Consumers for Auto Reliability and Safety v. Federal Trade Commission

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
CONSUMERS FOR AUTO )
RELIABILITY AND SAFETY, et al., )
)
Plaintiffs, )
)
v. ) No. 17-cv-0540 (KBJ)
)
FEDERAL TRADE COMMISSION, )
)
Defendant. )
)
MEMORANDUM OPINION
In 2016, the Federal Trade Commission (“FTC”) pursued enforcement actions
against six large car manufacturers/dealerships related to certain marketing practices
that those dealers employed with respect to “Certified Pre-Owned” vehicles that are
subject to outstanding National Highway Traffic Safety Administration (“NHTSA”)
safety recalls. The FTC and the dealers settled the claims by entering into six separate
consent orders, each of which prohibited the subject dealer from “[r]epresent[ing] that
used motor vehicles . . . are safe, have been repaired for safety issues, or have been
subject to a rigorous inspection” if said motor vehicle is “subject to any open recalls
relating to safety,” unless the subject dealer “discloses, clearly and conspicuously, and
in close proximity to such representation, any qualifying information related to open
recalls” concerning the vehicle, and the advertisement is not otherwise misleading.
Gen. Motors LLC, Decision & Order, FTC Matter No. 152 3101 (Dec. 8, 2016) ¶ I.A
(“GM Consent Order”). 1 Plaintiffs Consumers for Auto Reliability and Safety
1
See also Lithia Motors, Inc., Decision & Order, FTC Matter No. 152 3102 (Dec. 8, 2016) ¶ I.A
(“Lithia Consent Order”); Jim Koons Mgmt. Co., Decision & Order, FTC Matter No. 152 3104 (Dec. 8,
(“CARS”), the Center for Auto Safety, and U.S. Public Interest Research Group (“U.S.
PIRG”) (collectively, “Plaintiffs”) are consumer advocacy organizations that believe
that cars that have outstanding recalls are not, in fact, safe, and that the FTC should not
have permitted dealers to advertise cars in the manner provided for in the Consent
Orders. Accordingly, Plaintiffs have filed a complaint that alleges that the Consent
Orders both violate the Administrative Procedure Act (“APA”), 5 U.S.C. § 551, et seq.,
and authorize advertisements that are impermissibly deceptive in violation of the
Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 45(a)(1), and FTC
regulations. (See Am. Compl., ECF. No 7, ¶¶ 65–67.)
Before this Court at present is the FTC’s motion to dismiss Plaintiffs’ pleading.
(See FTC’s Mot. to Dismiss (“FTC’s Mot.”), ECF No. 17.) As relevant here, the FTC
argues, first and foremost, that this Court lacks subject-matter jurisdiction over
Plaintiffs’ complaint both because Congress has vested the courts of appeal with
“exclusive jurisdiction over FTC adjudicatory orders[,]” and also because Plaintiffs
lack Article III standing to challenge the Consent Orders, given that the Consent Orders
do not injure Plaintiffs in any way and any relief that could result from this litigation is
entirely speculative. (See Mem. in Supp. of FTC’s Mot. (“FTC’s Mem.”), ECF No. 17-
1, at 9, 11–14.) 2 The FTC further asserts that the Consent Orders are exempt from APA
review. (See id. at 14–17.) Plaintiffs respond that there is no jurisdictional impediment
2016) ¶ I.A (“Jim Koons Consent Order”); Asbury Auto. Grp., Inc., Decision & Order, FTC Matter No.
152 3103 (Mar. 22, 2017) ¶ I.A (“Asbury Consent Order”); West-Herr Auto. Grp., Inc., Decision &
Order, FTC Matter No. 152 3105 (Mar. 22, 2017) ¶ I.A (“West-Herr Consent Order”); CarMax, Inc.,
Decision & Order, FTC Matter No. 142 3202 (Mar. 22, 2017) ¶ I.A (“CarMax Consent Order”)
(collectively, the “Consent Orders”).
2
Page number citations to the documents that the parties have filed refer to those that the Court’s
electronic case filing system automatically assigns.
2
to this Court’s review of their challenge to the Consent Orders—which is brought under
the APA and not under the FTC Act itself—and they steadfastly maintain that their
members have an injury in fact that is traceable to the FTC’s entry of these Consent
Orders and that can be redressed if the Court rules in their favor.
For the reasons explained below, this Court concludes that even if the Consent
Orders can give rise to a claim under the APA under the circumstances presented here,
these plaintiffs do not have Article III standing to pursue any such claim, the gravamen
of which relates to potential action (or inaction) of third parties that are not before this
Court. Consequently, the FTC’s motion to dismiss must be GRANTED, and the instant
complaint must be DISMISSED for lack of subject matter jurisdiction. A separate
Order consistent with this Memorandum Opinion will follow.
I. FACTUAL BACKGROUND
A. The FTC’s Enforcement Actions And The Six Consent Orders 3
1. The Car Dealers’ Practices
The six auto dealers who are the subject of the Consent Orders came to the
attention of the FTC sometime before 2016, as a result of the dealers’ practice of
touting in advertisements the rigorous inspections that they performed on used cars
offered for sale, while not disclosing the possible existence of unrepaired safety recalls
with respect to those same vehicles. 4 For example, General Motors LLC (“GM”)
3
The facts recited herein are not disputed, and are drawn from both the amended complaint and the
various documents that Plaintiffs’ pleading refers to or relies upon, including documents from the FTC
administrative docket and press releases that the FTC has issued.
4
See generally Gen. Motors LLC, FTC Matter No. 152 3101; Lithia Motors, Inc., FTC Matter No. 152
3102; Asbury Auto. Group, Inc., FTC Matter No. 152 3103; Jim Koons Mgmt. Co., FTC Matter No. 152
3104; West-Herr Auto. Group, Inc., FTC Matter No. 152 3105; CarMax, Inc., FTC Matter No. 142
3202.
3
advertised “Certified Pre-Owned Vehicles,” which it claimed were subjected to a
“detailed, 172-Point Vehicle Inspection and Reconditioning Process” during which
“technicians ensure that everything from the drivetrain to the windshield wipers is in
good working order, or they recondition it to our exacting standards[,]” Gen. Motors
LLC, Compl., FTC Matter No. 152 3101, at 2 (Jan. 28, 2016) (“GM Compl.”); however,
GM did not disclose in those advertisements that such a Certified Pre-Owned Vehicle
might also be subject to an unrepaired safety recall, see id. at 2–3. Similarly, Jim
Koons Management Co. (“Jim Koons”) advertised the “Koons Used Car Advantage,”
which purportedly involved “certified mechanics check[ing] all major mechanical and
electrical systems and every power accessory as part of our rigid quality controls.” Jim
Koons Mgmt. Co., Compl., FTC Matter No. 152 3104, at 2 (Jan. 28, 2016) (“Jim Koons
Compl.”). But Jim Koons’s used car advertisements did not contain any disclosures
regarding possible open safety recalls concerning the vehicles at issue. See id. at 2–3.
