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Clorox Co. v. Reckitt Benckiser Group PLC

United States District Court, N.D. California

July 12, 2019

CLOROX COMPANY, Plaintiff,
v.
RECKITT BENCKISER GROUP PLC, et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS DOCKET NO. 44

          EDWARD M. CHEN UNITED STATES DISTRICT JUDGE

         The Clorox Company (“Clorox”) brings suit against Defendant Reckitt Benckiser, LLC (“Reckitt”) for false advertising under the Lanham Act and California's Unfair Competition Law and False Advertising Law. Currently before the Court is Reckitt's motion to dismiss Clorox's complaint. For the reasons discussed below, the Court GRANTS in part and DENIES in part Reckitt's motion.

         I. BACKGROUND

         A. Factual and Procedural Background

         The complaint alleges the following. Docket No. 1 (“Compl.”). Clorox produces and sells household cleaning and disinfecting products under the Clorox brand. Id. ¶ 2. Reckitt[1] produces and sells household cleaning, sanitizing, and disinfecting products under the Lysol brand. Id. Clorox and Lysol are the top two brands in the United States market for household cleaning products, as measured by sales revenue. Id. ¶ 15.

         Clorox claims that Reckitt has undertaken multiple false and deceptive advertising campaigns designed to erode consumer confidence in Clorox and boost sales of Lysol products. Id. ¶ 6. The advertisements purport to reveal deficiencies in Clorox products while claiming the superiority of Lysol products. Id. ¶ 20. Each challenged advertisement is described in detail below. Clorox alleges that its goodwill and business have been injured due to Reckitt's advertisements because they lead customers to doubt the efficacy and safety of Clorox products. Id. ¶ 110. Clorox also claims that the advertisements have diverted its sales to Reckitt. Id. ¶ 111.

         Clorox filed the complaint on March 20, 2019, asserting three causes of action: (1) false advertising in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (2) violation of California's Unfair Competition Law (“UCL”), Business and Professional Code § 172000, et seq; and (3) violation of California's False Advertising Law, Business and Professional Code § 175000, et seq. Reckitt filed the instant motion to dismiss on May 6, 2019. Docket No. 44 (“Mot.”).

         B. Advertisements at Issue

         Clorox's complaint identifies six categories of offending Reckitt advertisements.

         1. “Bleach Indicator Test” Advertisements for Lysol Daily Cleanser

         The “Bleach Indicator Test” television advertisement depicts a side-by-side test of Clorox Clean Up and Lysol Daily Cleanser. Compl. ¶ 38. One cutting board is first cleaned with Clorox Clean Up and another cleaned with Lysol Daily Cleanser, then an apple slice is placed on each cutting board. Id. The apple slice placed on the board cleaned with the Clorox product turns brown, while the other apple slice does not. Id. ¶ 39. Four individuals labeled as “real people” negatively react to the browned apple. Id. ¶ 40. One person says, “I wouldn't even want to touch this.” Docket No. 56 (“Opp.”) at 4. Another says, “What do you do with that? Like who's going to eat that?” Id. Finally, a voice-over states, “unlike Clorox Clean Up, Lysol Daily Cleanser has only three simple ingredients and leaves surfaces free from harsh chemical residue.” Compl. ¶ 41.

         Reckitt has a similar advertisement on YouTube which depicts “real people” applying a “bleach indicator test” to food preparation surfaces treated with Clorox Clean Up and Lysol Daily Cleanser. Id. ¶ 43. When the Clorox product activates the test and the Lysol product does not, the “real people” indicate that they prefer the Lysol product. Id.

         2. “Spray Away” Advertisements for Lysol Daily Cleanser

         A Reckitt advertisement disseminated on social media platforms shows an image of Clorox Clean Up and its list of ingredients being sprayed and wiped away with Lysol Daily Cleanser. Compl. ¶ 49. The advertisement then flashes banners stating: “Lysol Daily Cleanser[;] Only 3 ingredients, ” “Kills 99.9% of germs (when used as directed), ” and “No harsh chemical residue.” Id. ¶ 50. A Facebook advertisement juxtaposes the safety warnings of Clorox Clean Up and Lysol Daily Cleanser and concludes with this same statement. Id. ¶ 54.

         3. “Fake It, ” “Game Over, ” and “Spray Away” Advertisements for Lysol Disinfectant Spray

         A television advertisement shows a group of children pretending to have colds to get out of going to school. Compl. ¶¶ 62-63. The mother sprays a counter with Lysol Disinfectant Spray and an announcer states, “You can't protect them from an imaginary cold. But with Lysol you can help protect them from a real one.” Id. ¶ 64. Then the ad shows a split screen with the Clorox and Lysol symbols on either side, and “germs” on both sides of the screen; the germs on the Lysol side of the screen disappear while those on the Clorox side remain. Id. ¶¶ 65-66. In place of the germs, the Lysol screen displays the statement, “KILLS THE #1 CAUSE OF THE COLD” and an announcer states, “Lysol Disinfectant Spray kills the number one cause of the cold and Clorox Wipes don't.” Id. ¶¶ 66-67. After the commercial had been running for several months, in response to a protest by Clorox, Reckitt revised the side-by-side images to clarify in “minuscule type” that the comparison was between Clorox Disinfecting Wipes and Lysol Disinfecting Spray. Id. ¶ 69.

         Another television commercial entitled “Game Over” portrays a videogame-like scene in which the Lysol Disinfecting Spray shoots down germs (assumed to be rhinovirus) while Clorox Disinfecting Wipes do so with less efficiency, thereby losing the game. Id. ¶ 72. The screen then flashes “Lysol wins” and a second screen depicts the Lysol spray and states “Kills the #1 cause of the cold. Clorox wipes don't.” Id.

