Injunction Defunction: The Second Circuit Extinguishes Injunctive Relief as a Remedy for Consumer False Advertising Claims
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.
Background: Injunctive Relief In Mislabeling Class Actions
Federal courts presiding over putative consumer false advertising class actions are frequently called upon to decide whether the plaintiff has Article III standing to seek an injunction against the challenged labeling practice. Establishing standing requires the plaintiff to show, among other things, that she faces a sufficient likelihood of “actual and imminent” future harm. Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009). Allegations of merely “possible future injury,” however, “are not sufficient.” Clapper v. Amnesty Int’l USA, 568 U.S. 398 (2013) (emphasis added).
Given this standard, most courts that have considered the question have held that a past purchaser lacks constitutional standing to seek injunctive relief, let alone serve as the class representative of an injunctive relief class. This is because the purchaser—who is now aware of the alleged deception—either (a) cannot credibly allege that she would buy the product again, or (b) even if she did, could no longer be misled by the advertising she is challenging as false. She therefore is not at risk of being injured in the future by the challenged labeling. As one court explained, “[b]ecause a plaintiff in a false advertisement case has necessarily become aware of the alleged misrepresentations, there is no danger that they will again be deceived by them.” Davis v. Hain Celesial Grp., Inc., 297 F. Supp. 3d 327, 338 (E.D.N.Y. 2018); see also Tomasino v. Estee Lauder Cos., 44 F. Supp. 3d 251, 256 (E.D.N.Y. 2014) (plaintiff “has not alleged a sufficient future injury to establish standing to assert her claims for injunctive relief because she has demonstrated that she is, in fact, unlikely to purchase [the] products [at issue] again.”). And without constitutional standing to seek injunctive relief, a class representative cannot seek certification of an injunctive relief class under Rule 23(b)(2).
To get around this sound and straightforward legal reasoning, class action plaintiffs have generally pursued two tacks: First, they have alleged that they nevertheless had standing because, although they were now wise to the defendant’s deception, they would consider purchasing the product again in the future if they could be assured that the packaging was no longer deceptive. As we previously covered, in 2018 the Ninth Circuit became the first federal appellate court to accept this logic, holding 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.” Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 969 (9th Cir. 2018). As the Ninth Circuit saw it, “knowledge that the advertisement or label was false in the past does not equate to knowledge that it will remain false in the future.” Id. Accordingly, a threat of future harm may be established where the plaintiff plausibly alleges “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 970. We doubt that this theory of standing is actually consistent with Article III. Again, the future harm must be “actionable and imminent,” not merely speculative—and it cannot be self-imposed, either. See Clapper, 568 U.S. at 409. A plaintiff’s mere allegation that she might purchase the product at some unspecified point in the future, and that in doing so, she might suffer self-imposed harm if the defendant’s practices remain unchanged, should not pass muster. Nevertheless, that is the law of the Ninth Circuit—at least at present.
Second, plaintiffs have argued that denying injunctive relief to past purchasers would frustrate the purpose of consumer protection statutes and undermine the states’ pro-consumer public policies. Some courts have accepted this argument, too. In Belfiore v. P&G, 94 F. Supp. 3d 440, 445 (E.D.N.Y. 2015), for example, Judge Weinstein found that “public policy … supports the rule that Article III standing exists to seek injunctive relief” in this context, reasoning that “to hold otherwise would denigrate the New York consumer protection statute, designed as a major support of consumers who claim to have been cheated.” We have even greater doubts about this argument for standing. As the Supreme Court has explained, Article III’s injury-in-fact requirement is an “irreducible constitutional minimum.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). The legislative branch “cannot erase [that] requirement by statutorily granting the right to sue to a plaintiff who would not otherwise have standing.” Id. The fact that a state’s public policy might be advanced by a finding of Article III standing should therefore be irrelevant. See, e.g., Hollingsworth v. Perry, 570 U.S. 693, 715 (2013) (“[N]o matter its reasons, the fact that a State thinks a private party should have standing to seek relief ... cannot override our settled [federal] law to the contrary.”).
Prior to Berni, the Second Circuit had found on several occasions over the past few years that past purchasers in particular cases had not alleged the requisite imminent injury to satisfy Article III standing. In Nicosia v. Amazon.com, Inc., 834 F.2d 220, 239 (2d Cir. 2016), for instance, the Second Circuit found that the plaintiff lacked standing where he “failed to allege that he intend[ed] to use Amazon in the future to buy any products, let alone” the particular product at issue in that case. Similarly, in Kommer v. Bayer Consumer Health, 710 F. App’x 43 (2d Cir. 2018), the court again found standing lacking because the plaintiff “fail[ed] to allege that he intend[ed] to [purchase the offending product] in the future.” But certain district courts, concerned about the aforementioned policy implications of denying injunctive relief, had sought to limit the Circuit’s holdings to the precise facts of those cases. See Kurtz v. Kimberly-Clark Corp., 321 F.R.D. 482, 500 (E.D.N.Y. 2017) (distinguishing Nicosia on the ground that, in that case, “the offending product had been completely taken off the market”). Indeed, just six weeks ago, the Second Circuit suggested in an unpublished decision that whether past purchasers can satisfy Article III standing “is unsettled in this Circuit.” Axon v. Florida’s Natural Growers, Inc., 2020 U.S. App. LEXIS 17130, at *3, n.1 (2d Cir. May 29, 2020). This set the stage for the Circuit to settle the question once and for all.
