The late chef and travel raconteur Anthony Bourdain said that great chefs pride themselves on what they can do with offal. Anybody can make a fine steak. It takes real creativity and skill to turn glands and guts into something delectable. Think of sweetbreads, tripe, or liver. No, really. A couple of weeks ago on this blog we recalled a lobster dish in Paris. Right now we are thinking of a bone marrow salad we had at the St. John restaurant in London. Not only was it surprisingly good, it certainly hit the mark in the category of don’t-try-this-at-home.
For lawyers, winning cases on technical, nonsubstantive grounds is the equivalent of bone marrow salad. You can talk all you want about what’s fair and nice, but banishing your opponent from the courtroom due to procedural default is a delicious triumph. When a new case arrives, we always walk through a checklist of threshold issues. They are threshold issues — such as jurisdiction, standing, ripeness, etc. — because they slam the door on a case before it gets anywhere. Lack of standing, in particular, can be a powerful tool for the defense. We have written about that defense, including here.
But can lack of standing also work in favor of plaintiffs?
Last week, the Benton v. CVS Pharmacy, Inc., 2022 WL 1750462 (N.D. Cal. May 31, 2022), case showed how standing can be a double-edged sword. The plaintiffs brought a class action essentially trying to ban the sale of homeopathic products as a “health fraud” in violation of California’s Unfair Competition Law and California’s Food, Drug, and Cosmetic Law, which is known (confusingly for those of us who also do antitrust work) as the Sherman Law. The defendant removed the case to federal court based on diversity of citizenship. The plaintiffs were California residents, while the defendant was incorporated in Rhode Island. The defendant then filed a motion to dismiss in federal court, arguing that the state law causes of action were preempted by the federal Food, Drug and Cosmetic Act, that primary jurisdiction applies because the FDA was preparing a guidance on homeopathic products, and that the plaintiffs could not enjoin the sale of products they hadn’t purchased. That last argument is premised at least in part on lack of standing. Remember that.
To our defense hack eyes, the defense arguments are persuasive. Judge DDL Blog would likely grant the defense motion to dismiss. But we won’t get the chance. And, sadly, neither will the federal court in Benton.
The plaintiff moved to remand to state court. The motion to remand was clever. The argument rested in part on lack of standing. The plaintiffs contended that there was no federal subject matter jurisdiction over their single claim for restitution and injunctive relief. First, borrowing from the defendants’ standing argument, the plaintiffs said that they lacked standing to pursue injunctive relief under Article III because they did not allege an intent to purchase homeopathic products in the future. Second, the plaintiffs argued that, without the injunctive relief, the amount in controversy to establish diversity jurisdiction ($75,000) could not be met.
The federal court in Benton had two different motions in front of it: the defendant’s motion to dismiss and the plaintiff’s motion to remand. You can be sure each side wanted their motion decided first. The Benton court held that the jurisdictional issue needed to be addressed first. Then the Benton federal court agreed with the plaintiffs that they had no standing to pursue injunctive relief. Without any stated intention of purchasing homeopathic products in the future, the plaintiffs lacked standing. The defense, understandably, argued that the plaintiffs’ disclaimer of purchase intent was a sham allegation designed to avoid federal jurisdiction. But the federal court concluded that it did not seem at all shambolic to stop purchasing something one now thinks is a fraud.
The restitution claim could not satisfy the amount in controversy requirement. Given the small number of products purchased by the plaintiffs, the dollars at issue were under $100. In their motion to remand, the plaintiffs stated that a restriction award “is likely in the tens of dollars.” Such modesty. The defendant pointed to a possible award of attorney’s fees as getting up to $75,000, but that award was out of bounds if premised on securing an injunction, since the court already ruled that these plaintiffs lacked standing for an injunction, and any other bases for attorney’s fees were unclear and speculative.
The federal court also disagreed with the defendant’s argument that the plaintiffs were engaged in pure (or impure) forum-shopping: “Although it appears that Plaintiffs have indeed crafted their complaint in that way, a set of California plaintiffs seeking to enforce California state law in California state court can hardly be described as in appropriate form shopping.” Really? We think that conclusion veered from the simple to the simplistic.
Because there was no standing, and there was no possibility of reaching the diversity jurisdictional amount, the action was remanded to state court – where the diverse defendant did not want to be. You might even call this result offal.