CarMax likewise offered “CarMax Quality Certified” used cars, and the company
claimed that “[e]xperienced technicians put every vehicle through a rigorous Certified
Quality Inspection—over 125 points must check out before it meets our high
standards.” CarMax, Inc., Compl., FTC Matter No. 142 3202, at 1 (Dec. 16, 2016)
(“CarMax Compl.”). And while CarMax did further disclose the possibility of its used
cars having open safety recalls in some instances, it did so in a manner that was not
prominent. See id. at 3 (noting that “[f]or only approximately three seconds of [a]
thirty second [television] commercial, in tiny, blurry white font at the bottom of the
screen, the commercial displays text stating that ‘Some CarMax vehicles are subject to
open safety recalls. See carmax.com for details.’”).
4
The FTC took the position that these car dealers, and three others, had violated
Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), by “represent[ing] directly or
indirectly, expressly or by implication, that used motor vehicles [they] advertise[] have
been subject to rigorous inspection, including for safety issues” without “disclos[ing],
or disclos[ing] adequately, that used vehicles [they] advertise[] are subject to open
recalls for safety issues[.]” E.g., GM Compl. at 9. 5 Accordingly, the Commission filed
administrative complaints against each of the six auto dealers, proceeding in two waves:
the first three complaints issued on January 28, 2016, see GM Compl.; Jim Koons
Compl.; Lithia Motors, Inc., Compl., FTC Matter No. 152 3102 (Jan. 28, 2016), and the
second set of complaints issued on December 16, 2016, see CarMax Compl; Asbury
Auto. Grp., Inc., Compl., FTC Matter No. 152 3103 (Dec. 16, 2016); West-Herr Auto.
Grp., Inc., Compl., FTC Matter No. 152 3105 (Dec. 16, 2016).
2. The Settlement Agreements
At the time that the FTC issued each set of complaints against these car dealers,
the agency also announced that it had reached proposed settlements with each dealer.
(See Compl. ¶ 37.) 6 The terms of the Settlement Agreements vary slightly from dealer
to dealer, as explained below. However, in each of them, the auto dealer at issue faced
restrictions with respect to making certain representations when advertising used cars.
5
Section 5(a) of the FTC Act outlaws “unfair or deceptive acts or practices in or affecting
commerce[.]” 15 U.S.C. § 45(a).
6
See also Fed. Trade Comm’n, GM, Jim Koons Management, and Lithia Motors Inc. Settle FTC
Actions Charging That Their Used Car Inspection Program Ads Failed to Adequately Disclose
Unrepaired Safety Recalls (Jan. 28, 2016); Fed. Trade Comm’n, CarMax and Two Other Dealers Settle
FTC Charges That They Touted Inspections While Failing to Disclose Some of the Cars Were Subject to
Unrepaired Safety Recalls (Dec. 16, 2016). On the date of the filing of the instant Opinion, these
settlement announcements were located at https://www.ftc.gov/news-events/press-releases/2016/01/gm-
jim-koons-management-lithia-motors-inc-settle-ftc-actions and https://www.ftc.gov/news-events/press-
releases/2016/12/carmax-two-other-dealers-settle-ftc-charges-they-touted.
5
For example, the agreement between GM and the FTC effectively prohibited GM
from
[r]epresent[ing] that used motor vehicles that Respondent
advertises are safe, have been repaired for safety issues, or
have been subject to a rigorous inspection, unless:
1. The used motor vehicles are not subject to any open
recalls relating to safety, and the representation is
otherwise not misleading, or
2. Respondent discloses, clearly and conspicuously, and
in close proximity to such representation, any qualifying
information related to open recalls, including but not
limited to:
i. the fact that used motor vehicles that it advertises
may be subject to recalls for safety issues that have
not been repaired, and
ii. how consumers can determine whether an
individual used motor vehicle has been subject to a
recall for safety issues that has not been repaired, and
the representation is otherwise not misleading.
GM Consent Order ¶ I.A (emphasis added). The agreement that the FTC reached with
GM was the least onerous from the standpoint of the company, insofar as GM merely
agreed that when it advertises used vehicles as safe, repaired for safety, or inspected for
safety, it will also provide conspicuous disclosures that advise that the advertised motor
vehicle may be subject to unrepaired safety recalls, encourage consumers to determine
if such is the case with respect to any individual vehicle, and refrain from making any
safety-related representations that are otherwise misleading. See id.; see also Fed.
Trade. Comm’n, Stmt. of the FTC Concerning Auto Recall Advertising Cases, at 2 n.4
(Dec. 15, 2016) (explaining that representations that include the required disclosures
could nonetheless be misleading, in violation of the Consent Orders, “if a dealer . . .
6
makes false oral statements to consumers that specific cars are free of recalls, or states
a car may be subject to a recall (or otherwise implies it does not know the recall status)
but in fact knows the car is actually subject to an open recall”).
The five other car dealers agreed to the same obligations as GM concerning their
representations about used vehicles that are subject to open safety recalls, but each also
“further” agreed to various duties in the event that the dealer had received a written
notification from a manufacturer that one of its unsold used motor vehicles is, in fact,
subject to an open recall for a safety issue. In that circumstance, the five other dealers
agreed to provide that written notice (or a similar notification) “clearly and
conspicuously” to the consumer, “prior to the consummation of the sale of that used
motor vehicle[.]” Asbury Consent Order ¶ I.A; see also CarMax Consent Order ¶ I.A;
Jim Koons Consent Order ¶ I.A; West-Herr Consent Order ¶ I.A; Lithia Consent Order
¶ I.A.
In sum, and viewed collectively, the terms of the proposed settlements permitted
the dealers to continue advertising vehicles that are subject to pending safety recalls as
“safe,” “repaired for safety issues,” or “subject to a an inspection”—without repairing
the defects at issue in the recall—so as long as the dealers (1) made certain disclosures
to consumers about the possibility (or fact) of an outstanding safety recall, and, if
necessary, the manner in which the consumer could undertake to determine the status of
the vehicle at issue, and (2) refrained from otherwise making misleading representations
about the vehicle’s safety.
Administrative approval of these settlement agreements proceeded through the
normal course, with the FTC publishing notices of the proposed settlements in the
7
Federal Register and affording interested parties 30 days to submit comments. See Jim
Koons Management Company; Analysis of Proposed Consent Order to Aid Public
Comment, 81 Fed. Reg. 5751–56 (Feb. 3, 2016); West-Herr Automotive Group, Inc.;
Analysis of Proposed Consent Order to Aid Public Comment, 81 Fed. Reg. 93,926–33
(Dec. 22, 2016). Plaintiffs submitted comments objecting to the terms of the
settlements; the record demonstrates that Plaintiffs primarily asserted that the
agreements would put consumers and the public at risk, because more vehicles with
unrepaired safety defects would be placed on the road (see Letter from CARS, et al. to
Fed. Trade Comm’n (Feb. 29, 2016), ECF No. 18-8, at 4–5), and because consumers
would be lulled into thinking cars they purchased were safe, when in fact the cars were
defective (see id. at 7–8, 11–13). Plaintiffs also objected to the efficacy of the “may be
subject to recalls” disclaimer, arguing that it was “virtually meaningless.” (Id. at 3.)
Despite the objections that the FTC received from Plaintiffs and others, the
agency adopted the terms of the first three proposed agreements on December 8, 2016;
it adopted the terms of the second three agreements on March 22, 2017. (See GM
Consent Order; Asbury Consent Order; CarMax Consent Order; Jim Koons Consent
Order; West-Herr Consent Order; Lithia Consent Order.) These approvals took the
form of “Consent Orders” that the FTC issued on the aforementioned dates, each of
which incorporated the terms of the approved settlement agreement.