The Berni Decision
In Berni v. Barilla S.P.A., 2020 U.S. App. LEXIS 21167 (2d Cir. July 8, 2020), the Second Circuit considered the same question posed in Davidson, but squarely rejected the Ninth Circuit’s logic. Instead, it held unequivocally that prior purchasers lack standing to pursue injunctive relief, and that no “equitable exception” can cure their standing problem and their consequent inability to obtain certification of a Rule 23(b)(2) class.
In Berni, the plaintiffs alleged that they had been deceived by the packaging of a new line of boxed pasta from defendant Barilla, which was “sold in boxes of the same size as the older, familiar Barilla pastas,” but contained less pasta per box than the predecessor products did. Id. at *4. (We have discussed the questionable merits of such “slack-fill” cases elsewhere.) Based on this theory, the plaintiffs brought claims under New York’s General Business Law Section 349, which prohibits deceptive acts or practices in trade or commerce, and sought damages, restitution, and injunctive relief.
Barilla moved to dismiss, but before the district court could rule, the parties announced that they had reached a classwide settlement. Under its terms, class counsel would receive nearly half a million dollars in legal fees, but class members would not receive any monetary relief. Instead, the class would obtain injunctive relief in the form of an agreement by Barilla to include a minimum “fill-line” on its pasta boxes going forward, and to add language to the boxes clarifying that its pasta is sold by weight and not by volume. Id. at *5. A class member objected to the settlement on the ground that the named plaintiffs and absent class members—all of whom were past purchasers—lacked Article III standing to seek the injunctive relief contemplated by the settlement. The district court nevertheless certified the settlement-only injunctive class pursuant to Rule 23(b)(2), finding that “although the [settlement] class is technically defined by the past rather than the future activity of its members, it is not feasible to define a class based on consumers’ prospective future purchases.” Berni v. Barilla G. e R. Fratelli, S.P.A., 332 F.R.D. 14, 25 (E.D.N.Y. 2019). The objector appealed that decision, which teed up the issue for the Second Circuit.
The Second Circuit began its analysis by confirming “the familiar principle” that standing to obtain injunctive relief entails a “prospective-orient[ed]” analysis, focused not on “past injury” but on the likelihood of injury “in the future.” Thus, “if the injury occurred in the past—or if some future injury is merely conjectural or hypothetical—then plaintiffs will lack the kind of injury necessary to sustain a case or controversy, and necessary to establishing standing, under Article III.” 2020 U.S. App. LEXIS 21167, at *10. The absence of such standing is also fatal to a 23(b)(3) class, as “courts cannot permit injunctive relief through class settlement when plaintiffs would otherwise lack standing to seek such relief under Article III.” Id. at 14.
Applying that rule to the settlement class of former pasta purchasers, the court held that an “actual and imminent threat of future injury” had not been, and could not be, shown for several reasons. First, the “past harm” alleged by the class “is of the kind that is commonly redressable at law through the award of damages,” not through injunctive relief. Second, unlike “typical” injunctive relief classes that involve a “perpetual relationship” between the class members and the defendant, past purchasers “are not bound to purchase a product again.” Thus, “once they become aware they have been deceived, that will often be the last time they will buy that item,” and “there is no reason to believe that all, or even most, of the class members—having suffered the harm alleged—will choose to buy it in the future. Id. at *11-12. Third, even if class members did purchase the product again, they would suffer no injury because the “next time they buy one of the newer pastas, they will be doing so with exactly the level of information that they claim they were owed from the beginning.” Id.
Finally, the Second Circuit directly addressed the growing number of district courts that “have attempted to carve out an exception to the strictures of our law on injunctions, so that past purchasers can maintain class actions for such relief.” Id. at *14. The panel observed that such courts appeared to have created an “equitable exception” to Article III’s and Rule 23(b)(2)’s standing requirements to avoid the perceived unfairness of denying consumers recourse to injunctive relief. But the panel explained that “such an equitable exception to Rule 23(b)(2) simply does not exist, and courts cannot create one to achieve a policy objective, no matter how commendable that objective.” Id. at *14 n.36 (collecting cases affirming, in the litigation context, that there is no class action-based policy exception to the Article III standing requirement).
The Second Circuit’s holding that past purchasers categorically lack Article III standing for injunctive relief—and are thus ineligible to seek class certification under Rule 23(b)(2)—could not have been clearer. Given that some courts in recent years have applied Article III with less than full rigor in this context, it is reassuring to see the Circuit hold so unambiguously that courts may not apply a different set of rules merely to avoid what some may perceive as a harsh result.
If the Second Circuit’s holding survives any potential petition for en banc review—and based on Supreme Court precedent and analytical integrity, it should—it will further deepen a circuit split that may entice the Supreme Court to take up the issue. At minimum, the holding in Berni—which mirrors the conclusions reached by the Third and Seventh Circuits—is tough to reconcile with the Ninth Circuit’s more plaintiff-friendly holding in Davidson.
New York’s federal courts have long been a favorite forum for class action plaintiffs due to the theoretical availability of enormous statutory damages. While it remains to be seen whether the Berni decision will deter the plaintiff’s bar from filing suits as prolifically in New York district courts, one thing is clear: class-action plaintiffs seeking to use the threat of injunctive relief as a settlement cudgel can no longer brandish that weapon in the Second Circuit.