9th Circuit Issues Important New Standing Decision

Late last week, the Ninth Circuit settled a long-running district court split. The split pertains to when consumers have Article III standing to enjoin deceptive business practices. As the Ninth Circuit recognized, “district courts applying California law have split dramatically on this issue.”

The dispute, in short, turns on the requirement that anyone seeking an injunction must be at threat of future injury.  Quite a few courts had held that consumers who had already discovered a particular deception were not at threat of future injury, since they necessarily now knew the nature of the deception and thus could avoid being harmed again.

Many of those courts were not swayed even though they recognized their holdings created a paradox: even though injunctive relief lies at the heart of the UCL, in many cases, no plaintiff could enjoin deceptive conduct (at least in federal court). Those consumers who did not yet know of the deception would not know to file suit, whereas those who did know of the deception, would lack standing to seek an injunction.

As the Ninth Circuit recognized:

Were injunctive relief unavailable to a consumer who learns after purchasing a product that the product’s label is false, California’s consumer protection laws would be effectively gutted, as defendants could remove any such case.

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

The Ninth Circuit based its holding, though, on a different rationale: that the future injury necessary for Article III purposes need not be the same injury the plaintiff already suffered.  Where the initial injury was being duped into buying a product due to a misleading label, for example, the threatened future injury could be the consumer’s inability to rely on that label (or one like it) going forward:

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.  

More concretely, the court held that the following allegations sufficed:

[Plaintiff] alleged that she continues to desire to purchase [the products if available as advertised]; would purchase [the product as advertised] manufactured by [defendant] if it were possible; regularly visits stores … where [the mislabeled products] are sold; and is continually presented with [the misleading] packaging but has no way of determining whether the representation … is in fact true.

This ruling should provide clarity and eliminate a considerable amount of motion practice – recently, it has seemed like nearly every consumer class action complaint has been met with a Rule 12 motion arguing this point.