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U.S. Court of Appeals for the 4th Circuit

Civil Practice; Article III standing: Because a “tester” did not need to show an intention or need to actually book rooms at hotels in order to establish informational injury-based Article III standing to sue for alleged ADA-website violations, the district court erred in dismissing her suit for lack of standing. This decision deepened a split among the circuits on this question. Laufer v. Naranda Hotels LLC, Case No. 20-2348 (filed Feb. 15, 2023).

Products liability; sealed container defense: Where a company sued for allegedly providing contaminated eyewash argued that sophisticated purchasers would not reasonably assume it was the manufacturer, because it was listed on the eyewash bottles only as a “distributor,” that argument failed. The eyewash bottle and packaging listed only the company’s name and logo, and only it registered the product with the Food and Drug Administration. KeraLink International Inc. v. Geri-Care Pharmaceuticals Corporation, Case Nos. 21-2357, 21-2404 (filed Feb. 15, 2023).

Civil Practice

Article III standing

BOTTOM LINE: Because a “tester” did not need to show an intention or need to actually book rooms at hotels in order to establish informational injury-based Article III standing to sue for alleged ADA-website violations, the district court erred in dismissing her suit for lack of standing. This decision deepened a split among the circuits on this question.

CASE: Laufer v. Naranda Hotels LLC, Case No. 20-2348 (filed Feb. 15, 2023) (Judges KING, Thacker, Harris joined).

FACTS: Deborah Laufer is a “tester” who has filed hundreds of similar lawsuits throughout the country under the Americans with Disabilities Act, or ADA. Laufer complains of hotel reservation websites that do not allow for reservation of accessible guest rooms or provide sufficient accessibility information. The district court dismissed Laufer’s ADA claim for lack of Article III standing to sue.

LAW: In order to possess Article III standing to sue, “the plaintiff must have suffered an ‘injury in fact’ — an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical.” The second element requires “a causal connection between the injury and the conduct complained of.” As for the third element, “it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.”

Laufer’s ADA claim relies on 28 C.F.R. § 36.302(e)(1)(ii), which provides that a hotel owner must “[i]dentify and describe accessible features in the hotels and guest rooms offered through its reservations service in enough detail to reasonably permit individuals with disabilities to assess independently whether a given hotel or guest room meets his or her accessibility needs.” Similar to a First Circuit decision and a pertinent Eleventh Circuit concurring opinion, this court concludes that Laufer’s allegation of an informational injury accords her Article III standing to sue — whether or not she ever had a definite and credible plan to travel to the Baltimore area.

According to Laufer, she is entitled to the accessibility information as an individual with a disability, and Naranda’s failure to provide it constitutes discrimination under Title III of the ADA. Accepting that theory of Laufer’s ADA claim for purposes of the standing analysis, she has alleged an informational injury that gives her Article III standing to sue under Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982), Public Citizen v. United States Department of Justice, 491 U.S. 440 (1989), and Federal Election Commission v. Akins, 524 U.S. 11 (1998).

With respect to the first element of an injury in fact, Laufer has alleged all that she needs to: that she has “fail[ed] to obtain information which must be publicly disclosed pursuant to a statute.” Under the Havens Realty line of decisions, such an informational injury is sufficiently concrete, particularized and actual to qualify for Article III standing to sue. It matters not that Laufer is a tester who may have visited Naranda’s hotel reservation websites to look for ADA violations.

Turning to the second and third Lujan elements, Naranda did not argue in its motion to dismiss before the district court that there is no “causal connection between [Laufer’s alleged informational] injury and the conduct complained of,” or that it is not “likely . . . that the injury will be redressed by a favorable decision.” Moreover, the district court’s standing ruling against Laufer was confined to the first element, and this court has no basis to conclude herein that the second and third elements are not satisfied.

Of course, because Laufer seeks injunctive relief, she also must show a “real or immediate threat that [she] will be wronged again.” Naranda contends that Laufer cannot demonstrate such plausible intentions because her complaint does not allege that she would “return[] to the third-party websites for purposes of booking a room or availing herself of Naranda’s accommodations or services.” This court agrees with the First Circuit that Laufer has alleged plausible intentions to return to Naranda’s hotel reservation websites as part of the “system” described in her complaint for continually monitoring websites she finds to be in noncompliance.

