May 02, 2023

The importance of scrutinizing standing to seek injunctive relief in defending or settling false-advertising suits


State consumer-protection statutes frequently authorize claims for class-wide injunctive relief; notably, California courts have fashioned a similar remedy allowing for injunctions on behalf of the “general public.” Plaintiffs bringing class actions alleging that a company’s advertising is deceptive or misleading frequently tack on to their damages claims a request to enjoin the disputed marketing—sometimes to halt allegedly false advertising and sometimes to require the company to disclose some allegedly concealed fact about its product or service. These types of injunction claims are especially common in cases against food and beverage companies. But it is difficult to square these injunction claims with Article III standing requirements, and companies defending against class actions in federal court should be aware of the potential for seeking dismissal of requests for injunctive relief on standing grounds.

The Eleventh Circuit’s recent decision in Wilson v. Reckitt Benckiser LLC underscores the importance of considering Article III standing requirements not just in defending against class actions in federal court, but also in settling them. Rather than consider the issues raised on appeal by Ted Frank (who frequently challenges the fairness of class settlements), the Eleventh Circuit panel sua sponte vacated an $8 million class settlement that included injunctive relief in a false advertising case because none of the plaintiffs had standing to seek injunctive relief. The plaintiffs had alleged that the defendants misrepresented the efficacy of their “brain performance supplements,” that were alleged to be “worthless.” Because the plaintiffs indicated they would not purchase the products at all in the future—much less be misled by the defendants’ challenged representations—the court concluded that plaintiffs lacked standing to seek injunctive relief.

As we discuss below, the Eleventh Circuit’s conclusion is consistent with well-settled Article III principles. The circumstances presented to the Eleventh Circuit did not require it to wade into the circuit split over past purchasers’ standing to seek injunctive relief.   But the split is real—with the Ninth Circuit taking a much broader view of standing than three other circuits have.   We therefore also discuss issues that commonly arise when defendants litigate standing in the Ninth Circuit, which has allowed purchasers who say they were previously deceived to nevertheless pursue forward-looking injunctions under certain circumstances.       

Article III standing and injunctions

Article III’s “case or controversy” requirement limits federal courts’ power to hear cases to ones in which plaintiffs have suffered an injury in fact. In a series of decisions, the Supreme Court has explained what a plaintiff seeking injunctive relief must show in order to establish the requisite injury in fact. Among other things, the plaintiff must demonstrate that face an “imminent” threat of “concrete, particularized” harm. As the Court observed in Clapper v. Amnesty International USA, the threatened injury must be “certainly impending”; it is not enough to identify a “speculative” or “possible future injury” or one for which there is only an “objectively reasonable likelihood” that it may occur. And at the motion-to-dismiss stage, the plaintiffs’ allegations of the imminent future threat must be plausible.

These issues routinely will arise in class actions. For example, in false-advertising cases challenging product packaging, is it plausible that an allegedly deceived customer who now knows true the nature of the product would nonetheless again be deceived if he or she buys the same product? And even if one customer could make that allegation, would variations among putative class members preclude class certification?

Circuit split

In at least three circuits, the answers to these questions are straightforward. The Second, Third, and Seventh Circuits have rejected assertions of standing to seek injunctive relief premised on the idea that a dissatisfied customer would purchase the same product and again be deceived. See, e.g., Thorne v. Pep Boys Manny Moe & Jack Inc., 980 F.3d 879, 896 (3d Cir. 2020); Berni v. Barilla S.p.A., 964 F.3d 141 (2d Cir. 2020); Conrad v. Boiron, Inc., 869 F.3d 536, 542 (7th Cir. 2017).

As the Second Circuit explained in Berni, past purchasers don’t face an imminent threat of future harm for two reasons. First, they “are not bound to purchase a product again”—and if such individuals think they have previously been deceived, “that will often be the last time they will buy that item.” Second, “even if they do purchase it again, there is no reason to believe that all, or even most, of the class members will incur a harm anew,” because they are buying with “exactly the level of information that they claim they were owed from the beginning.”

Similarly, the Third Circuit explained in Thorne that when a plaintiff’s “allegations reveal that she knows of [the defendant’s challenged] practices, [her] request for injunctive relief amounts me to a ‘stop me before I buy again’ claim that precludes Article III standing.”

