Monday, October 23, 2017

9th Circuit rules inability to trust future representations provides standing for injunctive relief

Davidson v. Kimberly-Clark Corp., 2017 WL 4700093, -- F.3d --, No. 15-16173 (9th Cir. Oct. 20, 2017)

Rejecting a number of district court decisions, the Ninth Circuit finds standing to seek injunctive relief under California consumer protection laws even when the named plaintiff now knows the truth: “A consumer’s inability to rely in the future upon a representation made on a package, even if the consumer knew or continued to believe the same representation was false in the past, is an ongoing injury that may justify an order barring the false advertising.”  This case involves wipes advertised as “flushable” which allegedly are not. Davidson would like to buy truly flushable wipes, if such actually exist.

The district court dismissed the complaint under Rule 9(b)) because it concluded that Davidson failed to adequately allege “why” the representation that the wipes were flushable was false; she didn’t allege that she personally experienced problems with her home plumbing or the relevant water treatment plant.  The court of appeals reversed, finding her allegations sufficient and plausible.  Davidson alleged that flushable means “suitable for being flushed,” requiring an item to be capable of dispersing within a short amount of time. This definition of flushable was supported by dictionary definitions and Kimberly–Clark’s own statement on its website that its flushable wipes “are flushable due to patented technology that allows them to lose strength and break up when moving through the system after flushing.”  Davidson alleged that the actual wipes she purchased failed to “disperse and disintegrate within seconds or minutes” and “did not break up in the toilet bowl like toilet paper but rather remained in one piece.”  To the extent the district court dismissed the original complaint because Davidson failed to allege facts “showing how she came to believe that the [Scott Wipes] were not ‘flushable,’ ” that was wrong, because the complaint otherwise satisfied Rule 9(b).

The district court also held that Davidson didn’t allege damages, in that she hadn’t pled “facts showing that her use of the wipes damaged her plumping, pipes, or septic system.” But that wasn’t required—paying a premium for a falsely advertised product is sufficient harm to maintain a cause of action.  Davidson alleged that, without the misrepresentation, she wouldn’t have bought the wipes or would have paid less for them; that was enough.

Article III standing for injunctive relief: A plaintiff must demonstrate constitutional standing separately for each form of relief requested. The courts that have found no standing to seek injunctive relief generally reason that “plaintiffs who are already aware of the deceptive nature of an advertisement are not likely to be misled into buying the relevant product in the future and, therefore, are not capable of being harmed again in the same way.” The court of appeals disagreed:

Knowledge that the advertisement or label was false in the past does not equate to knowledge that it will remain false in the future. In some cases, the threat of future harm may be the consumer’s plausible allegations that she will be unable to rely on the product’s advertising or labeling in the future, and so will not purchase the product although she would like to. In other cases, the threat of future harm may be the consumer’s plausible allegations that she might purchase the product in the future, despite the fact it was once marred by false advertising or labeling, as she may reasonably, but incorrectly, assume the product was improved.

This result also prevents the untoward result that, otherwise, removing a case from state to federal court—as happened here—would enable a defendant to get rid of a remedy otherwise available.  After all, “the primary form of relief available under the UCL to protect consumers from unfair business practices is an injunction.” Without injunctive relief, “California’s consumer protection laws would be effectively gutted.”  Or there could be a “perpetual loop” of “plaintiffs filing their state law consumer protection claims in California state court, defendants removing the case to federal court, and the federal court dismissing the injunctive relief claims for failure to meet Article III’s standing requirements.”

Given Davidson’s allegations, she adequately alleged a desire to buy flushable wipes and an inability to rely on Kimberly-Clark’s representation of flushability, which was enough to constitute a “threatened injury [that is] certainly impending,” thereby establishing Article III standing to assert a claim for injunctive relief.

Judge Berzon concurred, noting that the majority assumed that it was required to perform a separate standing analysis for each “form of relief.”  She disagreed that this assumption was a requirement of the “case or controversy” requirement of Article III, and argued that it was instead “an artifact of the discredited practice of conflating the prerequisites for injunctive relief with the Article III prerequisites for entry into federal court.” Instead, “we have a single dispute—a single case, a single controversy—giving rise to multiple forms of relief.”  Where “state law clearly envisions those remedies as the product of a single adjudication of a single issue,” to proceed otherwise in federal court “fundamentally undermines, substantively, the enforcement of state laws in federal court.”  A remand to state court on injunctive relief alone was motivated by the same desire not to let defendants strip plaintiffs of their state-law remedies through removing a case over which there is clearly Article III jurisdiction, but was not an acceptable solution. 

Citing Lexmark, she contended that federal courts “have a history of improperly elevating the prerequisites for relief to the status of jurisdictional hurdles.” In Judge Berzon’s reading, the Supreme Court case on which the 9th Circuit relied to require separate Article III analysis of each remedy in previous cases, Lyons, did not actually make the jurisdiction/remedy mistake, but rather inquired into whether the nonjurisdictional requirements for equitable prospective relief were met, and concluded they were not because of the absence of irreparable harm. This is of little consequence in most cases following Lyons, because where the availability of injunctive relief is governed by federal law, the common-law prerequisites for injunctive relief “must eventually be satisfied, and largely mirror the standing prerequisites.” But that’s not good enough when this interpretation “imposes substantive limits on the availability of relief under state law, in the service of constitutional interests that aren’t actually under threat.” 

Still, Judge Berzon concurred fully, recognizing that the 9th Circuit en banc opinion interpreting Lyons the other way does require a separate standing analysis with regard to prospective relief. 

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