Consumer asks Eighth Circuit to revive greenwashing claims against Nike

ST. LOUIS (CN) — A woman asked the Eighth Circuit on Tuesday to revive her claims that Nike falsely markets its “Sustainability” clothing line to consumers.

Nike’s “Sustainability” clothing line is part of its Move To Zero initiative designed reduce the company’s carbon footprint to zero, the company’s website says.

On May 10, 2023, Maria Guadalupe Ellis filed a class action against the athletic apparel giant in the Eastern District of Missouri, claiming Nike is simply exploiting consumers’ preference for “green” products through misleading labeling that leads buyers to believe the products are “made with recycled and organic fibers” designed to reduce waste.

“Plaintiff claims that the Products are not made with any ‘recycled and organic fibers’ or ‘sustainable’ materials because the Products are made with virgin synthetic and non-organic materials that are harmful to the environment,” Guadalupe Ellis wrote in her brief.

On March 28, 2024, a federal judge granted Nike’s motion to dismiss for failure to state a claim, prompting Guadalupe Ellis to file an amended complaint a month later. In June 2024, the same judge denied Guadalupe Ellis’ motion for reconsideration because she failed to properly request leave to amend.

“Ellis has twice attempted to portray Nike’s use of recycled and organic fibers and candid communications regarding its environmental efforts as a ‘greenwashing’ campaign,” Nike said in its brief. “Because Ellis’ allegations consistently failed to state a claim and she did not properly seek leave to amend, the district court did not abuse its discretion in dismissing Ellis’ FAC with prejudice.”

Guadalupe Ellis’ attorney, Daniel J. Orlowsky, argued before the three-judge panel that adequate notice was not given by the federal court before the amended complaint was dismissed with prejudice due to failure to comply with the court’s requirements.

U.S. Circuit Judge James B. Loken, a George H. W. Bush appointee, didn’t appear swayed.

“There was a lot of warnings because you had to file a first amended complaint,” Loken said. “How many times does the court have to warn that the pleading keeps being inadequate?”

Orlowsky went on to argue that Nike was attempting to apply an improper standard to uphold the federal court’s decision.

Nike attorney Stanley J. Panikowski, of the San Diego-based DLA Piper LLP, countered by saying the shoe giant has shown multiple cases within the Eighth Circuit where cases have been dismissed with prejudice in similar fashion.

“It does make a very big difference whether dismissal is based on futility, because in that case, this court would review de novo, otherwise it’s abuse of discretion standard,” said U.S. Circuit Judge Raymond W. Gruender, a George W. Bush appointee. “Those are apples and oranges.”

Panikowski said there was no indication in the court’s order that the decision was based on futility.

“The plaintiff here did apparently have facts that she could have alleged beforehand,” Panikowski said. “There was no indication that any of this was based on newly discovered evidence.”

Orlowsky addressed the issue of futility in his rebuttal and was questioned by Loken, who referenced the Eighth Circuit’s 2023 ruling in Hennessey vs. The Gap , in which the court found that a consumer did not sustain an ascertainable loss after buying clothing from the Gap and Old Navy with what she claimed were artificially inflated ticket prices.

“Ascertainable loss is not before the court,” Orlowsky said. “We allege that the plaintiff paid for products that were supposed to be made with recycled materials, and they were not, and so the plaintiff did not suffer an ascertainable loss — she didn’t receive the benefit of a bargain.”

U.S. Circuit Judge L. Steven Grasz, a Donald Trump appointee, rounded out the three-judge panel that took the case under advisement. There is no timetable for a ruling.

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