Misled Consumers Can Obtain Injunctions Against Businesses

A consumer misled by fraudulent representations may still obtain an injunction against a business so long as the consumer claims that he or she wishes to purchase the product or service in the future but cannot confidently rely upon representations regarding the product or services because of a business’s prior false representations.  This rule, recently announced by the Ninth Circuit Court in Jennifer Davidson v. Kimberly-Clark Corporation, et al., No. 15-16173 (9th Cir. Oct. 20, 2017) [“Davidson”], represents an expansion of consumers’ rights to obtain an injunction against businesses in federal court while expressly limiting a business’s ability to dismiss a false advertising claim in the early stage of litigation. 

In Davidson, the consumer paid a higher price for wipes because the product packaging stated that the wipes were “flushable.”  After discovering that the wipes had clogged her pipes and caused septic problems, the consumer filed a consumer fraud action in California court seeking damages and injunctive relief.  The manufacturer, an out of state corporation, removed the case to federal court, and subsequently filed a motion to dismiss the complaint under federal law.   The District Court granted the manufacturer’s motion to dismiss, in part, because the consumer failed to allege she suffered harm from her use of the wipes.  The District Court also concluded that the consumer was not entitled to pursue a claim for injunctive relief because she, knowing the wipes were not in fact flushable, was unlikely to purchase flushable wipes in the future.  The consumer subsequently filed an appeal. 

On appeal, the Ninth Circuit reversed the District Court’s decision finding that it incorrectly concluded that the consumer needed to allege facts that the wipes actually damaged her pipes.  In California, a consumer need only allege that she sustained economic damage by paying a higher price for the allegedly falsely advertised product.  Because the consumer alleged that she had paid a higher price for the wipes, and would not have paid that price if she knew the products were not flushable, the Ninth Circuit concluded that she properly alleged economic damages such that she was entitled to maintain a claim for fraud against the manufacturer.   

Finally, the Court concluded that the consumer could pursue injunctive relief because she alleged that she could not rely on the manufacturer’s labels in the future.  The Ninth Circuit rejected the manufacturer’s assertion that there was no threat of imminent harm, which is required to obtain an injunction, because a misled consumer may still desire to purchase a product even if a previously purchased product did not work as advertised.  Allegations that a consumer cannot confidently purchase a product or service in the future because he or she cannot rely on a business’s representations is therefore sufficient to maintain a claim for injunctive relief, as the “inability to rely” represents a threat of imminent harm that a consumer is entitled to avoid by obtaining an injunction.  To hold otherwise, the Court noted, would effectively eviscerate a plaintiff’s right to pursue injunctive relief by allowing a business to remove a case to federal court and obtain procedural rules more stringent than those in California.

Although the holding expands a consumer’s ability to obtain injunctive relief, the Davidson decision is important for businesses, as a business can rely on the decision to dismiss a consumer’s complaint by using allegations in the pleadings to refute the consumer’s stated intent that he or she will purchase a product or service in the future.  For example, a business can focus on the lack of allegations that a consumer desires to: purchase a product or service in the future, has the opportunity to purchase a product or service in the future, or is continually presented with a product or service but has no way to know whether representations are true.