Flush with Uncertainty: Do Plaintiffs Have Standing to Seek Injunctive Relief for “Consumer Fraud” When They Are No Longer “Defrauded”?

Last summer, the Ninth Circuit answered that question in Davidson v. Kimberly-Clark Corp., where it held that a consumer who allegedly was deceived by the false advertising at the time of purchase may have Article III standing to sue for injunctive relief in federal court, even though the consumer, post-purchase, now knows the “truth” of the allegedly false advertisement. 889 F.3d 956 (9th Cir.), cert. denied, 139 S. Ct. 640 (2018).[1] The Davidson plaintiffs sued for damages based on the alleged price premium resulting from the “flushable” label and also for an injunction requiring the manufacturer to stop using that label. The Ninth Circuit, addressing an intra-circuit split, set out a standing test for the pursuit of injunctive relief regarding allegedly misbranded products. Although the Davidson decision has caused quite a stir, a close examination of the case reveals that its holding is more limited than some sensationalized accounts suggest.

Background

Of course, all courts agree that plaintiffs can sue manufacturers when they have suffered harm from a product. But federal courts are divided over whether a consumer who knows the “truth” about the product can seek injunctive relief to force a manufacturer to change its labeling. Before Davidson, some district courts in the Ninth Circuit had reasoned that injunctive relief should be available to plaintiffs in false advertising cases, even if they did not plan on buying the product again, because a contrary rule would undermine California’s consumer protection laws. Other district courts held that once a plaintiff knows the truth about the allegedly misleading label, it is unlikely the plaintiff will be misled into buying the product again, and therefore does not have standing to seek injunctive relief. Still other courts held that, depending on the product, a consumer who is aware of the alleged deception might have standing to seek injunctive relief, so long as there is a likelihood that the consumer will suffer future harm from the misleading label. For example, the consumer may still be interested in purchasing the product in the future, but may not know whether the product has changed, and therefore cannot rely with any confidence on the truth of the label.

Davidson I and II

In Davidson I, the Ninth Circuit held that a consumer who knows that a product’s label is misleading may still have standing to seek injunctive relief. The court reasoned that without an injunction, the plaintiff might incorrectly believe that the product had improved or the label had changed, and could therefore suffer an injury by purchasing the product again.

Kimberly-Clark petitioned the Ninth Circuit for a re-hearing en banc. The Ninth Circuit denied the petition but revised its Davidson I opinion to clarify what a plaintiff must allege to have standing. The court acknowledged that other circuits had denied injunctive relief to previously deceived consumers. 889 F.3d at 969 n.5. Nevertheless, the court reaffirmed the key takeaway of Davidson I: “We hold that a previously deceived consumer may have standing to seek an injunction against false advertising or labeling, even though the consumer now knows or suspects that the advertising was false at the time of the original purchase, because the consumer may suffer an ‘actual and imminent, not conjectural or hypothetical’ threat of future harm.” 889 F.3d at 969. The court reasoned that “[k]nowledge that the advertisement or label was false in the past does not equate to knowledge that it will remain false in the future.” Id.

The court then set out the requirements for standing to seek injunctive relief. A plaintiff must (1) allege an intent to purchase the product in the future, (2) allege a concrete and particularized injury, (3) show a likelihood of similar injury in the future, and (4) demonstrate that a favorable ruling would redress the injury. Id. at 967-72. Regarding the key issue of the threat of future harm, the court held: “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.” Id. at 969-70.

The court held that, although it was a “close question,” Davidson had alleged Article III standing. First, the court held that the plaintiff had adequately alleged that she wished to purchase the wipes again. Second, it noted that Davidson had alleged a concrete and particularized injury: “Davidson’s alleged harm is her inability to rely on the validity of the information advertised on Kimberly–Clark’s wipes despite her desire to purchase truly flushable wipes.” Id. at 971. Third, the court held that there was a likelihood the plaintiff would be injured in the future because she would have no way of knowing if the product had changed and become truly “flushable”; if she encountered the product in a store in the future, she “could not rely on that representation with any confidence.” Id. And finally, the court determined that the plaintiff satisfied the “redressability” prong of Article III standing because the injunctive relief “would likely redress Davidson’s injury by requiring that Kimberly-Clark only make truthful representations on their wipe products upon which Davidson could reasonably rely.” Id. at 972.

Peering Around the U-Bend

How has Davidson affected other federal cases? Defendants in consumer products cases, even in the Ninth Circuit, should not assume that Davidson opened the floodgates to injunctive relief in all mislabeling cases.

The Ninth Circuit has since reaffirmed that consumers in these cases must plausibly allege an intent to purchase the product in the future. Furthermore, some courts outside the Ninth Circuit have rejected Davidson altogether. Others – including courts in the Ninth Circuit – have cautioned against reading Davidson too broadly, noting in particular that Davidson did not hold that plaintiffs seeking injunctive relief in mislabeling cases always have Article III standing. Rather, assessing the threat of future harm will depend on the facts and circumstances of the particular case.

For example, a district court in the Seventh Circuit, citing Davidson, held that a plaintiff alleging that a sunscreen was mislabeled had standing because the plaintiff plausibly alleged that he wanted to purchase the sunscreen in the future. But a court in the Northern District of California recently rejected a claim for injunctive relief involving the alleged mislabeling of dietary supplements. The court noted that the claim was predicated on the premise that, as a matter of scientific fact, the supplements at issue were not beneficial to human beings. Because the defendant could not alter its advertising or product to make the supplements beneficial, the plaintiffs could not be deceived by the labeling in the future.

Thus, even under the Davidson test, not all plaintiffs will be able to obtain injunctions in federal court for mislabeled products. Defendants should carefully assess the plaintiffs’ allegations regarding their intent to make future purchases and examine whether, given the nature of the product and the mislabeling alleged, such allegations are plausible and sufficient to state a claim for injunctive relief under Article III.

[1] Davidson and this article address consumer standing in federal court under Article III of the U.S. Constitution. Article III does not apply to state courts. Some states, including California, have more-liberal standing requirements.