Truth in Green Advertising: Lessons from a $1.5-million Class Action Settlement

On October 2, 2025, a federal judge in California gave final approval to a proposed settlement resolving a class action lawsuit against Rust-Oleum Corporation, centered around allegedly deceptive sustainability or green marketing claims (i.e., “greenwashing”). The case focused on Rust-Oleum’s popular Krud Kutter cleaning products, which had been labeled as “Non-Toxic” and “Earth Friendly”, with consumers alleging these labels misrepresented the actual chemical contents and environmental safety of the products. The settlement included agreement by Rust-Oleum to pay $1.5 million and make changes to its green marketing claims. This settlement highlights the increasing legal scrutiny companies face when making sustainability or green claims and underscores the importance of clarity and substantiation.

What were the allegations?

In the lawsuit, Bush v. Rust-Oleum Corp. (N.D. California), the plaintiffs alleged that Rust-Oleum’s labeling of certain Krud Kutter products was false and misleading because it claimed the products were “Non-Toxic” and “Earth Friendly” even though the products contained substances that could pose risks to humans, animals, and the environment. Plaintiffs argued that consumers were likely to be misled by the prominent front-label claims, especially when compared to the less conspicuous technical disclosures on back labels or in online documentation. In support of their claims, plaintiffs pointed to the United States Federal Trade Commission (“FTC”) Guides for the Use of Environmental Marketing Claims (16 CFR Part 260 or the “Green Guides”), which provide examples of the FTC’s views on how reasonable consumers are likely to interpret certain claims.

Initiated in 2020, the case survived both a motion to dismiss and a motion for summary judgment filed by Rust-Oleum, with the court finding, among other things, that:

• The Green Guides were not dispositive in determining how a reasonable consumer is likely to interpret a claim; however, ​“whether the plaintiff’s asserted definitions are reasonable will be for the jury to decide as part of the overall reasonable-consumer test.”
• Whether the language on the back of product packaging can adequately qualify the “Earth Friendly” claim on the front, such that consumers are not misled, is a triable issue of fact. The court noted that ​the language on the back label “is in small type and the defendant’s own surveys provide evidence that most consumers do not read it.”
• “Puffery” is a statement that ​“is extremely unlikely to induce consumer reliance”, and “the term ​‘Earth Friendly’ is not so general or nonspecific as to make it ​‘extremely unlikely’ that a consumer would rely on it.”

What are the settlement terms?

After over five years of litigation, the court approved a final settlement, which includes:

• Rust-Oleum will pay $1.5 million to resolve the claims.
• After legal fees and costs, approximately $550,000 will be distributed to eligible class members, with any unallocated, unclaimed, or undeliverable funds to be distributed to environmental and consumer advocacy organizations, including Earthjustice and Mamavation.
• Rust-Oleum agreed to permanently remove the term “Non-Toxic” from all Krud Kutter product labels.
• Rust-Oleum may continue to use the term “Earth Friendly” but only with a clearly visible qualifying asterisk, directing consumers to detailed disclosures on the back of the product, such as “Contains no inorganic phosphates, hazardous solvents, or environmentally harmful surfactants.”

The court found this combination of monetary and injunctive relief sufficient, particularly given the changes to product labeling and marketing practices.

What are the key takeaways for product manufacturers and marketers?

This settlement offers several important lessons for companies that want to make green marketing claims about their products or services:

1. Avoid overly broad claims: Terms like “Non-Toxic” or “Earth Friendly” may be impactful from a marketing standpoint, but their vagueness makes them difficult to substantiate. Qualifying claims or making them more targeted may help reduce the risk of claims being challenged as untrue or misleading.
2. Ensure claims can be substantiated: Companies must ensure that green claims can be and are backed by reliable, scientific evidence. This can be demonstrated by, for example, aligning with the Green Guides or meeting certain commonly-accepted standards.
3. Use clear and conspicuous qualifications: If any claims require qualification, those statements must be clearly visible and understandable to consumers. Asterisks and back-label explanations may help but only if they are prominent and not buried in fine print.
4. Remedies are not just financial: Companies facing class actions often face both monetary settlements, fines, or penalties, as well as behavior change obligations. For example, they may be required to change labels or stop making certain claims.
5. Class action litigation is increasing and lengthy: While regulators such as the FTC or state attorneys general may also bring greenwashing actions, there is a notable rise in private class actions in this space. These cases can be costly and take years to resolve, including extensive media coverage.

As customers increasingly demand more sustainable products, companies understandably want to meet that demand. However, overstating or misrepresenting the sustainability of their products or services can come with a steep cost, including financial and reputational harm. Even the best intentions can face legal challenges, but adequate substantiation and legal review can help reduce the risk.

Clark Hill’s ESG & Sustainability advisory practice deploys multidisciplinary attorneys, consultants, and professionals to advise clients across industries and sectors. Our team includes experienced Environmental & Natural Resources, Corporate, and Litigation attorneys, who counsel clients on a range of issues, including EPR requirements and how to navigate current and emerging compliance obligations.

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