B. Procedural History
1. Plaintiffs’ Legal Claims
Plaintiffs filed their initial complaint in this Court challenging the FTC’s
Consent Orders on March 24, 2017 (see generally Compl.); they filed the governing
amended complaint on May 2, 2017 (see generally Am. Compl.). The operative
8
pleading asserts claims under the APA, but does not break down Plaintiffs’ theories of
liability into separate, specific counts.
Notably, with respect to the contention that Plaintiffs have a cause of action to
challenge the agency’s decision to enter into the settlement agreements with the auto
dealers, the complaint maintains that the Consent Orders “embody the agency’s
interpretation of what is a ‘deceptive act or practice’ within the meaning of Section 5 of
the FTC Act with regard to dealers who advertise and market ‘Certified Pre-Owned’
vehicles” and, therefore, the Orders qualify as “interpretative rules and general
statements of policy within the meaning of the FTC Act, 15 U.S.C. § 57a(a)(1)(A), and
the Administrative Procedure Act, 5 U.S.C. § 551(4).” (Am. Compl. ¶ 65.) As such,
according to Plaintiffs, the Consent Orders are subject to judicial review under section
706(2) of the APA. (Id.) In the alternative, Plaintiffs assert that the Consent Orders
“are ‘orders’ within the meaning of the APA, 5 U.S.C. § 551(5),” and are thus subject
to review on that basis. (Id.)
Regardless of how the Consent Orders are construed, Plaintiffs maintain that
they are “not in accordance with the law[,]” and therefore violate the APA, because
vehicles that are subject to outstanding safety recalls are not in fact safe, and allowing
dealers to advertise them as such is “inconsistent with the agency’s Used Car Trade
Regulation Rule, which provides that it is ‘a deceptive act or practice for any used
vehicle dealer. . . [t]o misrepresent the mechanical condition of a used vehicle.’” (Id.
¶ 66 (quoting 16 C.F.R. § 455.1(a)(1)).) Plaintiffs further insist that authorizing dealers
to advertise unsafe cars with the mere caveat that the vehicle “may” be subject to a
safety recall constitutes arbitrary and capricious agency action in light of the FTC’s
9
own observation in the initial administrative complaints that “it was a deceptive
practice under Section 5 of the FTC Act for used car dealers to fail to disclose that
vehicles subject to recall ‘are’ subject to such recalls.” (Id. ¶ 67.) Finally, Plaintiffs
claim that the Consent Orders contravene the requirement contained in Section 5 of the
FTC Act that “‘directs’ the agency ‘to prevent’ unfair and deceptive practices” and are
therefore not in accordance with the law, are arbitrary and capricious, and amount to an
abuse of discretion. (Id. ¶ 68 (citing 15 U.S.C. § 45(a)(2)).)
Ultimately, Plaintiffs ask this Court to declare that the Consent Orders violate
the FTC’s Used Car Trade Regulation Rule, 16 C.F.R. § 455.1(a)(1); Section 5 of the
FTC Act, 16 U.S.C. § 45(a); and the APA, such that the FTC’s Decisions and Orders
must be set aside. (See id. at 26.)
2. Alleged Injuries To Plaintiffs’ Members
It is important for present purposes to note that Plaintiffs have brought this legal
action on behalf of their individual members, who will allegedly suffer two types of
injuries as a result of the FTC’s Consent Orders. First, Plaintiffs allege that the
Consent Orders have exposed their members to an increased risk of physical injury,
death, property damage, and financial loss from accidents caused by unrepaired used
cars that are subject to pending safety recalls. (See Am. Compl. ¶¶ 5, 8–9, 12–13.)
Specifically, Plaintiffs assert that, because the FTC has now permitted car dealers to
“advertise and sell ‘certified’ used cars [that are subject to pending safety recalls] as
‘safe, ‘repaired for safety,’ and ‘subject to rigorous inspection’” (id. ¶ 5), “used car
dealers who previously would not sell [used vehicles subject to pending safety recalls]
without repairing them prior to sale are now choosing instead to conform their
marketing and sales practices to those sanctioned by the FTC” (id.). As a consequence,
10
Plaintiffs allege, “more unsafe used vehicles with unrepaired safety defects” are being
sold and used “on the nation’s roads and highways each day” (id.), meaning that
Plaintiffs’ members now face a heightened risk of driving, riding as a passenger in, or
sharing the road with an unrepaired used car that causes an accident (id.; see also id.
¶ 8).
Second, Plaintiffs assert that their members will also suffer “economic and other
injuries” from the FTC’s Consent Orders, because their members may be tricked into
buying a “certified” used car believing it is safe, only to have to incur costs later on to
address the outstanding recall. (Id. ¶ 8.) To that end, Plaintiffs allege that their
members may have to “take time off from work” to get the defects fixed, deal with a
“loss of transportation for work and personal use” while their cars are being repaired,
and “pay for alternative means of transportation” until the repairs have been completed.
(Id.)
In Plaintiffs’ view, both of the asserted injuries they have identified—the
increased risk of harm from future accidents and the economic loss associated with
future repairs—are directly traceable to the Consent Orders, insofar as those orders
“instruct the entire used car dealer industry that the FTC does not consider it a
‘deceptive or unfair act or practice’ for dealers to advertise and sell ‘certified’ used cars
subject to safety recalls as ‘certified,’ ‘safe,’ ‘repaired for safety,’ and ‘subject to
rigorous inspection,’ as long as the dealers disclose to consumers that such vehicles
‘may’ be subject to a safety recall.” (Id. ¶ 6.) Indeed, according to Plaintiffs,
AutoNation Inc., a car dealer that is not constrained by a Consent Order, has already
abandoned its prior policy of not selling any used vehicle that is subject to an
11
unrepaired recall in light of the Consent Orders. (See id. ¶ 54.) Plaintiffs also point to
the alleged fact that the National Automobile Dealers Association has begun to
publicize and promote the FTC’s new position concerning used-car advertisements, by
stating that the organization “will disseminate compliance guidance to its members
concerning the[] requirements [of the Consent Orders] and encourage their adoption.”
(Id. ¶ 52 (emphasis, quotation marks, and citation omitted).) Plaintiffs insist that a
favorable court decision would provide sufficient redress for their alleged injuries,
however, because if the FTC’s Consent Orders are set aside, “fewer used car dealers
will continue to sell unsafe vehicles.” (Id. ¶ 6.)
3. Proceedings In The D.C. Circuit
On February 6, 2017, following the FTC’s issuance of the first set of consent
orders, Plaintiffs filed a petition for review in the D.C. Circuit arguing—as they do
here—that the Consent Orders violate sections 5(a) and 18 of the FTC Act, the FTC’s
regulations, and the APA. (See FTC’s Mem. in Supp. of Mot. to Hold Case in
Abeyance, or in the Alternative, for an Extension of Time, ECF No. 9-1, at 3–4.) See
also Petition for Review, Consumers for Auto Reliability & Safety v. FTC, No. 17-1038
(D.C. Cir. Feb. 6, 2017). 7 Plaintiffs maintain that they initiated the D.C. Circuit action
“out of an abundance of caution[,]” because of the 60-day statute of limitations for
filing actions challenging adjudicatory consent orders in the courts of appeals, and that
they have always believed that the district court is the proper forum for litigating their
challenges to the Consent Orders. (Pls.’ Opp’n to Def.’s Mot. To Hold this Case in
7
Following the issuance of the second set of Consent Orders, Plaintiffs filed an additional petition in
the Circuit that challenges those as well. See Petition for Review, Consumers for Auto Reliability &
Safety v. FTC, No. 17-1125 (D.C. Cir. May 2, 2017).
