Supreme Court — Prudential Standing Doctrine Largely Abandoned — Statutory Standing Label Misleading, Too
Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377; 188 L. Ed. 2d 392 (2014):
This case requires us to decide whether respondent, Static Control Components, Inc., may sue petitioner, Lexmark International, Inc., for false advertising under the Lanham Act, 15 U.S.C. §1125(a).
Lexmark manufactures and sells laser printers. It also sells toner cartridges for those printers (toner being the powdery ink that laser printers use to create images on paper). Lexmark designs its printers to work only with its own style of cartridges, and it therefore dominates the market for cartridges compatible with its printers. That market, however, is not devoid of competitors. Other businesses, called "remanufacturers," acquire used Lexmark toner cartridges, refurbish them, and sell them in competition with new and refurbished cartridges sold by Lexmark.
Lexmark would prefer that its customers return their empty cartridges to it for refurbishment and resale, rather than sell those cartridges to a [**400] remanufacturer. So Lexmark introduced what it called a "Prebate" program, which enabled customers to purchase new toner cartridges at a 20-percent discount if they would agree to return the cartridge to Lexmark once it was empty. Those terms were communicated to consumers through notices printed on the toner-cartridge boxes, which advised the consumer that opening the box would indicate assent to the [***7] terms--a practice commonly known as "shrinkwrap licensing," see, e.g., ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1449 (CA7 1996). To enforce the Prebate terms, Lexmark included a microchip in each Prebate cartridge that would disable the cartridge after it ran out of toner; for the cartridge to be used again, the microchip would have to be replaced by Lexmark.
[*1384] Static Control is not itself a manufacturer or remanufacturer of toner cartridges. It is, rather, "the market leader [in] making and selling the components necessary to remanufacture Lexmark cartridges." 697 F.3d 387, 396 (CA6 2012) (case below). In addition to supplying remanufacturers with toner and various replacement parts, Static Control developed a microchip that could mimic the microchip in Lexmark's Prebate cartridges. By purchasing Static Control's microchips and using them to replace the Lexmark microchip, remanufacturers were able to refurbish and resell used Prebate cartridges.
Lexmark did not take kindly to that development. In 2002, it sued Static Control, alleging that Static Control's microchips violated both the Copyright Act of 1976, 17 U.S.C. §101 et seq., and the Digital Millennium Copyright Act, 17 U.S.C. §1201 et seq. Static Control counterclaimed, alleging, among other things, violations of §43(a) of the Lanham Act, 60 Stat. 441, codified at 15 U.S.C. §1125(a). Section 1125(a) provides:
 "(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which--
"(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
"(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,
"shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act."
Section 1125(a) thus creates two distinct bases of liability: false association, §1125(a)(1)(A), and false advertising, §1125(a)(1)(B). See Waits v. Frito-Lay, Inc., 978 F. 2d 1093, 1108 (CA9 1992). Static Control alleged only false advertising.
As relevant to its Lanham Act claim, Static Control alleged two types of false or misleading conduct by Lexmark. First, it alleged that through its Prebate program Lexmark "purposefully misleads end-users" to believe that they are legally bound by the Prebate terms and are [**401] thus required to return the Prebate-labeled cartridge to Lexmark after a single use. App. 31, ¶39. Second, it alleged that upon introducing the Prebate program, Lexmark "sent letters to most of the companies in the toner cartridge remanufacturing business" falsely advising those companies that it was illegal to sell refurbished Prebate cartridges and, in particular, that it was illegal to use Static Control's products to refurbish those cartridges. Id., at 29, ¶35. Static Control asserted that by those statements, Lexmark had materially misrepresented "the nature, characteristics, and qualities" of both its own products and Static Control's products. Id., at 43-44, ¶85. It further maintained that Lexmark's misrepresentations had "proximately caused and [we]re likely to cause injury to [Static [***10] Control] by diverting sales from [Static Control] to Lexmark," and had "substantially injured [its] business reputation" by "leading consumers and others in the trade to believe that [Static Control] is engaged in illegal conduct." Id., at 44, ¶88. Static Control sought treble damages, [*1385] attorney's fees and costs, and injunctive relief.
The District Court granted Lexmark's motion to dismiss Static Control's Lanham Act claim. It held that Static Control lacked "prudential standing" to bring that claim, App. to Pet. for Cert. 83, relying on a multifactor balancing test it attributed to Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519, 103 S. Ct. 897, 74 L. Ed. 2d 723 (1983). The court emphasized that there were "more direct plaintiffs in the form of remanufacturers of Lexmark's cartridges"; that Static Control's injury was "remot[e]" because it was a mere "byproduct [***11] of the supposed manipulation of consumers' relationships with remanufacturers"; and that Lexmark's "alleged intent [was] to dry up spent cartridge supplies at the remanufacturing level, rather than at [Static Control]'s supply level, making remanufacturers Lexmark's alleged intended target." App. to Pet. for Cert. 83.
