AARP endorsement of insurer doesn't inherently represent that AARP chose disinterestedly

Levay v. AARP, Inc., 2019 WL 2108124, No. 17-09041 DDP (PLAx) (C.D. Cal. May 14, 2019)

Plaintiffs are AARP members who allege to have “joined and paid to be AARP members” after being allegedly “induced ... through unlawful, misleading and/or unfair representations of products, services and endorsements by AARP and/or concealment of AARP’s unlawful ‘for profit’ business activities.” Specifically, they alleged reliance on “AARP’s misrepresentations that it protected seniors and that it put their interests first ahead of ‘for profit’ business ventures, and about its endorsements of insurance products.” Plaintiffs alleged that AARP’s stamp of approval was only a “stamp indicating the winner of [a] bidding war,” rather than a true endorsement on the merits. They brought California UCL and FAL claims.  The court found they failed to state a claim.

Initially, the court rejected the argument that the complaint didn’t allege any “statements by AARP, only advertisements run by United Healthcare and New York Life ....” The relevant representations were (1) solicitations and ads from AARP in which it represents its status and role as an advocate for seniors, and (2) AARP endorsements on United and New York Life insurance advertisements. “AARP does not dispute that it permits its name to appear on the advertisements and that AARP in fact endorses these products. Therefore, the endorsements constitute AARP’s representations even though they appear on United and New York Life advertisements.”

But was there an actionable misrepresentation?  Plaintiffs alleged that they “believed that AARP endorsed products and services, such as insurance products, were products and services that were the best for seniors.” But “best” was too vague ans subjective a promise of superiority, even if implied, to be actionable. By contrast, in Hanberry v. Hearst Corp., 276 Cal. App. 2d 680 (1969), the Hearst Good Housekeeping seal of approval could have deceived someone who bought defective shoes. The court held that “[i]mplicit in the seal and certification is the representation [that] respondent has taken reasonable steps to make an independent examination of the product endorsed, with some degree of expertise, and found it satisfactory.” But it was key that Good Housekeeping magazine stated: “ ‘This is Good Housekeeping’s Consumers’ Guaranty’ and ‘We satisfy ourselves that products advertised in Good Housekeeping are good ones and that the advertising claims made for them in our magazine are truthful.’ ” “The seal itself contained the promise, ‘If the product or performance is defective, Good Housekeeping guarantees replacement or refund to consumer.’ ” These express guarantees “made a consumer’s reliance on Good Housekeeping’s independent examination reasonable.”  And even if an implied promise of superiority was actionable, plaintiffs didn’t identify any defects in these insurance policies.

What about an implied representation that AARP had evaluated the insurance plans for suitability for seniors, “irrespective of profits”?  AARP wasn’t a fiduciary just because it was a nonprofit. Plaintiffs allegedly saw “solicitations and ads from AARP ... in which AARP represented its non-profit status and advocacy role for seniors and that it provide[d] endorsements for products and services as a benefit of membership, which [Plaintiffs] believed meant that AARP would [ ] make endorsements and stamps of approval based on what was best for seniors, rather than based on profits.”

“A representation that a product is selected irrespective of profits could be an actionable misrepresentation because it is sufficiently specific and objectively determinable such that a consumer could reasonably rely on such representation.” But the complaint didn’t sufficiently allege such a representation. Sample ads in the complaint said that United Healthcare and New York Life Insurance Companies “pay[ ] royalty fees to AARP for the use of its intellectual property.” “Therefore, it would not be reasonable for a consumer to believe that AARP was not engaged in revenue generating activities,” and there was no allegation of any representation that revenue concerns played no role in its endorsement decisions. “It would be foolish indeed for an enterprise, regardless of its status as a non or for-profit entity, to be blind, all other factors being substantially equal, to revenue generating opportunities. In short, there is nothing nefarious about AARP making endorsement decisions, or any other business decisions, based on generating maximum revenue that will be used to support its activities, absent some allegation that such decision resulted in articulable harm to its members.” It wasn’t enough to allege that AARP benefited.

Separately, the court found that plaintiffs didn’t plead with particularity the ads they relied on or when/how they became AARP members.