ESG Class Actions And Other Lawsuits "Sustainable" Into 2023

Published date16 June 2023
Subject MatterAntitrust/Competition Law, Environment, Consumer Protection, Litigation, Mediation & Arbitration, Antitrust, EU Competition , Environmental Law, Class Actions, Climate Change, Dodd-Frank, Consumer Protection Act
Law FirmMcMillan LLP
AuthorMr Ralph Cuervo-Lorens, Samantha Gordon, Talia Gordner and Guneev Bhinder

McMillan is authoring a number of articles to assist clients in navigating the quickly developing legal landscape surrounding ESG. Among other developments, regulators have confirmed that regulating ESG claims and combatting greenwashing will be a top priority in 2023. In addition to the actions taken by regulators, there has also been a rise in private ESG litigation.

This article focuses on recent ESG litigation developments in Canada and also looks to the United States for what we can expect to see here in the near future. For our introductory article, read: Green or Grey: Regulators Target Greenwashing, Misleading Environmental, Social and Governance (ESG) Claims.

Misrepresentation and "Greenwashing" Litigation

Businesses may face private lawsuits related to greenwashing on various grounds, including misrepresentation in their marketing materials or corporate disclosure. The issue of greenwashing isn't small: the International Consumer Protection and Enforcement Network (ICPEN) has reported that over 40% of business websites reviewed contained green claims that were "exaggerated, false or deceptive."1

Canadian competition, securities and consumer protection legislation all include private rights of action with respect to deceptive statements and many class actions have been brought in Canada under misrepresentation legislation in the last few decades.

It is an offence under the Competition Act to knowingly or recklessly make representations to the public that are false or misleading in a material respect for the purpose of promoting the supply or use of a product or a business interest. And any person who has suffered loss as a result of conduct in breach of that prohibition has a statutory private right of action.

The Competition Bureau's focus on greenwashing has grown in recent years. For example, Ecojustice filed an application under the Competition Act in 2019, alleging that Keurig Canada ("Keurig") made false or misleading claims regarding the recyclability of their infamous K-Cup coffee pods. Following Ecojustice's application, Keurig entered into a consent agreement with the Competition Tribunal.2 The Commissioner concluded that the Keurig's representations regarding the recyclability of its K-Cup pods were false and misleading and did not meet standard practices. As part of the consent agreement, Keurig agreed to pay $3.8 million in financial penalties and to create new templates for K-Cup packaging within 60 days.

Following the conclusion of the Competition Tribunal proceedings, there have been at least four class actions commenced against Keurig alleging misleading or deceptive marketing in describing the company's coffee pods as "recyclable".3 The Ontario Superior Court recently stayed one of the Ontario actions and allowed another to continue.4

In the Spring of last year, the Ontario Superior Court heard summary judgment motions in a certified class action alleging false or misleading advertising relating to Ford Canada's fuel consumption estimates for certain vehicles.5 Ford succeeded in dismissing the class action while...

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