Category: Jurisdiction/Standing

In the recent case Renfro v. Champion Petfoods, the Tenth Circuit affirmed a district court’s dismissal of a putative class action alleging that Champion Petfoods had deceptively marketed its Orijen-brand dog food.  The plaintiffs’ claim centered around an incident in 2018, when Champion Petfoods learned that some ingredients it had sourced for Orijen had been contaminated.  According to the plaintiffs, this incident—as well as other aspects of Champion’s sourcing and manufacturing process—rendered false Champion’s marketing claims that the products’ ingredients were generally high-quality.  In rejecting this contention, the Tenth Circuit reaffirmed a core principle of false advertising law: that false advertising claims must be based on alleged false assertions of fact, not vague or unprovable marketing statements.  The Tenth Circuit also reaffirmed the important principle that only plaintiffs who have been directly and personally harmed by a purportedly misleading practice have Article III standing to bring suit regarding that practice.

In a recent decision, McGee v. S-L Snacks Nat’l, 982 F.3d 700 (9th Cir. Dec. 4, 2020), the Ninth Circuit upheld a district court’s dismissal of a putative class action for lack of Article III standing.  McGee is notable for the court’s willingness, at the motion-to-dismiss stage, to subject a consumer’s theories of injury to meaningful scrutiny, and for its willingness to disregard conclusory and implausible allegations of harm.  It also serves as a helpful reminder that disclosures in a product’s ingredients list can be highly relevant in assessing the plausibility of a consumer’s claimed losses. 

The Illinois Biometric Information Privacy Act (“BIPA”) protects individuals against the unlawful collection, storage and use of their “biometric” information. Under BIPA, plaintiffs may bring claims against companies for failing to obtain informed consent before collecting biometric identifiers (including fingerprints and face scans) and for not maintaining proper privacy policies and procedures for storage of that information. Because the harm can be nebulous — for example, the economic harm from a violation is not always obvious — these cases often raise issues about what constitutes an actual “injury” sufficient to confer standing. Indeed, a number of recent cases in this area have given rise to an emerging circuit split. As in the false advertising context, some courts have permitted such cases to go forward on mere allegations of “bare procedural violations.”  As these cases proliferate, we’ll be watching closely to see whether courts begin to apply the Article III criteria appropriately rigorously, as they have increasingly done in the false advertising context.

Last week, the Second Circuit issued an important published decision holding that previously injured consumers who seek to challenge product labeling lack constitutional standing to pursue claims for injunctive relief, and cannot obtain certification of an injunctive relief class under Federal Rule of Civil Procedure 23(b)(2).  See Berni v. Barilla S.P.A., 2020 U.S. App. LEXIS 21167 (2d Cir. July 8, 2020).  Although the Second Circuit’s holding arose in the context of a settlement class, not a litigation class, the court’s reasoning was not dependent on or limited to that specific context; rather, the panel held, in unqualified terms, that “past purchasers of a product . . . are not likely to encounter future harm of the kind that makes injunctive relief appropriate.”  The Berni decision appears to close the door to injunctive relief for consumers asserting mislabeling claims in the Second Circuit.

“Whether reasonable consumers would be deceived by a challenged advertisement is a question of fact that can’t be decided on a motion to dismiss.”  This claim is one of the biggest sacred cows in false advertising litigation.  But as the Second Circuit has made clear twice in the past year, it’s just a load of bull.  Take, for example, Chen v. Dunkin’ Brands, Inc., --- F.3d ----, 2020 WL 1522826, which the Second Circuit decided unanimously earlier this week.  In Chen, the court doubled down on its June 2019 holding that a court can decide at the pleadings stage “whether a reasonable consumer would have been misled by a particular advertisement,”  Geffner v. Coca-Cola Co., 928 F.3d 198, 200 (2d Cir. 2019), affirming the dismissal of a false advertising claim involving the meaning of “steak.” In the process, the court also served up a tasty side dish of personal jurisdiction doctrine.

It was only a matter of time.  As we anticipated last summer, the plaintiffs’ bar recently filed a slew of false advertising suits against manufacturers of products infused or made with cannabidiol, a/k/a CBD.  This development was a fait accompli, given the combination of a booming CBD market, a murky federal regulatory landscape, and a patchwork of state regulatory efforts at varying degrees of development.  This confluence of factors has paved the way for at least ten consumer lawsuits in the last six months against producers of CBD products.  We expect more suits to follow in the near future as copycat suits are filed, CBD products become increasingly mainstream, and more deep-pocketed players enter the CBD market.

Back in May, we wrote about a package of “extreme pro-plaintiff changes” that legislators had proposed to New York’s main consumer-protection statute, Gen. Bus. Law § 349.  There have been some significant developments on this front, so we figured an update was in order.

Last Friday, the Third Circuit held that a J. Crew customer lacked standing to sue the company for printing ten digits of his credit card on a receipt, in violation of the Fair and Accurate Credit Transaction Act (which provides that companies should print only the last four digits).  Relying on the Supreme Court’s decision in Spokeo v. Robins, the court held that the plaintiff’s alleged injuries—a violation of the statute and the “risk of identity theft”—were merely “procedural,” and thus insufficiently “concrete” to confer standing under Article III.  The Third Circuit’s rigorous application of Article III standing requirements is good news for defendants in mislabeling cases, some of which are “gotcha”-type suits arising from highly technical labeling violations.