12
Abeyance, ECF No. 11, at 1–2, 5.) Accordingly, Plaintiffs filed a motion in the D.C.
Circuit to hold that case in abeyance pending resolution of this one (see id. at 2), and
the FTC responded by filing a cross-motion to dismiss that legal action on standing and
justiciability grounds (see id. at 4). The FTC also filed a motion in this Court to stay
the instant matter pending the D.C. Circuit’s resolution of Plaintiffs’ motion to stay
proceedings in that court. (See FTC’s Mot. to Hold Case in Abeyance, ECF No. 9, at
1.) On June 13, 2017, this Court granted the FTC’s stay motion and stayed the instant
case pending resolution of the D.C. Circuit matter. (See Order Staying Case, ECF No.
12.)
On July 14, 2017, in a one-page per curium order, the D.C. Circuit dismissed
Case 17-1038 for lack of jurisdiction. (See Not. of Filing Attachments to Joint Status
Report (“CARS I”), ECF No. 16-1, at 1.) The Circuit also subsequently dismissed the
second action with prejudice, at Plaintiffs’ request, based on the decision in the first
action. (See Joint Status Report, ECF No. 15, at 1.) In the two sentences of its order
that resolved the substance of the petitions, the D.C. Circuit found that Plaintiffs “are
not subject to the requirements of the consent orders at issue and therefore may not
challenge those orders in this court under 15 U.S.C. § 45(c) (CARS I at 1 (citation
omitted)), nor had Plaintiffs “shown that the consent orders should be treated as a rule
or substantive amendment to a rule promulgated under 15 U.S.C. § 57a(a)(1)(B)” (id.
(citation omitted)). Given the D.C. Circuit’s ruling, this Court lifted the stay it had
issued with respect to the district court litigation. (See Min. Order of Aug. 8, 2017.)
4. The FTC’s Motion to Dismiss
On September 8, 2017, the FTC filed the motion to dismiss Plaintiffs’ amended
complaint for lack of subject matter jurisdiction under Rule 12(b)(1) of the Federal
13
Rules of Civil Procedure, and for failure to state a claim under Rule 12(b)(6), that is
before the Court at present. (See FTC’s Mot. at 1.) The FTC’s motion makes four
arguments in this regard: (1) that Congress has vested the courts of appeal with
exclusive authority to review FTC consent orders, and that only parties bound by such
consent orders can seek such review; (2) that Plaintiffs lack Article III standing because
their claims arise from the FTC’s orders with respect to certain used-car dealers and the
resulting behavior of certain other used-car dealers in response to those orders; (3) that
the Consent Orders are the product of the FTC’s exercise of prosecutorial discretion and
thus are exempt from judicial review under the APA; and (4) that Plaintiffs are
incorrect when they assert that the Consent Orders are “rules” for purposes of the APA;
instead, these agency actions are nothing more than adjudicatory judgments that do not
reflect binding FTC policy. (See FTC’s Mem. at 5.) This Court held a hearing on the
motion on September 18, 2017, following the submission of Plaintiffs’ opposition (see
Mem. in Opp’n to Mot. to Dismiss (“Pls.’ Opp’n”), ECF No. 18) and the FTC’s reply
(see Reply to Opp’n to Mot. to Dismiss (“FTC’s Reply”), ECF No. 20).
After the Court held its hearing, Plaintiffs filed two additional documents to
support their claim that they have Article III standing: (1) an October 2019 report
written by the Frontier Group, U.S. PIRG’s Education Fund, and CARS entitled, Unsafe
Used Cars for Sale: Unrepaired Recalled Vehicles at AutoNation Dealerships (ECF No.
26-1) (“Frontier Group Report”), and (2) a Consumer Reports article from April of 2019
entitled, The Hidden Risks of Used Cars (ECF No. 26-2) (“Consumer Reports Article”).
14
II. LEGAL STANDARDS
A. Motions To Dismiss Under Federal Rule Of Civil Procedure 12(b)(1)
Federal courts are courts of limited jurisdiction, see Gen. Motors Corp. v. EPA,
363 F.3d 442, 448 (D.C. Cir. 2004), and the law presumes that “a cause lies outside [the
Court’s] limited jurisdiction” unless the plaintiff establishes otherwise, Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). When a defendant moves to
dismiss a complaint for lack of subject matter jurisdiction, the plaintiff bears the burden
of establishing jurisdiction. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992).
In evaluating a motion to dismiss under Rule 12(b)(1), the Court must “assume
the truth of all material factual allegations in the complaint and ‘construe the complaint
liberally, granting plaintiff the benefit of all inferences that can be derived from the
facts alleged[.]’” Am. Nat’l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011)
(quoting Thomas v. Principi, 394 F.3d 970, 972 (D.C. Cir. 2005)). “Nevertheless, ‘the
court need not accept factual inferences drawn by plaintiffs if those inferences are not
supported by facts alleged in the complaint, nor must the Court accept plaintiff[s’] legal
conclusions.’” Disner v. United States, 888 F. Supp. 2d 83, 87 (D.D.C. 2012) (quoting
Speelman v. United States, 461 F. Supp. 2d 71, 73 (D.D.C. 2006)). In addition, the
court need not “accept as true the complaint’s factual allegations insofar as they
contradict exhibits to the complaint or matters subject to judicial notice.” Kaempe v.
Myers, 367 F.3d 958, 963 (D.C. Cir. 2004).
Finally, when the court considers a motion to dismiss for lack of subject-matter
jurisdiction under Rule 12(b)(1), the court “is not limited to the allegations of the
complaint.” Hohri v. United States, 782 F.2d 227, 241 (D.C. Cir. 1986), vacated on
other grounds, 482 U.S. 64 (1987). Rather, “a court may consider such materials
15
outside the pleadings as it deems appropriate to resolve the question [of] whether it has
jurisdiction to hear the case.” Scolaro v. D.C. Bd. of Elections & Ethics, 104 F. Supp.
2d 18, 22 (D.D.C. 2000) (citing Herbert v. Nat’l Acad. of Sci., 974 F.2d 192, 197 (D.C.
Cir. 1992)).
B. Associational Standing
Plaintiffs here have brought the claims on behalf of their members, and are thus
proceeding under an “associational” theory of Article III standing. See Elec. Priv. Info.
Ctr. v. U.S. Dep’t of Com., 928 F.3d 95, 100–01 (D.C. Cir. 2019). To demonstrate
associational standing at the pleading stage, an organization must plausibly allege that:
“(1) at least one of [its] members has standing, (2) the interests the association seeks to
protect are germane to its purpose, and (3) neither the claim asserted nor the relief
requested requires the participation of an individual member in the lawsuit.” Am. Libr.
