Court Dismisses NYC's Lawsuit Against Fossil Fuel Companies for False Advertising

In 2021, the City of New York sued Exxon, Shell, BP, and the American Petroleum Institute, alleging that they violated New York City's Consumer Protection Law by engaging in false advertising and other deceptive trade practices.  The lawsuit charged that the large fossil fuel companies, along with an industry trade association, “have systematically and intentionally misled consumers in New York City . . . about the central role their products play in causing the climate crisis.” 

After several years of litigation, a New York State lower court dismissed the action.  Here's why. 

In its lawsuit, the City alleged that the companies engaged in two forms of “greenwashing.”  First, they engaged in “product greenwashing" – publishing misleading statements about the climate benefits of specific gasoline products without disclosing the adverse impacts of those products on the climate.  Second, they engaged in “corporate greenwashing” – publishing misleading statements that were intended to present them as climate-friendly, thereby inducing consumers to purchase their fossil fuel products.  

New York City's Consumer Protection Law prohibits “any deceptive or unconscionable trade practice in the sale . . . or in the offering for sale . . . of any consumer goods or services.”  And, a “deceptive” trade practice includes “any false, falsely disparaging, or misleading oral or written statement, visual description or other representation of any kind made in connection with the sale . . . or in connection with the offering for sale . . . of consumer goods or services . . . which has the capacity, tendency or effect of deceiving or misleading consumers.” 

As a preliminary matter, the court considered whether the advertising should be viewed from the perspective of the “reasonable consumer” (as the FTC does) or from the perspective of the “ignorant, the unthinking and the credulous” consumer (a traditional standard applied in New York for consumer protection claims).  Noting that the City's allegations had been based on assertions that the advertising misled reasonable consumers, and some courts had appeared to retreat from this standard, the court adopted the objective “reasonable consumer” standard, writing that “The adoption of the reasonable-consumer standard is also consistent with the language of the CPL itself, which provides that the rules and regulations under the CPL ‘shall not be inconsistent with’ the Federal Trade Commission Act, which adheres to a reasonable-consumer standard."  

Product Greenwashing

The City argued that the fossil fuel companies misled consumers by emphasizing the environmental benefits of their products without disclosing that fossil fuels cause climate change.  The City pointed to statements such as, “better than ‘ordinary fuels’ that have problems like increased emissions," “a growing number of lower-carbon and carbon-neutral products,” and “produce fewer emissions.”    

The court noted that the City did not assert that these types of statements were false – only that that they were misleading by failing to disclose that the product “still causes climate change despite the claims of reduced emissions.”  

The court dismissed the City's “product greenwashing” claim, holding that the fossil fuel companies shouldn't be held liable for failing to disclose information that is already publicly-known.  The court wrote that the City, “cannot succeed on this theory where Plaintiff's own allegations concede that the connection between fossil fuels and climate change is public information.”  The court continued, “the City's allegation that Defendants ‘conceal the central role of fossil fuels in causing climate change’ is not cognizable where the City has otherwise conceded widespread public awareness of this information.” 

The court also held that some of the fossil fuel companies' statements – such as “better than ordinary fuels," “take you further,” and “created to let you drive cleaner, smarter and longer” – are not actionable because they are puffery.  The court wrote, “No reasonable consumer would be misled by these subjective, non-specific and vague statements.”  

Corporate Greenwashing

The City argued that the fossil fuel companies also misled consumers by portraying themselves as committed to renewable energy and sustainability while continuing to invest heavily in fossil fuel production.  Specifically, the City said that they exaggerated their overall investment in clean energy resources and misrepresented the climate benefits associated with them.  The City pointed to statements such as, “we're working to make our energy cleaner and better,” “cleaner-burning,” and “powering progress together with more and cleaner energy solutions.” 

The court dismissed the City's “corporate greenwashing” claims, holding that they were not actionable because the fossil fuel companies' statements were not made “in connection with” with sale of goods or services.   The court explained that, “the statements as to investments in clean energy resources, such as wind and solar, and alternative energy sources, such as LNG, hydrogen fuel cells, and biofuels, are not alleged to be ‘made in connection with the sale’ of a consumer good because Plaintiff does not allege that Defendants sell these non-fossil fuel products or technologies anywhere, let alone in NYC.”  

The court didn't buy the City's argument that these statements about non-fossil fuel related technologies and alternative energy sources had the cumulative effect of inducing NYC consumers into purchasing fossil fuel products.  The court wrote, "Plaintiff provides no legal authority for the notion that statements about unrelated product (e.g., alternative fuels such as natural gas) or technologies (e.g., wind and solar energy) are actionable as related to the sale of a different product (fossil fuels).