APA Assessment Fee Litigation v. American Psychological Ass'n
920 F. Supp. 2d 86
D.D.C.2013Background
- APA formed APAPO in 2001 to conduct lobbying for APA; APAPO is a 501(c)(6) entity.
- Plaintiffs seek to file a fifth amended complaint alleging fraudulent inducement, rescission, and potentially negligent misrepresentation.
- Court previously dismissed the four counts for fatal threshold flaws and allowed only a limited chance to add new persuasive claims.
- Proposed claims rely on misrepresentation that payment of a practice assessment was a condition of APA membership.
- Court assumed, for sake of argument, that a “must pay” statement could be actionable, but held reliance was not reasonable under DC law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether proposed fifth amendment claims would survive a 12(b)(6) motion. | Levine/others contend misrepresentation induced membership contract. | APA/APAPO argue disclosure and documents negate reasonable reliance. | No; amendments would be futile and fail to survive 12(b)(6). |
| Whether misrepresentation about membership requirements constitutes actionable reliance. | Plaintiffs relied on “must pay” as a condition of membership. | Reliance not reasonable given independent information and contracts. | Not reasonable reliance under DC law; dismissal warranted. |
| Whether rescission and negligent misrepresentation claims are barred. | Rescission and negligence claims should be allowed. | No rescission due to fully performed contracts; negligent misrepresentation untimely. | Rescission barred; negligent misrepresentation not timely raised. |
| Whether leave to amend under Rule 15(a)(2) should be granted. | Court should permit amendment to cure deficiencies. | Amendment futile and prejudicial to defendants. | Leave to amend denied; amendment futile. |
Key Cases Cited
- Alicke v. MCI Commc’ns Corp., 111 F.3d 909 (D.C. Cir. 1997) (Rule 12(b)(6) dismissal proper where no reasonable customer could conclude)
- In re Estate of McKenney, 953 A.2d 336 (D.C. 2008) ( Reliance not reasonable where adequate independent investigation exists)
- Howard v. Riggs Nat’l Bank, 432 A.2d 701 (D.C. 1981) ( Reliance not reasonable when recipient can verify information)
- Clark v. Mut. Reserve Fund Life Ass’n, 14 App. D.C. 154 (D.C. 1899) ( Knowledge of by-laws assumed; membership obligations known)
- Dean v. Garland, 779 A.2d 911 (D.C. 2001) (Rescission requires restoration to pre-contract status; equitable remedy limits)
- Whiting v. AARP, 637 F.3d 355 (D.C. Cir. 2011) (Leave to amend not warranted when not properly requested)