Ass’n v. FCC, 406 F.3d 689, 696 (D.C. Cir. 2005); see also Hunt v. Wash. State Apple
Advert. Com’n, 432 U.S. 333, 343 (1977).
With respect to the contention that an individual member has standing, Plaintiffs
must plausibly allege facts that satisfy each of the three traditional elements of
standing. See Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (citing Lujan v.
Defs. of Wildlife, 504 U.S. 555, 560 (1992)). First, the member must have suffered an
injury in fact that is both “concrete and particularized” and “actual or imminent, not
conjectural or hypothetical[.]” Lujan, 504 U.S. at 560 (internal quotation marks and
citations omitted). Second, there must be a “causal connection” such that the member’s
injury is fairly traceable to the defendant’s challenged conduct. Id. (citation omitted).
And, third, it must be likely that the member’s “injury will be redressed by a favorable
[judicial] decision.” Id. at 561 (internal quotation marks and citation omitted); see also
16
Nat’l Wrestling Coaches Ass’n v. Dep’t of Educ., 366 F.3d 930, 937 (D.C. Cir. 2004)
(explaining the plaintiff must show that it is “likely, as opposed to merely speculative,
that the injury will be redressed by a favorable decision” (internal quotation marks and
citation omitted)), abrogation on other grounds recognized in Perry Capital LLC v.
Mnuchin, 864 F.3d 591, 620–21 (D.C. Cir. 2017).
Notably, and as relevant here, when “a plaintiff’s asserted injury arises from the
government’s allegedly unlawful regulation (or lack of regulation) of someone else,
much more is needed” to make a plausible allegation of standing to sue. Am. Fed’n of
Gov’t Emps., AFL-CIO v. Vilsack (“Vilsack”), 118 F. Supp. 3d 292, 299 (D.D.C. 2015)
(quotation marks and citation omitted), aff’d, 672 F. App’x 36 (D.C. Cir. 2016); see
also Renal Physicians Ass’n v. U.S. Dep’t of Health & Hum. Servs., 489 F.3d 1267,
1273 (D.C. Cir. 2007) (explaining that when a plaintiff’s claim is based on the
government’s regulation of a third party, a “heightened showing” is required to
establish standing). Specifically, “it becomes the burden of the plaintiff to adduce facts
showing that choices of the independent actors have been or will be made in such
manner as to produce causation and permit redressability of injury.” Lujan, 504 U.S. at
562 (internal alteration and brackets omitted). In other words, when “[t]he existence of
one or more of the essential elements of standing ‘depends on the unfettered choices
made by independent actors not before the courts and whose exercise of broad and
legitimate discretion the courts cannot presume either to control or to predict,’” the
plaintiff is subject to a higher burden in establishing standing. Food & Water Watch,
Inc. v. Vilsack, 79 F. Supp. 3d 174, 178–79 (D.D.C. 2015) (quoting Lujan, 504 U.S. at
562), aff’d 808 F.3d 905 (D.C. Cir. 2015). And, in a similar vein, when a plaintiff’s
17
arguments in support of Article III standing rely on a chain of allegations, a court “may
reject as overly speculative those links which are predictions of future events
(especially future actions to be taken by third parties) and those which predict a future
injury that will result from present or ongoing actions[.]” United Transp. v. ICC, 891
F.2d 908 (D.C. Cir. 1989).
III. ANALYSIS
Under our constitutional system, the role of the federal courts “is to redress or
prevent actual or imminently threatened injury to persons caused by private or official
violation of law[,]” and “[e]xcept when necessary in the execution of that function,
courts have no charter to review and revise legislative and executive action.” Summers
v. Earth Island Inst., 555 U.S. 488, 492 (2009) (citation omitted); see also Clapper v.
Amnesty Int’l USA, 568 U.S. 398, 408 (2013) (explaining that Article III of the
Constitution limits “federal-court jurisdiction to actual cases or controversies”
(quotation marks and citation omitted)). Standing doctrine “helps preserve the
Constitution’s separation of powers and demarcates ‘the proper—and properly
limited—role of the courts in a democratic society[.]”’ Coal. for Mercury-Free Drugs
v. Sebelius, 671 F.3d 1275, 1279 (D.C. Cir. 2012) (quoting Warth v. Seldin, 422 U.S.
490, 498 (1975)). As such, this Court must consider as a threshold matter whether the
organizational plaintiffs in the instant case have alleged facts that plausibly establish
that their members have “such a personal stake in the outcome of the controversy as to
warrant the invocation of federal-court jurisdiction.” New Eng. Anti-Vivisection Soc’y
v. U.S. Fish & Wildlife Serv., 208 F. Supp. 3d 142, 155 (D.D.C. 2016) (emphasis and
brackets omitted) (quoting Summers, 555 U.S. at 493); see also Fed. Forest Res. Coal.
18
v. Vilsack, 100 F. Supp. 3d 21, 34 (D.D.C. 2015) (noting that the plaintiff bears the
burden of establishing standing).
For the reasons explained below, the Court finds that Plaintiffs have not pled
facts that, if true, would plausibly establish that their members have standing to
challenge the Consent Orders under either of their asserted theories of injury, even if
one were to assume that there is a viable cause of action under the APA under these
circumstances. 8
A. Plaintiffs Have Not Plausibly Alleged An Injury In Fact Based On
Their Asserted Increased Risk Of Harm From Future Accidents
Starting with Plaintiffs’ first theory of injury—namely, that the FTC’s Consent
Orders have increased their members’ risk of physical injury, death, property damage,
and financial loss from accidents caused by unrepaired used vehicles—the Court notes,
first of all, that when a plaintiff claims that an agency action has increased the risk of
injury from a particular event, “the proper way to analyze [the] claim is to consider the
ultimate alleged harm—such as death . . . or property damage—as the concrete and
particularized injury[,] and then to determine whether the increased risk of such harm
makes injury to an individual citizen sufficiently ‘imminent’ for standing purposes.”
Pub. Citizen, Inc. v. Nat’l Highway Traffic Safety Admin., 489 F.3d 1279, 1298 (D.C.
Cir. 2007). To qualify as concrete and particularized, the asserted harm must be
“direct, real, and palpable—not abstract[,]” and it must also “affect the plaintiff in a
8
On the cause-of-action front, the Court notes that Plaintiffs fail to cite a single case in which a court
has authorized a plaintiff to bring an APA claim to challenge an adjudicatory order such as the ones at
issue here, and the FTC Act itself has a clear and specific set of instructions regarding how such orders
are to be challenged. See, e.g., 15 U.S.C. § 45(c-d). But because Article III standing is a jurisdictional
question that must be addressed prior to any merits-related concern (such as whether the plaintiff has a
cause of action), the Court must begin with standing; moreover, in this case, it ultimately need not
proceed to address any potential cause-of-action defect.
19
personal and individual way.” Id. at 1292 (internal quotation marks and citations
omitted). And for an injury to be imminent, there must be a “substantial risk that the
harm will occur,” as opposed to a “remote, speculative, conjectural, or hypothetical”
possibility. Food & Water Watch, 808 F.3d at 914 (emphasis added) (internal quotation
marks and citations omitted).
