Lead Opinion
ORDER AND AMENDED OPINION
MURGUIA, Circuit Judge:
ORDER
The opinion and concurrence filed October 20, 2017, and appearing at
The full court has been advised of the petition for rehearing en banc and no judge has requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35.
The petition for rehearing en banc is DENIED (Doc. 57).
No further petitions for rehearing or rehearing en banc will be entertained in this case.
OPINION
Under California's consumer protection laws, a consumer who pays extra for a falsely labeled or advertised product may recover the premium she paid for that product. California law also permits that consumer to seek a court order requiring the manufacturer of the product to halt its *961false advertising. California has decided that its consumers have a right, while shopping in a store selling consumer goods, to rely upon the statements made on a product's packaging. Today, we hold that misled consumers may properly allege a threat of imminent or actual harm sufficient to confer standing to seek injunctive relief. A consumer's inability to rely on a representation made on a package, even if the consumer knows or believes the same representation was false in the past, is an ongoing injury that may justify an order barring the false advertising.
In this case, Jennifer Davidson paid extra for wipes labeled as "flushable" because she believed that flushable wipes would be better for the environment, and more sanitary, than non-flushable wipes. Davidson alleges that the wipes she purchased, which were manufactured and marketed by Kimberly-Clark Corporation, were not, in fact, flushable. Davidson seeks to recover the premium she paid for the allegedly flushable wipes, as well as an order requiring Kimberly-Clark to stop marketing their wipes as "flushable." Davidson has plausibly alleged that Kimberly-Clark engaged in false advertising. Davidson has also plausibly alleged that she will suffer further harm in the absence of an injunction. We therefore reverse the district court and remand this case for further proceedings.
I. BACKGROUND
A. Factual Allegations
Defendants-appellees Kimberly-Clark Corporation, Kimberly-Clark Worldwide, Inc., and Kimberly-Clark Global Sales, LLC (collectively "Kimberly-Clark") manufacture and market four types of pre-moistened wipes: Cottonelle Wipes, Scott Wipes, Huggies Wipes, and Kotex Wipes. Each of the four products is marketed and sold as "flushable." Kimberly-Clark charges a premium for these flushable wipes, as compared to toilet paper or wipes that are not marketed as "flushable." Each of the four flushable wipes products contains a statement on the package (or on the website associated with the product) stating, in various ways, that the product "breaks up after flushing."
In 2013, Davidson was shopping at a Safeway in San Francisco when she came across Scott Wipes. Davidson saw the word "flushable" on the Scott Wipes package and noticed that the Scott Wipes were more expensive than wipes that did not have the word "flushable" on the package. According to Davidson, flushable ordinarily means "suitable for disposal down a toilet," not simply "capable of passing from a toilet to the pipes after one flushes." Davidson maintains that this ordinary meaning of flushable is understood by reasonable consumers, who expect a flushable product to be suitable for disposal down a toilet. Consistent with that understanding, the Merriam-Webster dictionary defines flushable as "suitable for disposal by flushing down a toilet," and a nonprofit organization of water quality professionals states that a flushable item must completely disperse within five minutes of flushing. In other words, "truly flushable products, such as toilet paper, ... disperse within seconds or minutes."
Davidson was concerned about products that were not suitable for flushing because she remembered hearing stories about people flushing items that should not be flushed, which then caused problems with home plumbing systems and municipal *962wastewater treatment facilities. Davidson did not want to cause such damage to her plumbing or to San Francisco's wastewater treatment facilities. Davidson reviewed the front and back of the Scott Wipes package and did not see anything indicating that the wipes were not suitable for flushing. Believing it would be easier and more sanitary to flush wipes than to throw them in the garbage, Davidson purchased the Scott Wipes.
Once Davidson began using the Scott Wipes, she noticed that each wipe felt sturdy and thick, unlike toilet paper. Davidson also noticed that the wipes did not disperse in the toilet bowl like toilet paper. After using the wipes several times, Davidson became concerned that the wipes were not truly flushable, so she stopped using the Scott Wipes altogether. Davidson investigated the matter further and learned that flushable wipes caused widespread damage to home plumbing and municipal sewer systems. This research "further[ed ] her concerns that the [Scott] Wipes were not in fact appropriate for disposal by flushing down a toilet."
