The court recognized that the word “natural” is displayed prominently on the front of Tom’s deodorant and toothpaste packaging. Id. at *1. On the boxes’ side panels, a blurb titled “what’s inside matters” describes the practices Tom’s considers to be natural and sustainable. Id. A link to the Tom’s website is also printed on the boxes, inviting consumers to go online to learn more about what makes Tom’s products “natural.” Id. The court also noted that per a 2015 settlement with a separate class of consumers, Tom’s was permitted to use the word “natural” to market certain products (including those at issue in this case), as long as it provided information on its packaging and website describing its definitions of “natural,” “sustainable,” and “responsible sourcing.” Id.
Nevertheless, the court held that plaintiff had met the plausibility standard required to survive a motion to dismiss, concluding that it is for the factfinder to determine whether a reasonable consumer “could be expected to take investigative steps to educate himself or herself rather than rely on the prominent display of the word ‘natural’ on the front of the package.” Id. at *5.
Defendants also averred that plaintiff’s claims against Colgate should be dismissed because plaintiff failed to allege any wrongs committed by Colgate or to explain the reason the corporate veil should be pierced to hold Colgate responsible for the actions of its subsidiary. Id. The court acknowledged that parent corporations are distinct from subsidiaries under Massachusetts law. However, the corporate veil may be pierced if the parent exercises “pervasive control” over the subsidiary’s activities and there is a “fraudulent or injurious consequence” of the relationship. Id. The court concluded that plaintiff alleged sufficient facts to state a claim for piercing the corporate veil by specifying that Colgate acquired Tom’s stock for the purpose of selling natural products, benefitting from Tom’s name in the natural product market, and working with Tom’s to market products as “natural,” despite synthetic ingredients. Id. at *9.
Munsell v. Colgate-Palmolive Co. serves as a warning of potential liability for companies in the use of the word “natural” on products. In a market where “natural” is commonly used to describe personal, cleaning, and food products, companies, including parent corporations, should consider the possibility of liability if the word is used inaccurately or without proper context.