The Importance Of Scrutinizing Standing To Seek Injunctive Relief In Defending Or Settling False-Advertising Suits

• Jurisdiction: United States,Federal,California
• Law Firm: Mayer Brown
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Class Actions, Personal Injury
• Author: Archis Parasharami, Daniel E. Jones and Kevin Ranlett
• Published date: 16 May 2023

State consumer-protection statutes frequently authorize claims for class-wide injunctive relief; notably, California courts have fashioned a similar remedy allowing for injunctions on behalf of the "general public." Plaintiffs bringing class actions alleging that a company's advertising is deceptive or misleading frequently tack on to their damages claims a request to enjoin the disputed marketing'sometimes to halt allegedly false advertising and sometimes to require the company to disclose some allegedly concealed fact about its product or service. These types of injunction claims are especially common in cases against food and beverage companies. But it is difficult to square these injunction claims with Article III standing requirements, and companies defending against class actions in federal court should be aware of the potential for seeking dismissal of requests for injunctive relief on standing grounds.

The Eleventh Circuit's recent decision in Wilson v. Reckitt Benckiser LLC underscores the importance of considering Article III standing requirements not just in defending against class actions in federal court, but also in settling them. Rather than consider the issues raised on appeal by Ted Frank (who frequently challenges the fairness of class settlements), the Eleventh Circuit panel sua sponte vacated an $8 million class settlement that included injunctive relief in a false advertising case because none of the plaintiffs had standing to seek injunctive relief. The plaintiffs had alleged that the defendants misrepresented the efficacy of their "brain performance supplements," that were alleged to be "worthless." Because the plaintiffs indicated they would not purchase the products at all in the future'much less be misled by the defendants' challenged representations'the court concluded that plaintiffs lacked standing to seek injunctive relief.

As we discuss below, the Eleventh Circuit's conclusion is consistent with well-settled Article III principles. The circumstances presented to the Eleventh Circuit did not require it to wade into the circuit split over past purchasers' standing to seek injunctive relief. But the split is real'with the Ninth Circuit taking a much broader view of standing than three other circuits have. We therefore also discuss issues that commonly arise when defendants litigate standing in the Ninth Circuit, which has allowed purchasers who say they were previously deceived to nevertheless pursue forward-looking injunctions under certain circumstances.

Article III standing and injunctions

Article III's "case or...