Davidson has never again purchased flushable wipes. Yet Davidson "continues to desire to purchase wipes that are suitable for disposal in a household toilet," and "would purchase truly flushable wipes manufactured by [Kimberly-Clark] if it were possible to determine prior to purchase if the wipes were suitable to be flushed." Davidson regularly visits stores that sell Kimberly-Clark's flushable wipes but is unable to determine, based on the packaging, whether the wipes are truly flushable. Davidson would not have purchased the Scott Wipes, or would have paid less for the Scott Wipes, had Kimberly-Clark not "misrepresented (by omission and commission) the true nature of their Flushable Wipes."
In addition to her experience with the Scott Wipes she purchased, Davidson alleges more broadly that all four flushable wipes products Kimberly-Clark manufactured and marketed "are not in fact flushable, because the wipes are not suitable for disposal by flushing down a household toilet." Kimberly-Clark manufactures these products with strong fibers that do not efficiently disperse when placed in a toilet. Kimberly-Clark's own testing demonstrates that the flushable wipes products break down in water at a significantly lower rate than toilet paper. Numerous news stories describe how flushable wipes have clogged municipal sewage systems, thereby requiring costly repairs. Consumers who have purchased some of the Kimberly-Clark flushable wipes products have lodged complaints on Kimberly-Clark's website that the flushable wipes damaged their septic tanks or plumbing.
Based on these allegations, Davidson brought four California state law causes of action against Kimberly-Clark, including for common law fraud and for violations of the Consumer Legal Remedies Act ("CLRA"), California Civil Code § 1750, et seq. , False Advertising Law ("FAL"), California Business & Professions Code § 17500, et seq. , and Unfair Competition Law ("UCL"), California Business & Professions Code § 17200, et seq. Davidson sought restitution, injunctive relief, and actual, punitive, and statutory damages on her CLRA claim; restitution and injunctive relief on her FAL and UCL claims; and compensatory and punitive damages on her common law fraud claim. Davidson sought to certify a class of all persons who purchased Cottonelle Wipes, Scott Wipes, Huggies Wipes, and Kotex Wipes in California between March 13, 2010 and the filing of the FAC on September 5, 2014.
B. Procedural History
Davidson initially filed this case in state court, but Kimberly-Clark removed it to *963federal court pursuant to the Class Action Fairness Act,
Davidson filed a motion for reconsideration under Rules 59(e) and 60(b), which the district court denied. First, the district court rejected Davidson's argument that it should have remanded the injunctive relief claims to state court. Second, the district court rejected Davidson's argument that it should have dismissed the FAC without prejudice so that Davidson could file a second amended complaint curing the alleged defects in the FAC. Third, the district court rejected Davidson's argument that the district court erred by ruling that Davidson had not adequately pled damages. Davidson timely appealed.
Davidson appeals six of the district court's rulings. First, Davidson argues that the district court erred by dismissing the FAC pursuant to Rule 9(b) for failure to adequately allege why the representation "flushable" was false. Second, Davidson argues that the district court erred by dismissing the FAC pursuant to Rule 12(b)(6) on the basis that Davidson had not suffered any damages. Third, Davidson argues that the district court erred by dismissing the original complaint pursuant to Rule 12(b)(6) for failing to plead how she came to believe the wipes were not flushable. Fourth, Davidson argues that the district court abused its discretion in striking, pursuant to Rule 12(f), references to newspaper reports in the original complaint. Fifth, Davidson argues that the district court abused its discretion by denying Davidson leave to amend her FAC. Finally, Davidson argues that the district court erred by dismissing her injunctive relief claims pursuant to Rule 12(b)(1) for lack of standing.
II. STANDARD OF REVIEW
We review de novo dismissals under Rule 9(b) for failure to plead fraud with particularity. Kearns v. Ford Motor Co. ,
*964III. DISCUSSION
A. Theory of Fraud
The district court dismissed the FAC pursuant to Rule 9(b) because it concluded that Davidson failed to adequately allege "why" the representation that the wipes were flushable was false. Davidson argues that the district court overlooked the FAC's "numerous, detailed factual allegations establishing that Defendants' wipes fail to disperse and therefore cause clogs and problems with sewer and septic systems." Kimberly-Clark argues that Davidson must allege that she experienced problems with her home plumbing or the relevant water treatment plant-allegations that are indisputably lacking in the FAC.
