Davidson v. Kimberly-Clark: 9th Cir. Resolves Split and Closes Article III Loopholes in False Ad. Cases

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On October 20, 2017, the U.S. Court of Appeals for the Ninth Circuit resolved the highly-contentious district court split over Article III standing for injunctive relief in deceptive advertising cases in favor of consumers. Davidson v. Kimberly-Clark Corp., et al., No. 15-16173, 2017 WL 4700093 (9th Cir. Oct. 20, 2017) (slip op. available here). In Davidson, the plaintiff alleged that she purchased, for a premium price, pre-moistened wipes manufactured and sold by the defendant, in part, because they were advertised as “flushable.” Ms. Davidson brought claims against Kimberly-Clark Corp. for violations of California’s consumer protection statutes, including the Consumers Legal Remedies Act (CLRA), False Advertising Law (FAL), and Unfair Competition Law (UCL), after her discovery that the wipes were not flushable, as advertised. Her complaint stated that, although she stopped purchasing the wipes, she would purchase them in the future, “if it were possible to determine prior to purchase if the wipes were suitable to be flushed.” Slip op. at 7. The district court granted, with prejudice, Kimberly-Clark’s motion to dismiss based in part on the finding that Davidson lacked Article III standing to seek injunctive relief because she was unlikely to purchase the wipes in the future.

In reversing the district court’s decision, the Ninth Circuit rejected the lower court’s reasoning that consumers who sue after being subjected to false or misleading advertisements lack Article III standing to pursue injunctive relief because they have since learned that the advertisements are false or misleading and thus “cannot be deceived again.” Rather, the appeals court found a plaintiff-consumer’s inability to rely on the accuracy of future labels constitutes an ongoing harm “sufficient to confer standing to seek injunctive relief” under Article III; thus, adopting the reasoning of other district courts that have found that “if injunctive relief were unavailable to a consumer who later learns after purchasing a product that the product’s label is false, California’s consumer protection laws would be effectively gutted.” Slip op. at 22.

Further, while dicta, the Ninth Circuit recognized the “anomalies” that would result from an opposite holding given the overwhelmingly common practice where, to defeat injunctive relief requests, defendants remove state court cases brought under state consumer protection statutes to federal court pseudo-automatically via the Class Action Fairness Act of 2005 (CAFA). Slip op. at 21-23. This would create a “’perpetual loop’ of plaintiffs filing their state law consumer protection claims in California state court, defendants removing the case to federal court, and the federal court dismissing the injunctive relief claims for failure to meet Article III’s standing requirements.” Id. at 22.

Injunctive relief is arguably the most significant remedy to consumers who bring class actions for false advertising under the UCL because it is the only remedy available that ensures future truthful advertising for a product. The decision in Davidson is vital to consumers, substantively and procedurally, in enforcing the protections afforded by California’s consumer statutes and receiving the appropriate and necessary remedies for violations of those statutes.

Authored by:
Trisha Monesi, Associate