A California woman recently filed suit against Delta Airlines arguing that its claim to be the first carbon neutral airline is untrue and misleading to consumers.  There are a number of important considerations for those involved in agriculture generally and carbon contracts specifically to be gleaned from this case.

Note:  All information below was obtained from the Plaintiffs’ Complaint.  Delta has not yet filed its Answer and there has been no judicial rulings on these allegations.

Photo by Trac Vu on Unsplash

Background

Delta is one of the major commercial airlines in the United States.  Since 2020, Delta has “repeatedly touted itself as the world’s first carbon-neutral airline.”  Delta appears to base these claims on their participation in the voluntary carbon offset market.  [To hear more about the voluntary carbon market, click here for a podcast episode I did with Dr. Jordan Shockley.]   In this market, companies and NGOs help facilitate investment by companies like Delta in green projects such as renewable energy or prevention of deforestation.   In exchange for investing in these projects, companies like Delta receive carbon offsets or credits that represent the amount of carbon not released due to the company’s investments in the offset market.  Thus, Delta claims since March 2020, its investments in the voluntary carbon offset market have entirely offset its CO2 emissions from its global airline operations.  Delta’s portfolio as of 2021 contained 50% renewable energy offsets, 44% agricultural forestry and other land use offsets, and 6% renewable offsets.

Litigation

In May 2023, Mayanna Berrin, a Delta customer, filed suit in federal court for the Central District of California. [Read Complaint here.]  Since March 2020, she claims to have purchased Delta flights at a market premium because she believed doing so was “more ecologically conscious” air travel.

She seeks to represent a class of people in California who have purchased airline tickets from Delta since March 2020. She claims that Delta “grossly misrepresented” the total environmental impact of its business operations in its advertisements, corporate advertisements, and marketing materials.

She claims the result of such misrepresentations was Delta attaining “underserved market share and extracting higher prices from consumers.”  The lawsuit claims that reasonable consumers reviewing Delta’s representations of being carbon-neutral would believe when taking into account all of Delta’s carbon emissions and related green investments, Delta “has not been responsible for releasing any net additional carbon into the atmosphere since March 2020.” According to the Complaint, some 87% of consumers are impacted by social or environmental claims of a company.

The Plaintiff claims to have seen and taken these representations into account when deciding to purchase Delta tickets. Specifically, had she (and other customers similarly situated) known the representations were false, she claims she would not have purchased Delta’s services, or at the very least, would have paid substantially less for them.

Factual Allegations

The Complaint sets forth four main arguments as to why Delta’s claims were false and misleading.

Misleading and Unverified Accounting

Here, the Plaintiff focuses her claims on allegations that the voluntary carbon market is “replete with dubious projections misleadingly packaged as guarantees.”  She cites to an article claiming research into Verra, the world’s leading carbon standard and one with which Delta did business, showed that more than 90% of Verra’s rainforest offset credits are “likely to be ‘phantom credits’ and do not represent genuine carbon reductions.”  Such ‘phantom credits,’ she says, result from inaccurate projections.  She points to a 2021 EU study finding that 85% of offsets failed to reduce emissions. She alleges that all three of the carbon vendors from whom Delta purchases offsets “have repeatedly engaged in fraudulent projections that grossly overstate their guarantee of carbon reduction.”  The Complaint claims this arises from misusing historical data and double-counting of projects, crediting several companies with the entire carbon offset from one piece of land.

The Complaint also notes a lack of regulatory framework for the voluntary carbon offset market, which has led to self-regulating, causing “multiple, competing certification standards and a dizzying array of organization or companies that act as middlemen, authenticating supposed greenhouse gas reductions and connecting buyers and sellers.”   The Complaint also notes the difficulty of measuring and modeling as an issue and the methodologies underlying offsets “vary widely and are not always transparent, accurate, or consistent.”

Non-Additional/Little Climate Impact

Next, the Plaintiff claims Delta’s statements are misleading because they have relied “almost exclusively on carbon offsets that are non-additional.”  A non-additional project occurs when carbon offsets are given for reductions that would have occurred regardless of the involvement of the voluntary carbon market.  We have seen this discussion in the context of carbon contracts with landowners–if a landowner already adopted a practice such as no-till, some companies will not allow them to enter into a carbon contract because there is no additionality.  The Plaintiff cites to a Bloomberg article claiming that only 4% of offsets actually remove carbon from the atmosphere.  The Complaint states that additionality is essential for carbon offset credits, and claims if greenhouse reductions are not additional, then purchasing carbon offset credits rather than reducing emissions actually makes climate change worse.   She notes given the low price of carbon credits, it is typically more cost effective for a company to purchase an offset than to reduce their own emissions.  She claims Delta relied almost exclusively on non-additional offsets.

