Closer Look: DC Court of Appeals Approves Broad Organizational Stance to File Consumer Protection Lawsuits
We’ve previously reported a wave of mislabeling lawsuits filed in the Superior Court of the District of Columbia, following lower court rulings purporting to award plaintiffs “testers” – individuals and organizations who buy products simply to test whether representations on a product are true – a right to sue on behalf of the general public under the District of Columbia Consumer Protective Procedures Act (“CPPA”). A year later, the District of Columbia Court of Appeals approved an even broader interpretation of the CPPA, allowing a public benefit organization to bring such actions even if the organization does not meet the requirements of the CPPA. article III. We expect further lawsuits to follow as a result of this decision.
The CAPP is intended to allow public interest organizations to assert mislabelling allegations on behalf of consumers in general.
The CPPA prohibits misleading or deceptive marketing practices. It aims to give public interest organizations the right to sue on behalf of the consumer or class of consumers who may be deceived or misled by these practices, as long as the organization has a “sufficient connection “with the interest of these consumers to adequately represent these interests. DC Code § 28-3905(k)(1)(D). Public interest organizations have increasingly embraced this provision of the CPPA to argue that they can put themselves in the shoes of consumers and bring any legal action that an individual consumer might bring, even if the organization itself suffered no damage.
Defendants have attempted to dismiss these cases on the basis of Article III, but trial courts have issued inconsistent rulings. Some courts have dismissed CPPA claims brought by public interest organizations for lack of Article III standing when the organization has failed to demonstrate that it suffered factual harm. Others, however, have argued that public interest organizations do not need to establish Article III standing to bring a deceptive marketing practice complaint under the CPPA.
The DC Court of Appeals clarifies that the ongoing requirements of Article III do not apply to certain CAPP claims.
The decision of the District of Columbia Court of Appeals in Animal Legal Defense Fund v. Hormel Foods Corp., 258 A.3d 174 (DC 2021), resolved this disagreement, holding that a public benefit organization can bring an action under the CPPA without any obligation to show its own standing under Article III. Although the standing requirements of Article III generally apply to the courts of the District of Columbia, the Hormel Foods The court held that CAPP’s legislative history reflected an intention by the Council of the District of Columbia to replace the standing requirements of Article III with a more lenient statutory test for standing.
Key findings of the decision include:
- Only statutory status required. A Public Benefit Organization – defined by the CPPA as “a nonprofit organization organized and operating, in whole or in part, for the purpose of furthering the interests or rights of consumers”, DC Code § 28-3901( (a)(15) — need not meet traditional Article III requirements to bring an action under CAPP in the courts of the District of Columbia. Rather, these organizations need only satisfy CAPP’s statutory requirement that the organization must have a “sufficient connection” to the consumer interests it seeks to represent.
- Broad Link Requirement. In determining whether there is such a connection, the Court of Appeal suggested that the protection of consumer interests was not necessarily the primary objective of the organization. The applicant in Hormel Foods satisfied this requirement by showing that one of its “subsidiary objectives” was to ensure that meat consumers have accurate information about factory farming conditions and practices so that they can make informed decisions about consumption of meat – even though the organization’s primary mission was to protect life and advance the interests of animals.
- Loose pleading standards. The Court of Appeal adopted a cowardly pleading standard to assert standing under 28-3905(k)(1)(D). Although the plaintiff in Hormel Foods did not invoke this provision as the basis of its standing — in fact, it only invoked this provision in summary judgment — the Court authorized the prosecution to proceed on the ground that the facts alleged in the complaint nevertheless supported this theory of standing.
CPPA claims brought by public interest organizations require creative defenses.
Hormel Foods removes an arrow from the quiver of a defendant in CPPA cases brought by public interest organizations. Businesses selling products in the District of Columbia should be prepared to be targeted by this law by organizations claiming to act in the public interest. And because many of these lawsuits seek only injunctive relief and declaratory relief, they can be difficult to file in federal court.
Yet despite Hormel FoodsUnder the broad interpretation of quality under the CPPA, companies can always use creative arguments to defeat CPPA claims.
- Other provisions of CAPP must still have standing under Article III. The holding in Hormel Foods applies only to lawsuits brought by public interest organizations on behalf of a consumer or class of consumers under Rule 28-3905(k)(1)(D). It does not apply to consumers seeking direct relief from a deceptive marketing practice (§ 28-3905(k)(1)(A)), nor to individuals or organizations filing a CPPA claim – on their behalf or on behalf of the general public – based on products they purchased simply to test whether representations on the product are true (§ 28-3905(k)(1)(B), (C)). Individual and organizational plaintiffs, including “tester” plaintiffs, who bring an action under these other provisions of the CPPA must still prove that they have standing under Article III.
- Personal Jurisdiction. Notwithstanding Hormel Foods, the personal jurisdiction requirements continue to apply in the courts of the District of Columbia to the same extent as in the federal courts. Even if a public benefit organization has legal status under the CPPA, it must still show that the District of Columbia court has personal jurisdiction over the defendant.
- No underlying claims by consumers. Although a public body does not have to demonstrate that it has caused itself harm, it must still identify a consumer or a category of consumers who have or will be harmed by the alleged misleading practices. DC Code § 28-3905(k)(1)(D) allows public interest organizations to bring private suits to the Attorney General only to the extent that an individual consumer or class of consumers could bring an action under the CPPA. In other words, demonstrating that an individual consumer cannot sustain a deceptive practices complaint against a business remains a viable defense against a complaint from a public interest organization.