By contrast, the Ninth Circuit has stepped out of line with that consensus that, at least sometimes, a once-deceived buyer can plausibly allege an imminent threat of future deception. In Davidson v. Kimberly-Clark Corp., 889 F.3d 956 (9th Cir. 2018), which dealt with “flushable” wipes that allegedly were not actually flushable, the Ninth Circuit held that there are two situations in which a purchaser could “properly allege a threat of imminent or actual harm sufficient to confer standing to seek injunctive relief.” First, the consumer might plausibly allege that “she would like to” buy the product again, but “will not purchase” it because she is “unable to rely on the product’s advertising or labeling in the future.” Second, the consumer could allege that “she might purchase the product in the future” because “she may reasonably, but incorrectly, assume the product was improved.”

The Eleventh Circuit in Wilson did not need to choose between these approaches because the plaintiffs lacked standing under either line of cases. As the court noted,  “none of the Named Plaintiffs have even alleged that they intend to buy the [challenged products] again.” Citing the Second Circuit’s Berni opinion, the court noted that there is “every reason to doubt” that the past purchasers would again purchase a product that they allege is “worthless.” The Eleventh Circuit then rejected the plaintiffs’ reliance on Davidson, explaining that “[t]he Ninth Circuit’s reasoning rests on an assumption that the plaintiff will, in fact, try to purchase the defendant’s products again in the future.”     

Just over four years ago, the Supreme Court denied review in Davidson. But the circuit split has become deeper and more entrenched, as evidenced by subsequent cases like Berni and Thorne. And in the meantime decisions like TransUnion LLC v. Ramirez have underscored that the Supreme Court is prepared to address Article III standing issues in the context of class actions.  So the Court may well take up this issue if an appropriate case comes before it. 

Litigating standing in the Ninth Circuit

Defendants seeking to challenge Article III standing to seek injunctive relief should consider preserving the argument that Davidson was wrongly decided for en banc or Supreme Court review. But there are also several ways that defendants can continue to challenge standing under Davidson and subsequent Ninth Circuit decisions applying that standard.

First, plaintiffs lack standing under Davidson if they have failed to plead that they intend to purchase the challenged product again or that they would like to purchase the challenged product as advertised. Indeed, the Ninth Circuit has repeatedly rejected assertions of standing for this reason. See, e.g., In re Coca-Cola Prods. Mktg. & Sales Pracs. Litig., 2021 WL 3878654 (9th Cir. 2021); Lanovaz v. Twinings N. Am., Inc., 726 F. App’x 590 (9th Cir. 2018).   

Second, even if a plaintiff alleges an intent to make future purchases, merely uttering those magic words in conclusory fashion is not enough. Rather, plaintiffs’ allegation that they intend to make future purchases must be plausible. For example, in Hanscom v. Reynolds Consumer Products LLC, 2022 WL 591466, at *5 (N.D. Cal. Jan. 21, 2022), the court held that a plaintiff challenging the “recycling” label on Hefty bags had failed plausibly to allege an intent to make future purchases because the complaint elsewhere asserted that “recyclables should be placed in a bin without a plastic bag,” thus disclaiming “any underlying belief in the utility of the recycling bags.”

Third, even if a plaintiff adequately alleges the intent to purchase the product again, defendants should be alert for other reasons why there is no future risk that the plaintiff will be misled. For instance, in many situations a plaintiff will have full knowledge of the nature of the product or service at issue and can make a fully informed decision about whether to purchase it going forward. Several courts have distinguished Davidson because unlike the plaintiff in that case, who could not tell if the flushable wipes at issue were flushable without purchasing them again and testing them out, the plaintiff before the court could “easily discover whether a previous misrepresentation had been cured without first buying the product at issue.” Cordes v. Boulder Brands US, Inc., 2018 WL 6714323, at *4 (C.D. Cal. 2018); see also, e.g., Cimoli v. Alacer Corp., 546 F. Supp. 3d 897, 906 (N.D. Cal. 2021).

When successful, these arguments can help defendants by eliminating claims for class-wide injunctive relief.  But there is an added benefit in cases under California law where plaintiffs have entered into arbitration agreements.  Often, plaintiffs have invoked claims for so-called “public” injunctive relief in an effort to avoid their arbitration agreements, and those efforts have often borne fruit when courts refuse to enforce arbitration agreements that prevent assertions of public injunction claims in arbitration.  Although we believe those cases have been called into question by the Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana, defendants have powerful arguments that courts need not reach the preemption question when a plaintiff lacks standing to pursue a claim for a public injunction.  Instead, defendants have argued with success that those injunctive claims should be dismissed, and the plaintiff’s arbitration agreement enforced with respect to any remaining claims.

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