Non-Immediate Offsetting

The Plaintiff then claims offsets need to be immediate, and Delta’s are not. She claims consumers expect carbon neutral claims are based on immediate carbon reductions, and a company claiming to be carbon neutral in a calendar year should have emissions offset that year, not sometime in the future.  She gives the example that a flight emits carbon dioxide into the atmosphere today, but saplings planted today will not grow large enough to offset today’s emissions for decades. She claims Delta’s carbon neutral claims are false because their projects have long timelines, may take years to scale, which make determining future effects “an act of educated guesswork” and certainly not creating carbon neutrality today.

Impermanence 

Lastly, the Plaintiff claims Delta’s offsets are impermanent.  This means the offsets offer no guarantee of future performance, despite Delta’s carbon neutral claims relying on such future performance.  She argues because carbon emissions stay in the atmosphere for a century or more, the offset for an equivalent amount of emissions must last for at least that long. She notes trees planted today, for example, are more likely to succumb to wildfire, disease, pests, or extreme weather and do not provide durable carbon storage.  She also claims if mitigation is subsequently reversed, it no longer serves the claimed counterbalancing function. This is a primary concern in biospheric storage such as trees, shrubs, soils, and other biological stores of carbon.  She points to examples of forests associated the carbon projects being destroyed by catastrophic fires.

The Complaint also sets forth facts that Delta knew or should have known its statements were false.

She notes “voluminous pages of industry-wide writing acknowledging the legal risks of continuing to engage” in misrepresentations related to carbon neutrality.  She cites to an article in “The Market” reporting that 41% of corporate sustainability officers do not use carbon offsets because they do not trust them, and 43% are seeking to have offsets rated or validated to prevent misleading the public.  She notes other transportation companies have halted their carbon offset programs and retracted neutrality claims after concerns the offset market is faulty. She quotes Delta’s own CEO as saying “carbon offsets are not the solution” as there are not enough to go around, they lack efficacy issues, and in some places do more harm than good.

Class Action Allegations

The Plaintiff seeks to bring these claims not only on her own behalf, but on behalf of those similarly situated.  [Click here to learn more about class actions in a prior podcast episode I did with Chuck Peifer.]  She seeks to represent a class of “all natural persons located in California who purchased a flight between March 6, 2020 and the present.  She sets forth required class action allegations of numerosity, typicality, superiority and adequacy of representation.  She claims there are over 5,000 class members and individual lawsuits would be impractical.  She claims  common questions of law and fact dominate over individual questions and there is no plain, speedy or adequate remedy other than a class action.  She states all class members’ claims arise from the same conduct, and she will fairly and adequately represent the class.

Causes of Action

The Complaint sets forth three causes of action, all under California law: A violation of the Consumers Legal Remedies Act, False advertising, and a violation of the Unlawful, Unfair, and Fraudulent Trade Practices Act.

The plaintiff seeks an award of monetary damages including compensatory damages, full restitution, and disgorgement of profits wrongfully obtained.  She also seeks attorneys’ fees and costs.  Finally, she seeks an injunction preventing Delta from continuing the allegedly unlawful practices alleged in the Complaint.

Delta’s Response

Delta has not yet filed its Answer in this litigation.  A Delta spokesperson has told the Associated Press the lawsuit is “without legal merit” and has stated Delta has “fully transitioned its focus away from carbon offsets toward decarbonization of [its] own activities.” [Read article here.]

Key Takeaways

This case offers a number of  considerations.

We’ve previously discussed the concept of “greenwashing lawsuits” gaining in frequency around the country, including those filed against agricultural companies.  This lawsuit is another example of how this type of litigation can arise.  From an advertising standpoint, it is a good reminder that any claim any business makes can be scrutinized and challenged.  This certainly includes major airline companies like Delta, but also includes a local farm, ranch, or agribusiness.  It is critical to ensure before any statements are made, a company is able to back those up with evidence to support the truthfulness of the claim.

For agricultural landowners participating in carbon markets, it is important to be aware of this type of lawsuit.  Here, the suit only named Delta as a defendant, but it would not be difficult to imagine future lawsuits could potentially also include more participants in the carbon marketplace such as verifiers, aggregators, and even landowners.  Further, the four points in the lawsuit raise questions about the accuracy of credits generated in the carbon market.  Understanding these challenges and seeing how courts resolve them will be important for anyone–including landowners–involved in the carbon market.

Finally, my friend, Dr. Jordan Shockley, pointed out an interesting consideration.  Delta has announced that it has transitioned away from the purchase of carbon offsets toward decarbonization of its own activities.  Presumably, that may include attempting to focus on reductions in their own supply chain.  If this approach is followed by agribusinesses, or other businesses utilizing agricultural products in their business model, it could have significant impacts on the farm level.  For example, if a food company were to impose certain carbon neutral production practices on all farmers from whom it purchased products to reduce its carbon footprint, rather than purchasing carbon credits, that would affect farm-level decisions and production practices for any producer selling to that food company.  This may be the next frontier in the carbon marketplace/company environmental, social, and governance investing movement.