California Sues Plastic Bag Makers Over False Recycling Claims

California has filed a lawsuit against three major plastic bag manufacturers—Novolex Holdings, Inteplast Group, and Mettler Packaging—accusing them of violating a 2014 state law by falsely labeling their plastic bags as recyclable. Although the law permitted thicker plastic bags at grocery checkouts if they were reusable and recyclable, state officials argue these bags were not processable at recycling facilities and ended up polluting landfills and waterways.

This lawsuit underscores the growing regulatory scrutiny of environmental claims and product labeling. For insurance claims adjusters, especially those handling environmental and general liability lines, the implications are significant. The misrepresentation of a product’s recyclability may trigger coverage questions, E&O claims, or disputes over pollution exclusions. Claims professionals must be prepared to assess both the direct damage and the broader regulatory context surrounding these types of liability events.

Additionally, the state has settled with four other plastic bag companies, who agreed to cease sales in California and pay nearly $1.8 million in penalties. These developments may lead to increased claims activity as companies seek indemnification or challenge policy exclusions related to intentional mislabeling or environmental violations.