The courts of appeals that have ruled in other cases against Laufer and a similarly-situated plaintiff have done so on the premise that those plaintiffs were obliged — but failed — to show an intention or need to actually book rooms at the defendants’ hotels in order to establish informational injury-based Article III standing to sue. In adopting that premise, the Second Circuit perceived that it was compelled to do so by TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021). Meanwhile, the Fifth and Tenth Circuits deemed the contrary decisions in Havens Realty, Public Citizen and Akins to be distinguishable and inapposite. None of those rulings withstand scrutiny.

Vacated and remanded.

Products liability

Sealed container defense

BOTTOM LINE: Where a company sued for allegedly providing contaminated eyewash argued that sophisticated purchasers would not reasonably assume it was the manufacturer, because it was listed on the eyewash bottles only as a “distributor,” that argument failed. The eyewash bottle and packaging listed only the company’s name and logo, and only it registered the product with the Food and Drug Administration.

 CASE: KeraLink International Inc. v. Geri-Care Pharmaceuticals Corporation, Case Nos. 21-2357, 21-2404 (filed Feb. 15, 2023) (Judges Harris, Quattlebaum, KEENAN).

FACTS: KeraLink International Inc., the former operator of a national network of “eye banks,” sued two of its suppliers, Stradis Healthcare LLC and Geri-Care Pharmaceuticals Corporation, after they allegedly provided KeraLink with contaminated eyewash used to remove donated eye tissue for future transplant.

The district court held Geri-Care and Stradis liable on the strict products liability claim, as well as on KeraLink’s alternative claim of breach of implied warranty. Additionally, the court held Stradis liable on the alternative claim of breach of express warranty.

LAW: The defendants do not dispute that KeraLink satisfied the elements of its claim of strict products liability but, instead, challenge the court’s judgment imposing liability based on two arguments: (1) the sealed container defense and (2) Geri-Care’s assertion that the economic loss rule bars KeraLink from recovering against Geri-Care in this tort claim.

Under Maryland law, a seller of a defective product in certain circumstances can assert an affirmative defense known as the sealed container defense to shield itself from liability for damages and injury caused by that product. In the district court, both Geri-Care and Stradis sought to invoke this defense as sellers of the eyewash, and each argued that the other qualified as a liable manufacturer.

Geri-Care contends that although it was the only entity named on the eyewash packaging, sophisticated purchasers like Stradis and KeraLink would not reasonably assume that Geri-Care was the manufacturer, because Geri-Care was listed on the eyewash bottles only as a “distributor.” The court disagrees.

There is no basis on which a purchaser, sophisticated or otherwise, could determine from the eyewash bottle and packaging that another entity was a manufacturer of the eyewash. Only Geri-Care’s name and logo appeared on the eyewash bottle and packaging, and only Geri-Care registered the product with the FDA. Although Geri-Care identified itself as a “distributor” and not as a “manufacturer,” a jury could not conclude on this record that purchasers of the eyewash reasonably would have known that Geri-Care was not the eyewash manufacturer.

Turning to Stradis, it included on the surgical pack the description “STERILE: Unless Open or damaged” and chose to place a representation on the insert that the pack contained “sterile eye wash.” These descriptions plainly were made by Stradis and were made separately from Geri-Care’s statement on the eyewash bottles that the contents were sterile. Stradis has not cited, nor has this court identified, any authority holding that a party who “passes on” another company’s warranty through its own, separate representation has not made an express warranty. Accordingly, under Maryland law, which precludes sellers who breach express warranties from relying on the sealed container defense, Stradis was barred from asserting the defense.

KeraLink sought recovery in strict products liability for lost service fees relating to the damaged tissue, the cost to replace the unusable eyewash and lost employee time. Geri-Care argues that the fees relating to the damaged tissue were pure economic losses barred by the economic loss rule. Geri-Care further contended that KeraLink did not seek damages related to injury to other property, because the eye tissue was not KeraLink’s property.

The record demonstrates that KeraLink had possessory rights to the donated tissue, having been given the required consent of the donors or legal next of kin. Although Maryland law prohibits parties from selling tissue and prescribes how parties must dispose of donated, unused tissue, these limitations imposed by statute did not eliminate KeraLink’s possessory interests in the tissue and its right to recover, store and transfer the tissue for transplant.

Geri-Care and Stradis argue that the district court’s award of prejudgment interest as a matter of right was error under Maryland law because both liability and any degree of liability were not certain. Assuming, without deciding, that the district court erred in awarding prejudgment interest as a matter of right, its award is affirmed under the court’s discretionary authority.

Affirmed.