Ctr. for Inquiry Inc. v. Walmart, Inc.

• Decision Date: 29 September 2022
• Docket Number: s. 20-CV-392 & 20-CV-530
• Citation: 283 A.3d 109
• Parties: CENTER FOR INQUIRY INC., Appellant, v. WALMART, INC., Appellee. and Center for Inquiry Inc., Appellant, v. CVS Pharmacy, Inc., Appellee.
• Court: D.C. Court of Appeals

283 A.3d 109

CENTER FOR INQUIRY INC., Appellant,

v.WALMART, INC., Appellee.andCenter for Inquiry Inc., Appellant,

v.CVS Pharmacy, Inc., Appellee.

Nos. 20-CV-392 & 20-CV-530

District of Columbia Court of Appeals.

Argued January 13, 2022

Decided September 29, 2022

Nicholas J. Little for appellants.

Christina G. Sarchio, Washington, with whom Matthew H. Kirtland, Washington, Jeffrey B. Margulies, and Katherine G. Connolly, were on the brief, for appellee Walmart, Inc.

Jeanne M. Gills, with whom Lauren A. Champaign, Washington, was on the brief, for appellee CVS Pharmacy, Inc.

Before Beckwith, and Easterly, Associate Judges, and Thompson,^* Senior Judge.

Thompson, Senior Judge:

In these consolidated appeals, plaintiff/appellant Center for Inquiry, Inc. ("CFI") seeks review of orders of the Superior Court dismissing its complaints against Walmart, Inc. ("Walmart") (appeal no. 20-CV-0392) and CVS Pharmacy, Inc. ("CVS") (appeal no. 20-CV-0530), alleging violations of the District of Columbia Consumer Protection Procedures Act (the "CPPA" or the "Act"). See D.C. Code §§ 28-3901 to 28-3913. Each complaint alleged that the defendant retailer's in-store and online product placement, along with aisle signage (e.g., "Cold, Cough

& Flu Relief"), falsely present homeopathic products as equivalent alternatives to "science-based" medicines and falsely represent that homeopathic products are effective in treating or relieving specific diseases and symptoms. Each of the complaints was dismissed upon a finding that CFI lacked standing to bring suit and failed to state a claim upon which relief could be granted. For the following reasons, we reverse and remand.

I. Background

The complaints state that plaintiff/appellant CFI is a non-profit organization whose "mission is to foster a secular society based upon science, reason, freedom of inquiry, and humanist values." According to the complaints, CFI envisions a "world where people value evidence and critical thinking, where superstition and prejudice subside, and where science and compassion guide public policy." The complaints allege that homeopathy

is a pseudoscience and that the concepts on which it is based "contradict the most fundamental understanding of science[.]"

On July 17, 2018, CFI filed its First Amended Complaint against CVS, seeking declaratory, injunctive, and monetary relief based on its allegations that the retailer violated the CPPA by falsely presenting homeopathic products as equivalent alternatives to "science-based" medicines through its manner of marketing, labeling, and placing the products in its physical stores and online. On August 5, 2020, the Superior Court (the Honorable Fern Flanagan Saddler) granted CVS's motion to dismiss the complaint, reasoning that CFI lacked standing because it failed to show that it is a "nonprofit organization" or "public interest organization" within the meaning of the CPPA, specifically, D.C. Code § 28-3905(k)(1)(C)-(D). Regarding whether CFI is a non-profit organization, Judge Saddler found that CFI did not "sufficiently allege[ ] that its members or organizational activities have been harmed" by CVS's allegedly unlawful trade practices. Regarding whether CFI is a public interest organization, Judge Saddler found that CFI's mission and organizational purpose did not demonstrate that it was organized and operating for the purpose of promoting interests or rights of consumers and further that CFI, which alleged that its suit was on behalf of the general public rather than on behalf of a class of consumers, did not allege a sufficient nexus to consumers. Judge Saddler also concluded that the complaint failed to state a claim, reasoning that she did not find CVS's marketing and product placement regarding homeopathic products "to be an actionable representation, or to have the tendency to mislead under the CPPA." She faulted CFI for "fail[ing] to cite to any pertinent scientific studies or legal authority ... that placing homeopathic products next to ‘science-based’ medicines ... is misleading to a reasonable consumer." Judge Saddler noted, with respect to the homeopathic products pictured in CFI's complaint, that "homeopathic" appears on the front of the boxes, which also had labels indicating their "Uses" and included federally mandated statements that the products had not been evaluated by the FDA. Upon that "unambiguous" labeling, Judge Saddler could not "find that a jury would find that a reasonable consumer would be mislead [sic] by [CVS's] marketing and product placement[.]"

