Degelmann v. Advanced Medical Optics: Federal Standing Established Where Consumers Allege Having Paid More than They Would Have

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The Ninth Circuit recently issued a ruling that embraces a broad conception of standing for plaintiffs pursuing class claims under California’s Unfair Competition Law (“UCL”) in federal court.  In Degelmann v. Advanced Medical Optics, the plaintiffs’ alleged injury arose from paying more for defective contact lens solution than they would have, had the defendant manufacturer provided truthful and accurate information on the harmful product’s label.  Degelmann v. Advanced Medical Optics, No. 10-15222, 2011 U.S. App. LEXIS 19706, *1-8 (9th Cir. Sept. 28, 2011) (available here).  The Court held that the named plaintiffs met the UCL’s standing requirement of an “injury in fact” and “lost money or property.”  Id.

In so ruling, the Court reversed the District Court’s more narrow view of what constitutes an “injury in fact.”  The District Court granted summary judgment to the defendant on grounds that the plaintiffs did not suffer any injury because they (1) did not become ill from using the lens solution, (2) were not forced by a product recall to discard unused product, and (3) “did not lose any money because if they had not bought MoisturePlus [lens solution], they would have bought another lens solution.”  Id. at *3 (referencing Degelmann v. Advanced Medical Optics, No. C 07-3107, 2010 U.S. Dist. LEXIS 122, *10 (N.D. Cal. Jan. 4, 2010) (granting summary judgment)).

The Ninth Circuit conceded that the plaintiffs might have purchased another lens solution, had MoisturePlus been labeled accurately.  But, the Ninth Circuit also emphasized that “it does not necessarily follow that [the plaintiffs] did not suffer economic harm.”  Id. at *6.  Rather, “had the product been labeled accurately, [the plaintiffs] would not have been willing to pay as much for it as they did, or would have refused to purchase the product altogether.”  Id. at *6.  Thus, the plaintiffs did in fact have standing to pursue their UCL claim.  Id. at *7-8.

The Ninth Circuit based its ruling on the holding of a prior California Supreme Court case, Kwikset v. Super. Ct., 51 Cal. 4th 310 (2011).  In Kwikset, the plaintiff consumers alleged that they had purchased products falsely labeled “Made in the U.S.A.” and had paid more for the products than they might have, had the products been labeled accurately.  As in Degelmann, the Supreme Court concluded in Kwikset that the consumers had suffered an identifiable economic injury.  Id. at 329.  Key to both the Kwikset and Degelmann decisions are findings of economic harm caused by false and misleading advertising. 

While ruling that the plaintiffs had standing to proceed under the UCL, the Degelmann Court affirmed summary judgment for the defendant because the plaintiffs’ state law claims were preempted by federal Food and Drug Administration labeling standards for contact lens fluids.  Degelmann, 2011 U.S. App. LEXIS 19706, *8-*13.  Nonetheless, Degelmann has set a plaintiff-friendly precedent to which district courts must adhere when evaluating standing issues.