Coke Sued Over "100% Recyclable" Label On Bottles, Could Impact Production Of 100+ Billion Bottles Annually

Coca-Cola Consolidated Inc. (NASDAQ: COKE) is facing a lawsuit from an environmental advocacy organization that claims that the "100% Recyclable" label on Dasani bottles has violated California's Environmental Marketing Claims Act and the California Consumers Legal Remedies Act.  

What Happened: The Dasani brand is owned by the Coca-Cola company under its Beverages (Non-Alcoholic Activity sector). Coca-Cola produces more than 3400 bottles each second under the Dasani brand with the label "100% Recyclable." However, in June, the Sierra Club, a nonprofit organization dedicated to environmental protection has alleged this label is fraudulent. 

In reality, Dasani bottles are not 100% recyclable as the bottle labels and caps contain polypropylene plastics. The Sierra Club has also found that 28% of each bottle cannot be recycled because processing losses contaminate the bottles. The Sierra Club has also based its lawsuit on the fact that most bottles never end up being recycled. 

Coca-Cola has also created marketing campaigns with the slogan "Every Bottle Back," which the Sierra Club claims is proof that they attempted to profit off of false claims. 

What's Next: Coca-Cola asserts that the Sierra Clubs claims have no merit and have moved to throw out the lawsuits. Coke asserts that because consumers or the Sierra Club were never really harmed by the labels, and consumers did receive "exactly what they hoped for: Dasani water bottles that were ultimately repurposed for reuse in another product."

Coke believes that the Sierra Club's legal actions have less to do with consumer protection and more to do with an effort to "reduce what it considers the harms of single-use plastic."

In response to the claims, Coke attorneys argued that "The word 'recyclable' means only that a product can be recycled," and "No reasonable consumer would interpret it as a guarantee that the product will be recycled and reused. Courts routinely dismiss claims premised on unreasonable interpretations of product labels, and this court should do so here."

Why It's Important: If this lawsuit goes in the Sierra Clubs' favor, Coke could potentially be found to have violated California's Environmental Marketing Claims Act and the California Consumers Legal Remedies Act due to participation in unfair business practices, false marketing, and fraud.

Coke could also be required to stop producing "100% Recyclable" labels on their bottles and halt any marketing campaigns that make similar claims. Additionally, the defendants in the case are seeking compensatory, statutory, punitive, treble, damage, restitution, and attorney fees, all with interest. The particular amounts will be determined at trial. Still, because the consumer class is so large (anyone who has purchased Dasani bottles), fines could add up to hundreds of millions of dollars. 

The lawsuit also makes similar claims against Niagara Bottling LLC and BlueTriton Brands Inc.