In a recent opinion, the U.S. District Court for the Northern District of California ruled that, while the plaintiff lacked Article III standing to seek injunctive relief in federal court, his claims for injunctive relief under state consumer protection laws could proceed in a parallel action in state court. Machlan v. Procter & Gamble Co., 2015 WL 106385 (Jan. 7, 2015).
The ruling is a novel approach to a procedural dilemma facing plaintiffs in deceptive marketing cases. While injunctive relief is a key remedy provided by many state consumer protection statutes, federal jurisprudence regarding the requirements for Article III standing for injunctions poses a nearly insurmountable hurdle in deceptive marketing cases brought under such statutes. A plaintiff seeking an injunction in federal court must show “irreparable injury,” which the Supreme Court has said requires “a sufficient likelihood that he will again be wronged in a similar way.” City of Los Angeles v. Lyons, 461 U.S. 95, 111 (1983). But in the context of consumer deceptive marketing claims, the plaintiff is now aware of the alleged deception and thus cannot show that he will be harmed in the same way in the future.
This is particularly significant in light of the Class Action Fairness Act, which gives defendants the ability to remove to federal court many consumer class actions filed in state courts that otherwise would not have been removable prior to CAFA’s enactment.
Machlan presented just such a case. The named plaintiff, Machlan, alleged that he purchased Pampers Kandoo personal hygiene moistened wipes, which were marketed as being “flushable.” He alleged this was false and that he personally experienced problems flushing the wipes in his toilet. Machlan alleged that he paid a premium for the Kandoo wipes over other brands because he thought “flushable” meant “suitable for flushing.” Machlan filed his complaint in state court on behalf of himself and a putative class of California consumers who purchased the wipes from 2010 to the present. Machlan’s complaint alleged state law statutory and common law claims, and sought injunctive relief, restitution, compensatory damages, and punitive damages.
The defendants removed the case to federal court under CAFA and filed a motion to dismiss for lack of subject matter jurisdiction, arguing, in part, that Machlan lacked standing to seek injunctive relief. Specifically, the defendants contended Machlan had not – and could not – establish that an injunction would “redress a real and immediate threat of repeated injury.”
U.S. District Judge James Donato agreed:
Here, the harm that is at the center of plaintiff’s complaint is that he was allegedly deceived about the true nature of the “flushable” wipes marketed and sold by defendants. ... But plaintiff has filled his complaint with pages of allegations – and photos which graphically illustrate – that he has since learned that those “flushable” wipes are not, in fact, suitable for flushing. Even if plaintiff were to allege that he intends to buy these wipes again, and even if plaintiff has continued and will continue to purchase those wipes daily, the nature of his alleged injury, i.e., deception, is such that he personally cannot be harmed in the same way again.
Machlan, 2015 WL 106385 at *3. The court noted its agreement that the ruling “goes against the broad remedial purposes behind California’s consumer protection statutes,” but nonetheless “the scope of the Court’s jurisdiction begins and ends with Article III, and it cannot hear a case that falls outside that scope just because that would better serve public policy.” Id. at *4.
Rather than simply dismiss the plaintiff’s claims for injunctive relief, however, the court remanded to the state court the “portions” of Machlan’s claims that seek injunctive relief. Because Machlan’s claims for injunctive relief were potentially viable under state law, but not justiciable in federal court, the court feared “the possibility that an action like this one could become stuck in a perpetual loop of (1) plaintiff’s re-filing in state court, followed by (2) removal by defendants and then (3) dismissal by this Court.” Id. The court further observed that injunctive relief “is an important remedy under California’s consumer protection laws” and opined that “[a]llowing a defendant to undermine California’s consumer protection statutes and defeat injunctive relief simply by removing a case from state court is an unnecessary affront to federal and state comity.” Id. at *5.
While Judge Donato’s approach seems to preserve the availability of a statutory remedy that would otherwise have been lost upon removal of the action to federal court, it raises procedural questions of its own. As an initial matter, does a federal court have the authority to issue this type of “partial remand”? Acknowledging the lack of express authority on that point, Judge Donato relied primarily on the U.S. Supreme Court’s decision in Carnegie-Mellon University v. Cohill, 484 U.S. 343 (1988). In that case, the plaintiffs filed a complaint in state court alleging a single federal age discrimination claim and a number of state law claims. The defendants removed the case to federal court and the district court granted the plaintiffs’ motion to amend their complaint to eliminate the federal law claim and to remand the remaining claims to state court. The Supreme Court held that the district court acted within its discretion in remanding, rather than dismissing, the pendent claims as a matter of economy, fairness, and comity. Id. at 357. Judge Donato also referred to dicta from a Ninth Circuit Court of Appeals opinion in which the court discussed the possibility of remanding state law claims for which the plaintiff lacked Article III standing, but the court in that case expressly did not decide that issue. Lee v. Am. Nat’l Ins. Co., 260 F.3d 997, 1007 (9th Cir. 2001).
Even if partial remand of certain claims is allowed, Judge Donato’s ruling involves the additional complication that it appears to involve the remand of a claim to a specific remedy, not an entire cause of action. Machlan’s claims for other types of relief on the same state law causes of action remain in federal court. In which court – state or federal – will the factual issues with respect to the alleged deceptive marketing be litigated and decided? To the extent those issues are addressed in the state court, does that interfere with the purposes of CAFA and the defendants’ right to have the controversy adjudicated in federal court? Judge Donato’s opinion does not provide any specific guidance, merely stating that “[t]he Court will implement appropriate case management and scheduling orders to ensure smooth sailing of this case in relation to the state action.”
Notably, the Machlan decision comes on the heels of another “flushable wipe” class action (involving a different product and different defendants) that was removed under CAFA to the Northern District of California. The district judge in that case similarly held that the plaintiff did not have standing to pursue injunctive relief because the plaintiff, having decided that the product at issue is not truly “flushable,” could not allege that she would purchase the same product again in reliance on “flushable” label. Davidson v. Kimberly-Clark Corp., 2014 WL 3919857, *5 (Aug. 8, 2014). The plaintiff subsequently tried to cure the standing defect by amending her complaint to allege that she “continues to desire to purchase wipes that are suitable for disposal in a household toilet” and that she “would purchase truly flushable wipes manufactured by [d]efendants if it were possible to determine prior to purchase if the wipes were suitable to be flushed.” The district court found plaintiff’s amendment unavailing, reasoning that since the plaintiff has concluded the wipes at issue are not flushable (the basis of her claims), “any such product that she would be willing to purchase would necessarily be a product with a different design and construction, not the product at issue here.” Davidson v. Kimberly-Clark Corp., 2014 WL 724398, *4 (Dec. 19, 2014). In both Davidson opinions the court dismissed the claims for injunctive relief and did not consider remand. Ultimately, all of Davidson’s claims failed because the court found she had not pled facts showing why the “flushable” designation was false; unlike Machlan, Davidson never alleged that she had observed any problems flushing the wipes.