Monday, March 30, 2009

Locked out: standing ends false designation of origin case

Kwikset Corp. v. Superior Court, 90 Cal. Rptr. 3d 123 (Ct. App. 2009)

This case (earlier trip to the court of appeals discussed here) is founded on claims that Kwikset falsely labelled its products as made in the USA when they didn’t meet the statutory definitions of same. The litigation was begun before California amended its unfair competition statutes to tighten standing requirements by requiring economic injury—lost money or property. Here, the court of appeals determined that the real parties in interest (plaintiffs) couldn’t allege standing under the new requirements.

Basically, all that plaintiffs could show was that they purchased Kwikset locksets based on the “Made in the U.S.A.” claims. But that’s not sufficient to allege loss of money or property, because the locksets had intrinsic value even if their geographic origin wasn’t what the plaintiffs wanted. The injury has to be economic, not the injury inherent in deception.

Here, there was no allegation that the locksets were defective/poor-performing, were not worth the purchase price, or cost more than similar products without false country of origin labels. The purchasers intended to buy locksets. As long as a person receives a product or service of equivalent value in exchange for the payment, she hasn’t lost money for purposes of the California statutes.

This ought to depend on the idea that the plaintiffs intended to buy locksets; if you induce me to buy storm windows with the false representation that I need them, and I don’t need them, then even if they’re perfectly good storm windows I’ve suffered a monetary loss. But some of the cases go further and suggest that as long as I paid market price I’m just out of luck, which seems to open up fertile ground for deception. The court responded to this concern by noting that public prosecutors don’t need to meet the standing requirements; in fact, after plaintiffs here sued, the defendants entered into a consent order with the FTC “limit[ing]” their use of inaccurate country of origin labels.

Plaintiffs argued that they could amend the complaint to allege that alternative, cheaper locksets were available, or that the locksets weren’t worth the price paid, but there was no record evidence or other proof of this, and the case has already been through trial. There was no reasonable possibility they could truthfully amend the complaint.

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