In the context of increased-risk-of-harm injuries, courts in this jurisdiction assess
the imminence requirement by asking two questions: first, whether the agency’s action
substantially increases the risk of harm (over and above the level of risk that would
have existed had the agency taken the plaintiffs’ preferred course of action), and,
second, whether the “[overall] risk of harm to which [the plaintiffs’] members are
exposed, including the increase allegedly due to [the agency’s] action, is substantial and
sufficient to take a suit out of the category of the hypothetical.” Pub. Citizen, 489 F.3d
at 1297 (internal quotation marks and citation omitted). In other words, the plaintiff
must plausibly allege that the agency’s action has substantially increased the risk of the
ultimate harm asserted (e.g., the risk of death or property damage), and that there is a
substantial likelihood—given that heightened risk—that the plaintiffs’ members will
actually suffer the alleged injury. See Food & Water Watch, 808 F.3d at 915. And the
plaintiff’s “failure to satisfy either of these prongs . . . deprive[s]” the court “of
jurisdiction to hear [the] case.” Id.
To offer a simple example of how this test operates in practice, imagine that the
Consumer Product Safety Commission (“CPSC”) promulgated a regulation that required
manufacturers of curling irons to warn users of the risk that the iron could burn a
person’s scalp and cause damage to surfaces, by placing a bright red label on the back
20
of the product’s packaging. Imagine further that a consumer advocacy organization
challenged this regulation, arguing that the regulation failed to ensure adequate
disclosure of these risks; that the CPSC should have required manufacturers to place
such labels on the curling iron itself; and that, by promulgating the regulation, the
CPSC had exposed the organizations’ members to an increased risk of bodily injury or
property damage that would result from misusing such curling irons.
To satisfy the first prong of the imminence test, the organization would need to
allege facts that, if true, would plausibly demonstrate that placing a warning label on
the back of a package leads to a substantially higher risk of injury or property damage
than placing the warning label on the irons themselves (i.e., the plaintiff’s preferred
outcome). See Pub. Citizen, 513 F.3d at 238–41 (finding that the plaintiff organization
lacked standing where it had not shown that its members were at an increased
incremental risk as a result of a NHTSA rule, compared to the alternative rule that the
organization desired); see also Food & Water Watch, 808 F.3d at 915 (finding that an
organization lacked standing to challenge a revised poultry inspection regulation where
the organization failed to make a plausible allegation that the regulation substantially
increased the risk of foodborne illness when compared to the requirements of existing
regulations). For instance, the organization might point to statistics (or other alleged
facts) indicating that consumers face a 20% risk of burns or property damage when the
label is placed on the back of a package, whereas they face only a 15% risk of doing so
when the warning is placed on the iron itself. See Pub. Citizen, 513 F.3d at 239–40
(evaluating whether the plaintiffs’ proffered statistics demonstrated a substantially
increased risk of harm); see also Food & Water Watch, 808 F.3d at 915–17 (same).
21
And if the facts alleged plausibly indicate that there has been a substantial increase in
the risk of harm, the analysis would then proceed to the second prong of the test, where
the organization would have to allege a plausible circumstance that give rise to a
substantial probability that their members would experience bodily injury or property
damage from misusing the curling irons. See Food & Water Watch, 808 F.3d at 915.
To satisfy this second prong, the organization might allege, for example, that its
members frequently purchase and use curling irons, that some of its members live in
houses with surfaces that could be scorched by a hot iron, or that some of its members
have problems with fine motor skills such that it is substantially more likely they will
inadvertently touch their skin with a hot iron. In so doing, the organization might
successfully demonstrate that, because the CPSC’s regulation now exposes consumers
of curling irons to a 20% risk of burns or property damage, it is likely that some of its
members will suffer those consequences. See Mountain States Legal Found. v.
Glickman, 92 F.3d 1228, 1235 (D.C. Cir. 1996) (holding that plaintiffs had plausibly
alleged a substantial probability of injury, because their members hiked and camped in
the region where an agency’s actions heightened the risk of wildfires). The evaluating
court would then also need to determine whether the overall risk of harm to the
organization’s members makes their asserted injuries likely and impending, as opposed
to speculative or remote. See Pub. Citizen, 489 F.3d at 1293–94; see also Food &
Water Watch, 808 F.3d at 915 (emphasizing that, “in applying the ‘substantial’
standard,” courts must be “‘mindful that the constitutional requirement of imminence
22
necessarily compels a very strict understanding of what increases in risk and overall
risk levels count as ‘substantial’” (citation and alterations omitted)). 9
Applying this framework to the instant case, the Court concludes that Plaintiffs
have asserted concrete and particularized injuries, but they have failed to make a
plausible allegation that the FTC’s Consent Order result in a substantial increase in the
risk of harm, as the first prong requires. As mentioned previously, Plaintiffs allege
that, because the Consent Orders explicitly authorize car dealers to advertise and sell
used cars as certified, safe, and rigorously inspected even when the cars are subject to
pending safety recalls, the Consent Orders will increase the number of unrepaired used
vehicles on the road (see Am. Compl. ¶¶ 5, 8), and that this increase in defective used
cars creates a heightened risk of physical injury, death, property damage, and financial
loss (see id. ¶¶ 5, 8–9). Plaintiffs further allege that the FTC could have averted this
increase in risk if it had prohibited car dealers from advertising and selling used cars as
certified, safe, and rigorously inspected “without first repairing any defects subject to a
pending recall.” (Id. ¶ 42; see also id. ¶¶ 5, 8–9; Pls.’ Opp’n at 38.)
In this Court’s view, Plaintiffs’ “ultimate alleged harm” is undoubtedly concrete
and particularized. See Pub. Citizen, 489 F.3d at 1298. The D.C. Circuit and the
Supreme Court have long explained that physical injuries, death, property damage, and
financial loss are quintessential examples of “direct, real, and palpable” harms. Id. at
1292; see also TransUnion, LLC v. Ramirez, 141 S. Ct. 2190, 2204 (2021). Likewise,
9
It is worth noting that, while the second prong of the analysis looks at the likelihood that the
plaintiff’s members will suffer the purported injury, this inquiry is distinct from the question of
particularity, which focuses on whether the alleged injury (assuming it happens) affects the plaintiff’s
members in a personal way. See Pub. Citizen, 489 F.3d at 1292–93, 1295–96.
23
the physical and monetary injuries that can result from car accidents have an
indisputably distinct and personal impact on the individuals harmed. See Pub. Citizen,
489 F.3d at 1292.
Plaintiffs falter at the first step of the imminence test, however, because they
have not come close to asserting a plausible allegation that the Consent Orders increase
the risk of these concrete and particularized harms. Instead, the facts alleged in
Plaintiffs’ complaint and supporting declarations indicate merely that many used cars
have potentially dangerous defects that are the subject of pending safety recalls, and
that a sizeable proportion of those cars have not been repaired. (See, e.g., Am. Compl.
¶ 33 (asserting that “‘[c]ar manufacturers and the National Highway Safety
Administration have recalled tens of millions of vehicles in each of the last several
years for defects that pose significant safety risks to consumers’”); id. ¶ 47 (alleging
that “an average of 25% of recalled vehicles are left unrepaired every year”); Decl. of
Michael Brooks, Ex. V to Pls.’ Opp’n, ECF No. 18-23, ¶ 11 (stating that “a
conservative estimate of unrepaired safety recalls on vehicles currently on the road or
sitting on used car lots waiting to be sold [is] close to 80 million” (emphasis added)).)