Because Davidson's common law fraud, CLRA, FAL, and UCL causes of action are all grounded in fraud, the FAC must satisfy the traditional plausibility standard of Rules 8(a) and 12(b)(6), as well as the heightened pleading requirements of Rule 9(b). Kearns ,
Assuming the truth of the allegations and construing them, as we must, in the light most favorable to Davidson, Daniels-Hall , 629 F.3d at 998, we hold that the FAC adequately alleged why the term "flushable" is false.
Importantly, Davidson alleged that the actual wipes she purchased failed to "disperse and disintegrate within seconds or minutes." For example, Davidson alleged that after using the wipes, she "noticed that each individual wipe felt very sturdy and thick, unlike toilet paper" and that "[s]he also noticed that the wipes did not break up in the toilet bowl like toilet paper but rather remained in one piece." Her personal experience is supported by additional allegations, including Kimberly-Clark's own testing of the wipes.
Kimberly-Clark argues that Davidson was required to allege damage to her pipes or her sewage system because "suitable for flushing" means that the wipes "would not cause problems in her plumbing or at the water treatment plant." But Kimberly-Clark justifies this theory by taking a single allegation in the FAC out of context. The FAC admittedly contains many allegations about how Kimberly-Clark's flushable wipes and other wipes marketed as "flushable" can cause damage to pipes and sewage systems. But these allegations are extraneous and do not detract from Davidson's basic theory of fraud: that "truly flushable products ... disperse and disintegrate within seconds or minutes," and Kimberly-Clark's flushable wipes do not "disperse and disintegrate within seconds or minutes." Since "[d ]ismissal is proper only where there is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory," Navarro v. Block ,
For these reasons, we hold that the FAC adequately alleged that Kimberly-Clark's use of the word "flushable" was false because the Scott Wipes Davidson purchased did not disperse as a truly flushable product would have.
B. Harm
The district court also dismissed Davidson's FAC in part because Davidson had not alleged that she suffered any damages. When Davidson questioned this conclusion in her motion for reconsideration, the district court clarified that Davidson "had not pled facts showing that her use of the wipes damaged her plumping, pipes, or septic system."
However, Davidson was not required to allege damage to her plumbing or pipes. Under California law, the economic injury of paying a premium for a falsely advertised product is sufficient harm to maintain a cause of action. See, e.g. ,
To properly plead an economic injury, a consumer must allege that she was exposed to false information about the product purchased, which caused the product to be sold at a higher price, and that she "would not have purchased the goods in question absent this misrepresentation." Hinojos ,
C. Dismissal of the Original Complaint
The district court stated in its order dismissing the original complaint that "plaintiff has not alleged facts showing how she came to believe that the [Scott Wipes] were not flushable." Davidson argues that this requirement "does not exist in law." According to Kimberly-Clark, the statement simply reflected the district court's observation that Davidson had not alleged facts about her own experience.
Davidson was required to "identify the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about the purportedly fraudulent statement, and why it is false." Cafasso ,
D. Article III Standing for Injunctive Relief
Finally, we address the most challenging issue in this case: whether Davidson has standing to seek injunctive relief.
Article III of the U.S. Constitution authorizes the judiciary to adjudicate only "cases" and "controversies." The doctrine of standing is "an essential and unchanging part of the case-or-controversy requirement of Article III." Lujan v. Defs. of Wildlife ,
A plaintiff must demonstrate constitutional standing separately for each form of relief requested. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC) Inc. ,
It is an open question in this circuit to what extent a previously deceived consumer who brings a false advertising claim can allege that her inability to rely on the advertising in the future is an injury sufficient to grant her Article III standing to seek injunctive relief. With no guidance from our court, district courts applying California law have split dramatically on this issue. See Pinon v. Tristar Prods., Inc. , No. 1:16-cv-00331-DAD-SAB,
Courts concluding that such a plaintiff lacks standing to seek injunctive relief generally reason that "plaintiffs who are already aware of the deceptive nature of an advertisement are not likely to be misled into buying the relevant product in the future and, therefore, are not capable of being harmed again in the same way." Pinon ,
Other district courts in this circuit have concluded that a plaintiff has standing to seek an injunction against a product's misleading representation, even though the plaintiff already knows or has reason to believe that the representation is false. See
For example, in Ries v. Arizona Beverages USA LLC , the plaintiffs alleged that the defendants engaged in false advertising by marketing their "AriZona Iced Tea" beverages as "All Natural" and "100% Natural" even though the product contained the non-natural ingredients high fructose corn syrup and citric acid.
