E-Alert Case Updates

D.C. Superior Court holds that Non-Profit can recover monetary damages on behalf of non-party consumers under the D.C. Consumer Protection Procedures Act

Nat’l Consumers League v. Bimbo Bakeries United States
Case No. 2013 CA 006548 B
by Wayne C. Heavener, Associate
Semmes, Bowen & Semmes (www.semmes.com)

For more information, contact Paul N. Farquharson at (410)576-4742.

In National Consumers League v. Bimbo Bakeries United States, the Superior Court of the District of Columbia issued a written opinion, in which it held that a non-profit entity could pursue claims arising under the District of Columbia’s Consumer Protection Procedures Act (“D.C. CPPA”). Writing for the Court, Judge John M. Mott held that a non-profit entity had constitutional and statutory standing to bring an action against a commercial bakery for allegedly misleading the public with certain product labeling. In reaching its decision, the Court held that the non-profit entity’s claims were not preempted under federal law, and the organization could recover monetary damages for consumers not party to the case, so long as those damages were recovered for the consumer’s benefit.

National Consumers League (“NCL”) filed an action, individually and on behalf of the general public, against Bimbo Bakeries USA, Inc. (“Bimbo”), alleging that the sale of certain Bimbo products constituted unlawful trade practices under the D.C. CPPA. Specifically, NCL alleged that the packaging on certain bread products misled the public into believing that there was a greater amount of whole wheat than was really contained. NCL is a non-profit organization, and the sole plaintiff in this action. Bimbo filed a Motion to Dismiss NCL’s claims, based on several arguments. First, Bimbo argued that NCL lacked standing to bring its claims because it had suffered no injury-in-fact. Second, Bimbo argued that NCL’s action was preempted under federal law, and that the Food and Drug Administration (“FDA”) had primary jurisdiction of this matter. Finally, Bimbo argued that NCL failed to state a claim on which relief could be granted because NCL’s Complaint did not comply with D.C. Super. Ct. R. 9(b)’s heightened pleading standard for fraud.

The Court denied Bimbo’s Motion to Dismiss. The Court held that NCL had standing under both Article III of the Constitution and the D.C. CPPA. The Court noted that, in order to demonstrate constitutional standing, a plaintiff must demonstrate an injury-in-fact, which is actual or imminent, and a causal connection between the injury and the conduct complained of in the plaintiff’s complaint. The Court held that, although the D.C. CPPA did not excuse the need to prove constitutional standing, the statute did create certain rights, the impairment of which could constitute an injury-in-fact. Specifically, the Court held that the D.C. CPPA conferred standing upon the NCL both as a “private attorney general,” as well as a non-profit organization specifically permitted to bring an action seeking relief on behalf of a consumer or class of consumers. D.C. Code § 28-3905(k)(1)(D). As such, NCL could demonstrate an injury-in-fact sufficient to confer standing under both Article III and the D.C. CPPA.

The Court likewise rejected Bimbo’s argument that NCL’s claims were preempted by federal law. Bimbo argued that Plaintiff’s claims were preempted under the Nutritional Labeling and Education Act (“NLEA”), and that the NLEA preempted NCL’s D.C. CPPA claims insofar as they sought to impose additional or different labeling requirements that were not identical to current FDA regulations. The Court rejected Bimbo’s argument because the NLEA did not encompass false or misleading labeling, as the NCL had alleged against Bimbo. Therefore, the Court did not find any express preemption in the NLEA that would vitiate NCL’s D.C. CPPA claims. Similarly, the Court held that the FDA should not have primary jurisdiction of the NCL’s claims. The Court held that, even if an agency does have primary jurisdiction, it does not negate the court’s jurisdiction. Therefore, the Court held that there was no requirement that the Court defer to the FDA on matters of mislabeling.

Finally, the Court rejected Bimbo’s argument that NCL was required to meet the heightened pleading requirements of D.C. Super. Ct. R. 9(b). Under Rule 9(b), a plaintiff is required to plead all averments of fraud or mistake with particularity. Bimbo argued that NCL’s argument was premised on alleged fraud in Bimbo’s product packaging. Nonetheless, the Court held that Rule 9(b)’s heightened pleading standard was not applicable in this case. Rather, the Court held that a more relaxed standard of pleading was consistent with the Legislature’s intent to allow consumers to overcome the pleading problem associated with common law fraud claims. The Court further held that NCL was entitled to recover not only attorneys’ fees pursuant to the D.C. CPPA, but also a $1,500.00 statutory penalty for each violation of the D.C. CPPA. Bimbo argued that such damages could only be recovered by an actual consumer, as opposed to a non-profit organization. The Court rejected Bimbo’s rationale, and held that such damages could be recovered by NCL, but only for the benefit of D.C. consumers.