opp. at 9; Compl. ¶¶ 97, 99. Clorox alleges there is a difference
between the formulation and purpose of the two products. Acid-based cleaners, such as Lysol
Power Toilet Bowl Cleaner, are more effective against mineral-based deposits (like rust and
limescale), whereas Clorox’s bleach-based Clorox Toilet Bowl Cleaner is more effective at
removing organic stains (like mildew and mold). Compl. ¶ 103. Both Clorox and Lysol offer
products in both categories that are more apt for direct comparisons—Clorox markets Clorox
Toilet Bowl Cleaner–Tough Stain Remover, which is intended to be used to clean limescale and
rust. . Because acid-based and bleach-based cleaners have different efficacy depending on the
type of deposits on surfaces, Reckitt’s undifferentiated claim of the Lysol product’s superiority in
cleaning limescale stains is misleading and thus is sufficient to claim literal falsity by implication.
See Groupe SEB
,
Reckitt again cites EPA approval to argue comparability. Specifically, the EPA approved Clorox Toilet Bowl Cleaner for use on mineral-based deposits, just like Lysol Power Toilet Bowl Cleaner, so the comparisons are not mismatched. But this response does not defeat Clorox’s statement of a plausible claim. Reckitt also contends that its advertisement includes a “disclaimer expressly stat[ing] that
the purported advantage relates only to rust and limescale and not to organic matter.” Mot. at 13.
Reckitt cites
Cannarella v. Volvo Car United State LLC
, which held that “other statements in [an
advertisement can] dispel … alleged misrepresentations.” No. CV 16-6195-RSWL-JEMx, 2016
U.S. Dist. LEXIS 192449, at *21 (C.D. Cal. Dec. 12, 2016). But such statements may not be
effective if they are hidden.
See, e.g
.,
23andMe, Inc.
Second, Clorox claims that this advertisement is misleading because it represents “[t]hrough its depiction of a woman using a single squirt of the product to render her toilet immaculate, . . . that the Lysol product works instantly to removal all deposits from toilets.” Compl. ¶ 107. The “ad egregiously misrepresents the efficacy of Lysol Power Toilet Bowl Cleaner” because “the product requires at least 10 minutes to remove some toilet bowl stains.” . Clorox claims that in fact, Lysol Power Toilet Bowl Cleaner is deficient in terms of removing organic deposits, so it “cannot render toilets immaculate in seconds, as depicted in Reckitt’s advertising.” Compl. ¶ 94. These facts are sufficient to support a plausible claim that the advertisement’s portrayal of the immediate cleaning effect would be misleading to consumers.
Third, Clorox contends that the claim “10X more cleaning power than Clorox” is literally false because Lysol products generally do not have a performance advantage over Clorox. In fact, when comparing the Lysol Power Toilet Bowl Cleaner to Clorox Toilet Bowl Cleaner–Tough Stain Remover, the Lysol product does not have an advantage in removing limescale and rust because they contain the same active ingredient, glycolic acid. Compl. ¶ 103. The Lysol product does not have 10x more cleaning power than Clorox’s comparable product. There is thus a factual basis for Clorox’s claim that the advertisement is false. Clorox also claims that the statement “10X More Cleaning Power than Bleach,” which appears on various in-store displays and on product packaging, is literally false or has the tendency to mislead consumers. See Compl. ¶¶ 101–02; id. , Exh. 8. The advertisement Clorox references is an in-store display that proclaims “10X More Cleaning Power than Bleach” and features a picture of a Lysol product containing a label that says “10X Cleaning Power.” Exh. 8. Construing the facts in Clorox’s favor, it can be plausibly inferred that these two statements are misleading because a reasonable consumer would likely believe that the comparison is in fact with its leading competitor, Clorox. Clorox and Lysol are top competitors in the cleaning products market. See Compl. ¶¶ 2, 15 (alleging that Clorox and Lysol “for decades . . . have competed in the U.S. market for household cleaning products,” are the “top two brands, measured by sales revenue, in the U.S. market for household cleaning products,” and “compete vigorously for sales and share of this expansive market”). Many consumers may well associate “bleach” with Clorox. Furthermore, viewed contextually, Reckitt has produced numerous advertisements explicitly comparing Lysol product to Clorox products. Accordingly, a consumer could reasonably understand any comparative statement on a Lysol product to be relative to Clorox. Thus, Clorox’s claims regarding the “10X Cleaning Power” statements meet the requirements of Rule 9(b).