We resolve this district court split in favor of plaintiffs seeking injunctive relief. We hold that a previously deceived consumer may have standing to seek an injunction against false advertising or labeling, even though the consumer now knows or suspects that the advertising was false at the time of the original purchase, because the consumer may suffer an "actual and imminent, not conjectural or hypothetical" threat of future harm. Summers ,
We observe-although our conclusion is not based on this consideration-that our holding alleviates the anomalies the opposite conclusion would create. As the Machlan court aptly recognized, "[a]llowing a defendant to undermine California's consumer protection statutes and defeat injunctive relief simply by removing a case from state court is an unnecessary affront to federal and state comity [and ] ... an unwarranted federal intrusion into California's interests and laws."
Since we hold that a previously deceived plaintiff may have standing to seek injunctive relief, we must turn our attention to whether Davidson adequately alleged that she faces an imminent or actual threat of future harm caused by Kimberly-Clark's allegedly false advertising. Davidson alleged that she "continues to desire to purchase wipes that are suitable for disposal in a household toilet"; "would purchase truly flushable wipes manufactured by [Kimberly-Clark] if it were possible"; "regularly visits stores ... where [Kimberly-Clark's] 'flushable' wipes are sold"; and is continually presented with Kimberly-Clark's flushable wipes packaging *971but has "no way of determining whether the representation 'flushable' is in fact true."
We are required at this stage of the proceedings to presume the truth of Davidson's allegations and to construe all of the allegations in her favor. Daniels-Hall , 629 F.3d at 998. Though we recognize it is a close question, based on the FAC's allegations, we hold that Davidson adequately alleged that she faces an imminent or actual threat of future harm due to Kimberly-Clark's false advertising. Davidson has alleged that she desires to purchase Kimberly-Clark's flushable wipes. Her desire is based on her belief that "it would be easier and more sanitary to flush the wipes than to dispose of them in the garbage." As in Ries , the FAC is "devoid of any grounds to discount [Davidson's] stated intent to purchase [the wipes] in the future."
Davidson has also sufficiently alleged an injury that is "concrete and particularized." See Spokeo, Inc. v. Robins , --- U.S. ----,
As necessary where standing for prospective injunctive relief is premised entirely on the threat of repeated injury,
Finally, Davidson meets the redressability prong of standing because a favorable ruling would likely provide redress for her alleged injury. See Monsanto Co. ,
We therefore hold that Davidson's allegation that she has "no way of determining whether the representation 'flushable' is in fact true" when she "regularly visits stores ... where Defendants' 'flushable' wipes are sold" constitutes a "threatened injury [that is] certainly impending," thereby establishing Article III standing to assert a claim for injunctive relief. See Clapper ,
IV. CONCLUSION
We hold that the FAC adequately alleges that Kimberly-Clark's use of the word "flushable" was false because the Scott Wipes that Davidson purchased did not adequately disperse as a truly flushable product would have. The district court erred in concluding that Davidson failed to allege harm and how she came to believe the wipes were not flushable. Finally, because Davidson's allegations sufficiently identified a certainly impending risk of her being subjected to Kimberly-Clark's allegedly false advertising, Davidson had standing to pursue injunctive relief. We therefore REVERSE and REMAND.
The following allegations are taken from the operative first amended complaint ("FAC"). At this stage of the proceedings, we must "accept as true all well-pleaded allegations of material fact, and construe them in the light most favorable to the non-moving party." Daniels-Hall v. Nat'l Educ. Ass'n ,
Davidson argues that to survive Rule 12(b)(6), she need only plead enough facts to plausibly demonstrate that a reasonable consumer may be misled. Her observation is correct. See Williams v. Gerber Products Co. ,
We do not address the district court's order granting the motion to strike allegations in the original complaint, as that complaint was replaced by the FAC, and we conclude that the FAC is sufficient as is to survive the heightened pleading requirements of Rule 9(b). Similarly, we do not address the district court's order denying leave to amend the FAC, as we conclude that the FAC is adequate as it stands.
Interestingly, the Machlan court remanded the portions of the plaintiff's claims that sought injunctive relief, and then proceeded in federal court on some of the claims seeking monetary damages. Id. at 960-62, 964-65. The court reasoned that injunctive relief is an important remedy in California's consumer protection statutes and that allowing a defendant to undermine those statutes through removal to federal court "is an unnecessary affront to federal and state comity." Id. at 961. Here, Davidson similarly argues that the district court erred by denying her request to remand the injunctive relief "claim" to state court. Because we conclude that Davidson's alleged future injury justifies Article III standing for injunctive relief, we need not reach this issue.