On May 20, 2019, CFI filed a complaint against Walmart that is almost identical to its (first amended) complaint against CVS. Walmart moved to dismiss on the grounds of lack of standing, failure to state a claim, and the primary jurisdiction doctrine. In May 2020, the Superior Court (the Honorable Florence Y. Pan) granted Walmart's motion. Like Judge Saddler, Judge Pan reasoned that CFI does not qualify as a public interest organization because it is not "organized and operating ... for the purpose of promoting interests or rights of consumers." Judge Pan also found that CFI failed to allege that it was suing on behalf of a consumer or class of consumers and thus did not allege a sufficient nexus to consumers. Also like Judge Saddler, Judge Pan further found that CFI lacked non-profit organization standing because it did not allege that its organizational activities had been harmed by Walmart's product-placement practices with respect to homeopathic items or that any of CFI's members had been harmed by Walmart's product placement.¹ In addition, Judge Pan found that the complaint failed to state a claim, rejecting CFI's theory that through its product placement, Walmart makes a "representation" about the efficacy of the homeopathic drugs or implies that "homeopathic drugs are as effective as the science-based drugs that are shelved nearby."²

CFI timely appealed from both judgments of dismissal, and we granted a motion to consolidate the appeals. This court reviews de novo the dismissal of a complaint for lack of standing. Equal Rts. Ctr. v. Properties Int'l , 110 A.3d 599, 603 (D.C. 2015). We also review de novo a dismissal for failure to state a claim. Grayson v. AT&T Corp. , 15 A.3d 219, 229 (D.C. 2011) (en banc).

II. Applicable Law

The CPPA provides that "[i]t shall be a violation of this chapter for any person to engage in an unfair or deceptive trade practice, whether or not any consumer is in fact misled, deceived, or damaged thereby, including [as pertinent here] to "(a) represent that goods or services have a source, sponsorship, approval, certification, accessories, characteristics, ingredients, uses, benefits, or quantities that they do not have;" "(d) represent that goods or services are of particular standard, quality, grade, style, or model, if in fact they are of another;" "(e) misrepresent as to a material fact which has a tendency to mislead;" "(f) fail to state a material fact if such failure tends to mislead;" and "(f-1) use innuendo or ambiguity as to a material fact, which has a tendency to mislead[.]" D.C. Code § 28-3904(a), (d), (e), (f), (f-1).³

D.C. Code § 28-3905(i)(3)(B) provides that a complainant may sue in the Superior Court when any violation of the CPPA has occurred. In 2012, the Council of the District of Columbia (the "Council") amended the CPPA, enacting two new subsections governing who may sue under the Act, including § 28-3905(k)(1)(D). Subsection (k)(1)(D) authorizes CPPA suits by "public interest organization[s]," defined as "nonprofit organization[s] ... organized and operating, in whole or in part, for the purpose of promoting interests or rights of consumers." D.C. Code § 28-3901(a)(15). In pertinent part, subsection (k)(1)(D) provides that:

(i) [A] public interest organization may, on behalf of the interests of a consumer or a class of consumers, bring an action seeking relief from the use by any person of a trade practice in violation of a law of the District if the consumer or class could bring an action ... for relief from such use by such person of such trade practice.

(ii) An action brought under sub-subparagraph (i) of this subparagraph shall be dismissed if the court determines that the public interest organization does not have sufficient nexus to the interests involved of the consumer or class to adequately represent those interests.

D.C. Code § 28-3905(k)(1)(D)(i)-(ii).

III. Analysis

A. Standing

Our review of the Superior Court's lack-of-standing analysis is informed by our recent opinion in Animal Legal Defense Fund v. Hormel , 258 A.3d 174 (D.C. 2021) (" ALDF "). In ALDF , the plaintiff organization had as its "core mission" "protect[ion of] the lives and advance[ment of] the interest of animals" rather than the interest of consumers. Id. at 179. Its CPPA suit alleged that defendant Hormel's "Natural Choice" advertising campaign "misleads consumers into believing that the animals slaughtered to make Natural Choice deli meats were treated humanely, even though they were not." Id. at 180. In concluding that ALDF had standing to bring suit under the CPPA as a public interest organization, we rejected the narrow approach toward standing that Walmart and CVS suggest is required. We explained that in the 2012 amendments to the CPPA, the Council intended to confer maximum standing for public interest organizations, "beyond what would be afforded in a federal case under a narrow reading of prior federal court decisions on federal standing." Id. at 184 (quoting Consumer Protection Act of 2012, Report on Bill 19-0581 ("Committee Report"), at 6 (Nov. 28, 2012)). We added that "the Council intended public interest organizations bringing suit under (k)(1)(D) to be free from any requirement to demonstrate their own Article III standing." Id. at 184.

We recognized in ALDF that to have standing under § 28-3905(k)(1)(D), ALDF had "to check three boxes: (1) it must be a public interest organization [under the definition quoted...