Non-Comparative Advertisements Clorox challenges an online advertisement that shows a boy sneezing at a table and then the Lysol Disinfecting Spray with the words, “Kills over 100 illnesses causing germs.” Compl. ¶¶ 78–79. The next screen depicts Lysol Disinfecting Spray alongside Lysol Disinfecting Wipes. ¶ 80. Clorox alleges that this advertisement “sends the clear message that both products ‘kill over 100 illness causing germs,’” when in fact only the Lysol Disinfecting Spray has that capability. Opp. at 19 (emphasis added); Compl. ¶ 82.
This advertisement is not sufficiently unambiguous as to be false because it is unclear whether the advertisement is referring to both products as able to kill over 100 illness-causing germs, or whether they can do so together . However, Clorox also alleges that the advertisement has the tendency to mislead consumers. Compl. ¶ 82. Clorox states that consumers “would likely not realize that the . . . claim is true only to Lysol Disinfecting Spray.” . It is plausible that where an advertisement trumpets that a Lysol product “Kills over 100 illnesses causing germs” and then immediately afterwards displays two Lysol products, a consumer could be misled into believing that the claim is true for both products. Clorox also claims that the non-comparative advertisement showing actors spraying and immediately wiping surfaces clean and an announcer stating that Lysol Daily Cleanser kills “99.9% of germs” is false. Compl. ¶ 57. Clorox claims that the advertisement erroneously portrays that Lysol Daily Cleanser works by spraying and immediately wiping the surface, whereas the EPA-approved use instructions on the label requires ten minutes of contact with a treated surface to achieve its disinfectant effect. Compl. ¶ 58. These allegations are sufficient to
state a claim that the advertisement is misleading. Clorox also claims that the advertisement’s “erroneous portrayal of Lysol Daily cleanser’s approved use instructions and disinfecting efficacy reinforces the false messaging of Reckitt’s comparative advertising: that Lysol Daily Cleanser is comparable to CCU but has ‘safer’ and ‘simpler’ ingredients.” Compl. ¶ 59. However, this allegation does not state a plausible claim because there is no express or implicit comparison to a Clorox product.
In sum, Clorox has plausibly alleged falsity, either under a literally false theory or “likely to mislead” theory, with respect to all of the advertisements in the complaint.
2. Materiality
A false advertising claim must be material in that it is “likely to influence the purchasing
decision” of consumers.
[6]
Southland Sod Farms
,
3. Injury Caused by False Statements
Under the Lanham Act, the plaintiff must “plead (and ultimately prove) an injury to a
commercial interest in sales or business reputation proximately caused by the defendant’s
misrepresentations.”
Openwave Messaging, Inc. v. Open-Xchange, Inc.
, No. 16-cv-00253-WHO,
as a result of the advertisements, it has suffered direct diversion of sales and lost profits on those
sales that it would have otherwise earned. Compl. ¶ 111. Clorox also claims that the
advertisements have damaged its goodwill, reputation, and standing with the consuming public.
¶¶ 110–11. Such allegations are sufficient to plead damages.
See Openwave Messaging, Inc.
Reckitt asserts that Clorox’s claims fail because it “failed to allege that it has in fact been
injured,” and “offers only conclusory allegations” without “alleg[ing] as to how any specific ad
has caused [Clorox] any identifiable harm. Reply at 11; Mot. at 16. But neither case Reckitt cites
in support of its argument is persuasive. First, in
Jack Russell Terrier Network of N. Ca. v. Am.
Kennel Club
,
within the Ninth Circuit have been more lenient regarding the factual showing required to establish injury at the motion to dismiss stage. 4. Conclusion Clorox has adequately alleged each element of its Lanham Act claim. Accordingly, Reckitt’s motion to dismiss the Lanham Act claim is DENIED . UCL and FAL Clorox alleges that Reckitt engaged in unfair competition, “including unlawful, unfair, deceptive and fraudulent business acts or practices, in violation of the [UCL]” and “engaged in
false advertising in violation of the [FAL]” based on the same advertisements challenged under the
Lanham Act. Compl. ¶¶ 120, 124–25, 129. The UCL prohibits an “unlawful, unfair[,] or
fraudulent business act or practice and unfair, deceptive, untrue[,] or misleading advertising.” Cal.
Bus. & Prof. Code § 17200. Here, Clorox alleges both unlawful and unfair business practices
premised on Reckitt’s misrepresentations.
See, e.g.
, Compl. ¶¶ 120–24. An “unlawful” practice
under the UCL is “anything that can properly be called a business practice and that at the same
time is forbidden by law.”
Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co.
, 20 Cal. 4th
163, 180 (1999) (internal quotation marks omitted). The “unfair” prong of the UCL “prohibit[s]
not only advertising which is false, but also advertising which[,] although is true, is either actually
misleading or which has a capacity, likelihood or tendency to deceive or confuse the public.”