Several other circuits have considered whether a previously deceived consumer has standing to seek injunctive relief and have held they do not. See Conrad v. Boiron, Inc. ,
In McNair , the court determined there was no reasonable likelihood that the former customers would be injured by the marketer's techniques in the future because the former customers did not allege that they intended to subscribe to magazines through the marketer again-they alleged only that they "may, one day, become Synapse [magazine marketer] customers once more because 'Synapse's offers are compelling propositions ....' "
In Nicosia , the plaintiff had purchased a diet product on Amazon.com that contained sibutramine, a controlled substance that had previously been removed from the market.
Finally, in Conrad , the court held that an injunction would not redress the consumer's potential injury because the injury was already redressed by the merchant's refund program for the deceptive product, and no other injury justifying injunctive relief was pled.
Unlike the cases cited above, here, Davidson sufficiently alleges that she would purchase truly flushable wipes manufactured by Kimberly-Clark.
At the same time, we note that the risks to plaintiffs in cases such as this are occasionally overstated based on the mistaken impression that the only remedy for an improper removal is dismissal without prejudice. As a general rule, if the district court is confronted with an Article III standing problem in a removed case-whether the claims at issue are state or federal-the proper course is to remand for adjudication in state court. See
Although courts in this circuit occasionally imply otherwise, see, e.g. , Pinon v. Tristar Prods., Inc. , No 1:16-cv-00331-DAD-SAB,
Concurrence Opinion
I concur in the majority opinion with the following observations:
As to prospective relief, the majority opinion rests on the proposition that we are required to perform a separate standing analysis for each "form of relief," and concludes that Davidson has separately established standing for her requests for restitution and for an injunction. There is case law supporting both points, as the opinion states.
I write separately to note that duplicating the standing analysis in this way does not give effect to the "case or controversy" requirement of Article III. Instead, it appears to be an artifact of the discredited practice of conflating the prerequisites for injunctive relief with the Article III prerequisites for entry into federal court. Although we said in Hodgers-Durgin v. de la Vina ,
The present case well illustrates the problem. Davidson seeks restitution for the premium she paid for a falsely labeled product, and no one doubts that she has standing in federal court to do so. Under California law, if Davidson prevails on her false advertising claim and is entitled to restitution, she is equally entitled to an injunction. See
It is mechanically possible, in this case, to define Davidson's "case or controversy" differently, and to assign the requirements of injury, causation, and redressability separately to each remedy she seeks. But it turns Article III on its head to let the remedies drive the analysis, where state law clearly envisions those remedies as the product of a single adjudication of a single issue. See Korea Supply Co. v. Lockheed Martin Corp. ,
It was in recognition of this anomaly that the district court in Machlan v. Procter & Gamble Co. remanded only the injunctive aspect of that similar false advertising case to state court.
Federal courts have a history of improperly elevating the prerequisites for relief to the status of jurisdictional hurdles. See Lexmark Int'l, Inc. v. Static Control Components, Inc. , --- U.S. ----,
Conflating the elements of relief with the elements of standing is of little consequence in most cases following Lyons. Where the availability of injunctive relief is governed by federal common law, the common-law prerequisites for injunctive relief must eventually be satisfied, and largely mirror the standing prerequisites. See, e.g. , Monsanto Co. v. Geertson Seed Farms,
*975Despite these concerns, I nonetheless concur fully in the majority opinion. The Supreme Court has read Lyons as requiring a separate standing analysis with regard to prospective injunctive relief, even when a party otherwise has standing to advance a claim. And, as the majority opinion explains, assuming a separate standing analysis is necessary despite the state prescription of effectively automatic prospective relief, that requirement is met here.
See Smith v. City of Fontana ,
I note that only equitable relief was sought in Hodgers-Durgin,
One ordinarily thinks of severing separate claims joined in a single action, not separate forms of relief flowing from a single claim. See Fed. R. Civ. P. 21. But severing and remanding discrete forms of relief is no less anomalous than separately analyzing forms of relief for the purposes of Article III standing. And as remand is required if the district court lacks jurisdiction over a removed case,
In any event, as the main opinion notes, the Machlan approach is considerably more efficient than the likely alternative-dismissing the "claim" for injunctive relief without prejudice, only to have that "claim" refiled in state court absent the request for restitution that justified removal. See
See Summers v. Earth Island Inst. ,