Litigants are already seeing the effects of the Spokeo decision in action, with a California federal court judge granting an advertiser's motion to dismiss a false advertising case in reliance upon the U.S. Supreme Court's recent opinion.
In May, the high court ruled in Spokeo, Inc. v. Robins that a plaintiff must show an injury in fact before pursuing a claim for a violation of the Fair Credit Reporting Act, a federal statute that provides for statutory penalties similar to theTelephone Consumer Protection Act. The 6-2 decision authored by Justice Samuel Alito made headlines, with defense attorneys hoping it would decrease the number of consumer class actions seeking damages for mere technical violations of federal statutes.
A false advertising action out of California may further those hopes. The case involved plaintiffs who filed a putative class action against PharmaCare US, Inc. over its IntenseX dietary supplement, which the company claimed could enhance sexual power and performance.
When the plaintiffs filed a motion for class certification, the defendant relied on Spokeo to argue certification was improper because the plaintiffs failed to establish evidence that all members of the proposed nationwide class suffered an actual injury.
U.S. District Court Judge Marilyn L. Huff—who also found problems with commonality and predominance as well as typicality for the proposed class—agreed that standing issues foreclosed granting the certification motion.
"The Supreme Court recently reemphasized the importance of the Article III standing requirements, particularly the requirement of an injury that is both concrete and particularized," she said. "It wrote: 'Congress' role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right. Article III standing requires a concrete injury even in the context of a statutory violation."
While the plaintiffs asserted they had standing because they relied on the label claims, the product did not perform as promised, and they lost money as a result, the defendant countered that some class members lacked standing because they were not dissatisfied, were not harmed, or had no viable claim.
"Defendant points out that the proposed class includes consumers (1) who bought similarly named products not distributed by Defendant, (2) whose claims are time-barred, (3) who bought IntenseX because of the express label claims, received the benefit claimed, and are satisfied, (4) who bought IntenseX for reasons other than its advertising or labeling, (5) who suffered no injury because they would have paid the same for similar products, (6) who received a refund, and (7) who bought the product from Defendant's website and were never exposed to the alleged aphrodisiac/disease claims Plaintiffs rely on," the court said.
Although the Ninth Circuit Court of Appeals has been inconsistent about whether absent class members must have standing, Judge Huff said the plaintiffs still failed to satisfy the necessary standing requirements.
"Whether characterized as problems with overbreadth, commonality, typicality, or Article III standing, however, there is a substantial mismatch between Plaintiffs and the classes they propose to represent," the judge wrote. "The Court concludes that class certification is not proper to the extent that Plaintiffs raise claims and theories they do not have standing to raise, and to the extent that the class includes consumers who have no cognizable injury, including those who obtained full refunds."
To read the order in Sandoval v. PharmaCare, click here.
Why it matters: For companies facing putative class actions filed under consumer protection statutes such as the TCPA and the FCRA, the order denying class certification in reliance upon Spokeo holds promise. The court was clear that the U.S. Supreme Court's decision will operate to limit certification where potential class members have not suffered a cognizable injury.