These alleged facts fail to specify what portion of the risk is attributable to unrepaired
“certified” used cars that are now being sold as a result of the FTC’s Consent Orders—
as opposed to the universe of cars that were sold (by dealers or individuals) prior to the
Consent Orders that have since become subject to pending recalls—and thus they are
insufficient to demonstrate an increased risk of harm. And while Plaintiffs insist that
the FTC’s Consent Orders have caused more unrepaired used vehicles to be on the road
than there otherwise would be (see Am. Compl. ¶¶ 5, 9), that contention is not only
24
patently conclusory, it also falls short of demonstrating that the alleged increased risk
satisfies the established thresholds for imminence in the standing context.
For example, Plaintiffs’ submissions do not plausibly suggest that the Consent
Orders have substantially increased the sale of unrepaired used cars with pending safety
recalls. In this regard, Plaintiffs maintain that one of the dealers subject to the Consent
Orders “more than doubled its sales of unrepaired recalled vehicles” between 2015 and
2017 (Decl. of Michael Brooks ¶ 9; Ex. X to Pls.’ Opp’n, ECF No. 18-25, at 13), but the
relevant Consent Order was not issued until March of 2017 (see Am. Compl. ¶ 58), and
Plaintiffs’ proffered statistics do not indicate how many more unrepaired recalled
vehicles this dealer sold after the Consent Orders than it sold before. Similarly,
Plaintiffs have submitted a report that estimates that “1 in 30” of the certified used cars
sold by AutoNation—one of the car dealers that allegedly changed its practices in
response to the Consent Orders—have “open safety recalls” (Frontier Group Report at
12); yet, that same report states that one of the car manufacturers subject to the Consent
Orders has adopted a policy requiring dealers to repair certified used cars with open
recalls prior to sale (see id. at 11), and another article that Plaintiffs have submitted
represents that at least seven auto manufacturers “said they had no plans” to allow
dealers to begin selling used cars with open recalls following the Consent Orders (Ex. O
to Pls.’ Opp’n, ECF No. 18-16, at 4). 10 In the presence of evidence that points in both
10
Plaintiffs also rely on a study that Consumer Reports conducted entitled, The Hidden Risks of Used
Cars, to support their position, but that report makes no mention of “certified” used vehicles. (See
generally Consumer Reports Article). What is more, that report notes that some manufacturers, like
Honda, have “‘advised [] dealers that they should not sell any vehicle, new or used, from any brand,
with an unrepaired safety recall[,]’” and says that at least one independent car dealer told Consumer
Reports that “he always checks for recalls and that he wouldn’t advertise a car as safe if it had an open
recall.” (Id. at 10.)
25
directions on the crucial issue of whether more certified used vehicles subject to open
recalls are actually being sold now than before the Consent Orders issued, it is difficult
to infer from the statistics and reports that Plaintiffs proffer that the Consent Orders
have increased the overall number of unrepaired used cars on the road, much less that
any increase has been substantial.
A second, and perhaps even more significant, problem with Plaintiffs’ assertion
regarding the increased number of unrepaired used cars on the road is that Plaintiffs
have failed to allege, in a plausible manner, that the risk of car accidents is any greater
due to the Consent Orders than it would have been had the FTC forbidden car dealers
from advertising and selling such cars as “‘safe’” and “‘certified[.]’” (Am. Compl. ¶ 9;
Pls.’ Opp’n at 37.) As Plaintiffs readily admit, the Motor Vehicle Safety Act does not
preclude car dealers from selling unrepaired used vehicles subject to pending safety
recalls (see Am. Compl. ¶ 33; Consumer Reports Article at 5), and the agency that
administers that statute “lacks authority to require used car dealers to fix such defects
prior to sale” (Am. Compl. ¶ 33). Thus, even if the FTC had prohibited car dealers
from advertising and selling recalled used cars as “‘safe,’ ‘repaired for safety,’ and
‘subject to rigorous inspection’” without repairing the defects prior to sale (id. ¶ 8),
those car dealers would still be free to sell unrepaired used cars as long as they did not
advertise them in that manner.
Against this backdrop, and in the absence of any factual allegations contrasting
the relative risks of the asserted harms, the Court concludes that Plaintiffs have failed
to make a plausible allegation that the FTC’s Consent Orders have substantially
increased the risk of physical injury, death, property damage, and financial loss as
26
compared to the risk associated with Plaintiffs’ preferred policy. See, e.g., Pub.
Citizen, 513 F.3d at 239–40 (finding that plaintiffs had not satisfied the first prong of
the imminence test because their statistics did not account for crucial factors and did
not permit the court to assess whether the challenged regulation increased the risk of
harm over the risk from plaintiffs’ preferred regulatory approach); Food & Water
Watch, 808 F.3d at 915–17 (similar). 11
B. Plaintiffs Have Not Plausibly Alleged That Their Asserted Injury
Based On The Costs Of Repairs Is Fairly Traceable To The FTC’s
Consent Orders Or Redressable By A Favorable Court Decision
Plaintiffs’ alternative theory of injury—that their members will “unwittingly
purchase” unsafe used cars as a result of the Consent Orders and then “suffer economic
and other injuries” from having to get the cars repaired (Am. Compl. ¶ 8)—fares no
better. 12
For one thing, to the extent that this asserted economic injury depends on
Plaintiffs’ members being tricked into buying an unsafe car, the Court finds that any
such injury cannot be fairly traced to the Consent Orders. As explained earlier, the
Consent Orders at issue prohibit car dealers from misrepresenting “whether there is or
11
A plaintiff’s failure to satisfy either prong of the imminence test deprives a court of jurisdiction.
See Food & Water Watch, 808 F.3d at 915. Therefore, the Court need not address whether Plaintiffs
have plausibly alleged that their own members have a substantial probability of suffering the harm
asserted.
12
Plaintiffs have not specified the “other injuries” to which they are referring. (Am. Compl. ¶ 8.) To
the extent that “other injuries” is meant to encompass the need to “pay for alternative means of
transportation” and “take time off from work” to get a car repaired (id.), the Court construes those
asserted injuries as economic injuries. And if Plaintiffs are attempting to allege that their members will
suffer an informational injury from having to figure out what repairs may be needed—a suggestion that
Plaintiffs make in passing in their opposition brief and supporting declarations (see Pls.’ Opp’n at 9,
37; Decl. of Michael Brooks ¶ 6)—the Court finds that such allegations have neither been developed
sufficiently nor been presented to the Court in an adequate manner. See Food & Water Watch, 79 F.
Supp. 3d at 196–97 (discussing the facts that a plaintiff must plausibly allege to establish standing
based on an informational injury).