Brady v. Bayer Corp.
,
Reckitt contends the UCL and FAL claims should be dismissed because Clorox has failed to establish standing to bring them and further has not adequately alleged that the advertisements are likely to deceive a reasonable consumer.
1. Standing
Reckitt contends that Clorox must “allege its own reliance on any alleged statements by Reckitt” to assert claims under the UCL and FAL, and cannot “establish that it has standing based upon its customers’ reliance upon the ads in question.” Mot. at 18. Reckitt is correct as to the FAL claim and the UCL unlawful prong claim, but not the UCL unfair prong claim. A claim under the FAL must demonstrate that “the plaintiff suffered an injury due to his or
her own actual and reasonable reliance on the purported misleading statements.”
Rosado v. eBay,
Inc.,
In contrast, where the UCL claim argues
unfair
acts or practices, a plaintiff need not
demonstrate that he or she was deceived by the alleged misrepresentation. at 911. Courts
reason that a defendant’s unfair business practices can threaten or harm competition even without
deceiving competitors.
See id.
(citing
Cel-Tech
,
2. Likelihood to Deceive
Additionally, in order to state a false advertising claim under the UCL, a plaintiff must
demonstrate that the advertisement is “either actually misleading or which has a capacity,
likelihood or tendency to deceive or confuse the public,” and “likely to deceive a reasonable
consumer.”
Hadley v. Kellogg Sales Co.
,
Reckitt asserts that Clorox must prove that “a significant proportion of the general
consuming public or of targeted consumers, acting reasonably in the circumstances, could be
misled” by the challenged advertisements. Mot. at 19 (quoting
Ebner v. Fresh, Inc
.,
As discussed above, Clorox has plausibly explained how Reckitt’s advertisements could be misleading to consumers under the Lanham Act. For the similar reasons, the Court cannot hold as a matter of law that the advertisements cannot possibly mislead a reasonable consumer under the UCL. Accordingly, Reckitt’s motion to dismiss the UCL unfair prong claim is denied.
CONCLUSION
For the foregoing reasons, Reckitt’s motion to dismiss is GRANTED in part and DENIED in part . With respect to Clorox’s Lanham Act claims, Reckitt’s motion to dismiss is DENIED . The motion is GRANTED with respect to Clorox’s FAL and UCL unlawful prong claims; these claims are dismissed with prejudice for lack of standing.
This order disposes of Docket No. 44.
IT IS SO ORDERED .
Dated: July 12, 2019
______________________________________ EDWARD M. CHEN United States District Judge
Notes
[1] Clorox originally also named the United Kingdom-based Reckitt Benckiser Group, PLC as a 27 defendant. Compl. ¶ 14. Reckitt is the principal United State subsidiary of Reckitt Benckiser Group, PLC. Id. After Reckitt Benckiser Group, PLC filed a motion to dismiss for lack of personal jurisdiction, Clorox voluntarily dismissed it from the action. Docket Nos. 38, 55.
[2] Reckitt demands that Clorox be ordered to amend its complaint to reflect the dismissal of Reckitt 28 Benckiser Group PLC. The Court does not consider such amendment to be necessary.
[3] Reckitt also cites
Stiles v. Wal-Mart Stores, Inc
., 2015 U.S. Dist. 117324 (E.D. Cal. Sept. 2,
2015), where the court dismissed a false advertising claim on a Rule 12(b)(6) motion because the
plaintiff did not allege specific facts showing the statement actually conveyed the misleading
message.
Id.
at *9. But
Stiles
is an outlier case that relied on
William H. Morris
as its authority;
William H. Morris
addressed the standard of proof at trial.
See
[4] Reckitt claims that scientific research demonstrates that hypochlorous acid does not leave any
residue on food. Docket No. 57 (“Reply”) at 4. This raises a factual dispute that is inappropriate
for resolution at this stage. On a motion to dismiss, the Court must accept as true all plausible
factual allegations in Clorox’s complaint.
See Cousins v. Lockyer
,
[5] This same analysis applies to the commercial Clorox alleges that contains a voiceover stating, “Clorox Toilet Bowl Cleaner with Bleach is no match against limescale,” with a “minuscule” disclaimer stating that the results involve Lysol Power Toilet Bowl Cleaner and Clorox Toilet Bowl Cleaner Clinging Bleach Gel, which is distinct from the Clorox Toilet Bowl Cleaner with Bleach product referenced in the voice-over. Compl. ¶¶ 99, 100.
[6] Historically, courts have presumed materiality for literally false statements.
See William H.
26
Morris
,