         The “Spray Away” online advertisement shows Lysol Disinfecting Spray and the statement “Lysol Kills the #1 cause of colds.” Id. ¶ 74. Next, the Lysol spray sprays a container of Clorox Disinfecting Wipes off the screen. Id. The screen flashes, “Clorox wipes don't.” Id.

         4. “Strength Test” Advertisement for Lysol Wipes

         This commercial depicts four people at the gym putting disinfectant wipes to a “strength test” by using them to pick up kettlebell weights. Compl. ¶¶ 84-85. The Clorox wipe rips immediately while the Lysol wipes holds the weight for several seconds. Id. ¶ 86. A disclaimer states, “Dramatization. Based on lab results. Supervised demonstration. Do not attempt.” Id.

         A second, nearly identical version of this advertisement consists of different people at the gym doing the same strength test and contains the same disclaimer; a voice-over declares “Lysol for the win, ” and labels the Lysol wipe the “winner.” Id. ¶ 88.

         A different Facebook advertisement claims, “Lysol wipes are stronger than competition” and depicts a Lysol wipe intact next to a torn “competitive” wipe that “appears below a version of the famous Clorox chevron, in which the Clorox brand name has been replaced with the words ‘vs leading competitor.'” Id. ¶ 89.

         5. “No Scrubbing” Advertisements for Lysol Power Toilet Bowl Cleaner

         A television commercial shows a woman squirting Lysol Power Toilet Bowl Cleaner into a toilet and flushing it; the toilet bowl instantly becomes clean without the use of a brush. Compl. ¶ 96. She says, “that was surprisingly not terrible.” Id. It then depicts the results of a side-by-side efficacy test comparing Lysol Power Toilet Bowl Cleaner and Clorox Regular Liquid Bleach. Id. ¶ 97. The results show the Lysol surface is clean and the Clorox surface is dirty. Id.; see also id., Exh. 6. A small disclaimer states, “Cleaning Power vs. Clorox Regular Liquid Bleach on limescale and rust stains. Results after contact with product for 10 minutes, followed by rinsing.” Id. ¶ 98. A small banner states, “10X more cleaning power than Clorox.” Id. ¶ 97.

         A similar commercial shows the same side-by-side test in which the Clorox side fails to clear limescale buildup while the Lysol side cleans it completely. Id. ¶ 99. A voiceover states, “Clorox Toilet Bowl Cleaner with Bleach is no match against limescale, ” and a banner that states, “10X” flashes across the screen. Id. A “minuscule” disclaimer states that the results involve Lysol Power Toilet Bowl Cleaner and Clorox Toilet Bowl Cleaner Clinging Bleach Gel, which is a distinct product from the “Clorox Toilet Bowl Cleaner with Bleach” product referenced in the voice-over. Id. ¶ 100.

         Additionally, the “10X More Cleaning Power than Bleach” claim also appears on various in-store displays and on product packaging. Id., Exh. 8; id. ¶ 101. Clorox also claims Reckitt uses the phrase “10X Cleaning Power” on its product packaging Id. ¶ 105.

         6. Non-Comparative Advertisements

         An advertisement shows actors spraying and immediately wiping surfaces clean, and an announcer states that Lysol Daily Cleanser kills “99.9% of germs.” Compl. ¶ 57.

         Another online advertisement shows a boy sneezing at a table, then displays the Lysol Disinfecting Spray with the words, “kills over 100 illnesses causing germs” and a disclaimer that “Lysol Disinfecting Spray kills germs on hard surfaces when used as directed.” Id. ¶ 79. The next screen depicts Lysol Disinfecting Spray along with Lysol Disinfecting Wipes and the tagline “What it takes to protect.” Id. ¶ 80. A near-identical advertisement shows a different boy sneezing on a couch. Id. ¶ 81.

         II. LEGAL STANDARD

         Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include “a short and plain statement of the claim showing that the pleader is entitled to relief.” A complaint that fails to meet this standard may be dismissed pursuant to Rule 12(b)(6). Fed.R.Civ.P. 12(b)(6). To overcome a Rule 12(b)(6) motion to dismiss, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (internal quotation marks omitted).

         On a Rule 12(b)(6) motion, the Court “accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The Court need not, however, “assume the truth of legal conclusions merely because they are cast in the form of factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (per curiam) (internal quotation marks omitted). Thus, “a Plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)).

         Claims sounding in fraud or mistake are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), which requires that a plaintiff alleging fraud “must state with particularity the circumstances constituting fraud.” Fed.R.Civ.P. 9(b). To comply with this heightened pleading standard, the plaintiff must allege the “who, what, when, where, and how” of the alleged fraud. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). “The plaintiff must set forth what is false or misleading about a statement, and why it is false.” Id.

         Although the Ninth Circuit has not definitively spoken as to whether Rule 9(b) applies to Lanham Act claims, “the better reasoned [district court] authority is that, where a Lanham Act claim is predicated on the theory that the defendant engaged in a knowing and intentional misrepresentation, then Rule 9(b) is applicable.” 23andMe, Inc. v. Ancestry.com DNA, LLC, 356 F.Supp.3d 889, 908 (N.D. Cal. 2018). The false advertisement allegations in Clorox's complaint imply that Reckitt knowingly or intentionally deceived consumers. See, e.g., Compl. ¶ 45 (“Reckitt appears to have deliberately designed its test to not detect the ...


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