27
is not an open recall for safety issues on any used motor vehicle[,]” and also require car
dealers to both “clearly and conspicuously” disclose that advertised cars “may be
subject to recalls for safety issues that have not been repaired,” and provide information
about “how consumers can determine whether an individual used motor vehicle has
been subject to a recall for safety issues that ha[ve] not been repaired[.]” (GM Consent
Order ¶ I.A; see also, e.g., Asbury Consent Order ¶ I.A.) Indeed, five out of the six
Consent Orders further require car dealers to disclose affirmatively, prior to the
finalization of the sale, that a particular vehicle is subject to an outstanding safety recall
if the manufacturer has notified that dealer of the recall. (See Asbury Consent Order
¶ I.A; Jim Koons Consent Order ¶ I.A; CarMax Consent Order ¶ I.A; Lithia Motors
Consent Order ¶ I.A; West-Herr Consent Order ¶ I.A.) Consequently, in order for
Plaintiffs’ members to make an “unwitting[] purchase” of an unrepaired used car
without realizing it was subject to an open safety recall (Am. Compl. ¶ 8), either the car
dealer who advertised and sold the car would need to have disregarded the Consent
Orders’ “clear and conspicuous” disclosure requirements (and/or have misrepresented
the car’s recall status), or Plaintiffs’ members would need to have overlooked the
disclaimers that the car dealer included in response to the Consent Orders. And under
both of these scenarios, the asserted injury to Plaintiffs’ members would follow solely
from the actions of car dealers or the member themselves—not from the Consent Orders
at issue.
Moreover, while the actions of third parties such as the car dealers or Plaintiffs’
members can sometimes give rise to a redressible injury if such third-party actions are
the “predictable effect of Government action[,]” Dep’t of Com. v. New York, 139 S. Ct.
282551, 2566 (2019), Plaintiffs have not offered a single non-speculative reason to infer
that car dealers will predictably ignore the Consent Orders’ requirements or that
Plaintiffs’ members will predictably overlook clear and conspicuous disclaimers, see id.(explaining that the causation element would not be satisfied if the respondent’s “theory
of standing rest[ed] on mere speculation about the decisions of third parties”). Thus,
the Court concludes that Plaintiffs have failed to make a plausible allegation that their
members will inadvertently buy unrepaired used cars and suffer economic consequences
because of the Consent Orders.
Plaintiffs’ suggestion that their members will suffer economic injuries more
broadly (see, e.g., Am. Compl. ¶ 9 (asserting that “Center members are also at increased
risk of injury, death, and property damage, and attendant financial burdens by being
exposed to accidents caused by other defective used cars that, but for the Decisions and
Orders at issue in this case, would not be on the roads and highways, and from being
passengers in more used cars that are unsafe”) is likewise unavailing, because a
successful standing assertion must necessarily include a plausible allegation that a
favorable decision from this Court could redress the asserted injuries. See Lujan, 504
U.S. at 560. Not so here. As this Court has already explained, the law does not
prohibit car dealers from selling used cars subject to pending recalls. (See Am. Compl.
¶ 33; Consumer Reports Article at 5.) Thus, car dealers would still be able to sell
unrepaired used cars even if the Court set aside the Consent Orders as unlawful, and
that reality undermines the conclusion that a judgment in Plaintiffs’ favor would
actually solve the problem that Plaintiffs have identified. See, e.g., Crete Carrier Corp.
v. EPA, 363 F.3d 490, 494 (D.C. Cir. 2004); Fla. Audubon Soc’y v. Bentsen, 94 F.3d
29658, 671 (D.C. Cir. 1996). Put another way, if the Consent Orders were voided
tomorrow, used car dealers could proceed to sell unrepaired used cars without explicitly
advertising them as “‘safe,’” “‘repaired for safety issues,’” or rigorously inspected
nonetheless (Am. Compl. ¶ 1), meaning that Plaintiffs’ members would have to “endure
the costs associated with having those vehicles repaired” regardless (id. ¶ 8). 13
Undaunted, Plaintiffs insist that their injuries will be redressed if they succeed in
this litigation, because “at least some dealers who repaired used cars before selling
them but who have now changed their practices to conform to the FTC’s [Consent
Orders] . . . will return to their prior practices.” (Pls.’ Opp’n at 39.) Even if true, this
assertion, standing alone, fails to demonstrate that it is “‘likely,’ rather than
‘speculative’” that auto dealers would resume repairing recalled used cars prior to sale
if this Court sets aside the Consent Orders. Renal Physicians Ass’n, 489 F.3d at 1277(quoting Ctr. for Law & Educ. v. Dep’t of Educ., 396 F.3d 1152, 1157 (D.C. Cir.
2005)); see also Fla. Audubon Soc’y, 94 F.3d at 670 (noting that establishing standing
is difficult where it “depends on predicting the acts of even a single ‘interest group’
who is unrepresented in the instant litigation, especially when that group . . . is actually
composed of dozens of individual actors, each of whom must react to other market or
regulatory inputs” (internal quotation marks and citation omitted)). And, indeed,
Plaintiffs’ own submissions indicate that a confluence of factors led car dealers like
AutoNation to change their policies following the Consent Orders (including a shortage
13
And while Plaintiffs seem to suggest that any such repairs would cause direct financial harm to their
members, under the Motor Safety Vehicle Act, manufacturers are obligated to provide consumers with a
safety recall remedy free of charge in most circumstances. See 49 U.S.C. § 30120(a). This might well
be yet another reason why Plaintiffs’ allegations of economic injury miss the mark.
30
of parts to repair some recalls and “other anticipated regulatory rollbacks” (Ex. O to
Pls.’ Opp’n at 5)), which suggests that car dealers may very well continue to sell
unrepaired used cars even if the Consent Orders were invalidated. See Renal
Physicians Ass’n, 489 F.3d at 1277 (finding that a plaintiff had not established standing
where it was possible that, even if a regulation were rescinded, a third party would not
revert to its prior practices).
This all means that the hallmarks of sufficient allegations of an increased risk of
harm that is fairly traceable to government regulation of third parties are not present to
support the conclusion that Plaintiffs have plausibly alleged standing to sue in this case.
In particular, Plaintiffs have never plausibly alleged that the Consent Orders will cause
their members to buy unrepaired used cars inadvertently, nor have they plausibly
alleged that invalidation of the Consent Orders would redress their asserted economic
injuries. Therefore, the Court readily concludes that Plaintiffs do not have standing to
proceed on this alternative theory of harm.
IV. CONCLUSION
For the reasons explained above, this Court finds that it lacks jurisdiction over
Plaintiffs’ complaint because Plainitffs have not pled facts sufficient to establish
standing to sue under Article III. 14 Consequently, and as stated in the accompanying
14
The Court’s conclusion that Plaintiffs do not have standing to bring their suit in federal court does
not mean that they have no recourse for their alleged harms. Given that the law does not currently
forbid used car dealers from selling vehicles subject to safety recalls without first making repairs (a
fact that dooms Plaintiffs’ arguments in this case for the reasons stated above), Plaintiffs’ claims are
best directed to the “policymaking Branches” of Government, Pub. Citizen, 489 F.3d at 1295—which
have already promulgated laws prohibiting new car dealers and rental car companies from selling,
renting, or loaning recalled cars without making the necessary repairs, 49 U.S.C. § 30112(a)(3); Pub. L.
No. 114-94, 129 Stat. 1706, § 24109(a) (2015).
31
Order, the FTC’s motion to dismiss Plaintiffs’ amended complaint (ECF No. 17) is
GRANTED.
DATE: September 6, 2021 Ketanji Brown Jackson
KETANJI BROWN JACKSON
United States Circuit Judge
Sitting by Designation
32