The Sixth Circuit reversed the dismissal of Static Control's Lanham Act claim. 697 F.3d, at 423. Taking the lay of the land, it identified three competing approaches to determining whether a plaintiff has standing to sue under the Lanham Act. It observed that the Third, Fifth, Eighth, and Eleventh Circuits all refer to "antitrust standing or the [Associated General Contractors] factors in deciding Lanham Act standing," as the District Court had done. Id., at 410 (citing Conte Bros. Automotive, Inc. v. Quaker State-Slick 50, Inc., 165 F.3d 221, 233-234 (CA3 1998); P&G v. Amway Corp., 242 F.3d 539, 562-563 (CA5 2001); Gilbert/Robinson, Inc. v. Carrie Beverage-Missouri, Inc., 989 F. 2d 985, 990-991 (CA8 1993); Phoenix of Broward, Inc. v. McDonald's Corp., 489 F.3d 1156, 1162-1164 (CA11 2007)). By contrast, "[t]he Seventh, Ninth, and Tenth [Circuits] use [***12] a categorical test, permitting Lanham Act suits only by an actual competitor." 697 F.3d, at 410 (citing L. S. Heath & Son, Inc. v. AT&T Information Systems, Inc., 9 F.3d 561, 575 (CA7 1993); Waits, supra, at 1108-1109; Stanfield v. Osborne Industries, [**402] Inc., 52 F.3d 867, 873 (CA10 1995)). And the Second Circuit applies a "'reasonable interest' approach," under which a Lanham Act plaintiff "has standing if the claimant can demonstrate '(1) a reasonable interest to be protected against the alleged false advertising and (2) a reasonable basis for believing that the interest is likely to be damaged by the alleged false advertising.'" 697 F.3d, at 410 (quoting Famous Horse, Inc. v. 5th Avenue Photo Inc., 624 F.3d 106, 113 (CA2 2010)). The Sixth Circuit applied the Second Circuit's reasonable-interest test and concluded that Static Control had standing because it "alleged a cognizable interest in its business reputation and sales to remanufacturers and sufficiently alleged that th[o]se interests were harmed by Lexmark's statements to the remanufacturers that Static Control was engaging in illegal conduct." 697 F.3d, at 411.
We granted certiorari to decide "the appropriate analytical framework for determining a party's standing to maintain an action for false advertising under the Lanham Act." Pet. for Cert. i; 569 U.S. ____, 133 S. Ct. 2766, 186 L. Ed. 2d 217 (2013).
II. "Prudential Standing"
The parties' briefs treat the question on which we granted certiorari as one of "prudential standing." Because we think that label misleading, we begin by clarifying the nature of the question at issue in this case.
From Article III's limitation of the judicial power to resolving "Cases" and "Controversies," and the separation-of-powers principles underlying that limitation, we have deduced a set of requirements that together make up the "irreducible constitutional minimum of standing." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992). The plaintiff must have suffered or be imminently threatened with a concrete and particularized "injury in fact" that is fairly traceable to the challenged action of the defendant [***14] and likely to be redressed by a favorable judicial decision. Ibid. Lexmark does not deny that Static Control's allegations of lost sales and damage to its business reputation give it standing under Article III to press its false-advertising claim, and we are satisfied that they do.
Although Static Control's claim thus presents a case or controversy that is properly within federal courts' Article III jurisdiction, Lexmark urges that we should decline to adjudicate Static Control's claim on grounds that are "prudential," rather than constitutional. That request is in some tension with our recent reaffirmation of the principle that [**LEdHR4]  "a federal court's 'obligation' to hear and decide" cases within its jurisdiction "is 'virtually unflagging.'" Sprint Communications, Inc. v. Jacobs, 571 U.S. ___, ___, 134 S. Ct. 584, 591, 187 L. Ed. 2d 505, 513 (2013) (quoting Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976)). In recent decades, however, we have adverted to a "prudential" branch of standing, a doctrine not derived from Article III and "not exhaustively defined" [**403] but encompassing (we have said) at least three broad principles: "'the general prohibition on a litigant's raising another [***15] person's legal rights, the rule barring adjudication of generalized grievances more appropriately addressed in the representative branches, and the requirement that a plaintiff's complaint fall within the zone of interests protected by the law invoked.'" Elk Grove Unified School Dist. v. Newdow, 542 U.S. 1, 12, 124 S. Ct. 2301, 159 L. Ed. 2d 98 (2004) (quoting Allen v. Wright, 468 U.S. 737, 751, 104 S. Ct. 3315, 82 L. Ed. 2d 556 (1984)).
Lexmark bases its "prudential standing" arguments chiefly on Associated General Contractors, but we did not describe our analysis in that case in those terms. Rather, we sought to "ascertain," as a matter of statutory interpretation, the "scope of the private remedy created by" Congress in §4 of the Clayton Act, and the "class of persons who [could] maintain a private damages action under" that legislatively conferred cause of action. 459 U.S., at 529, 532, 103 S. Ct. 897, 74 L. Ed. 2d 723. We held that the statute limited the class to plaintiffs whose injuries were proximately caused by a defendant's antitrust violations. Id., at 532-533, 103 S. Ct. 897, 74 L. Ed. 2d 723. Later decisions confirm that Associated General Contractors rested on statutory, not "prudential," considerations. See, e.g., Holmes v. Securities Investor Protection Corporation, 503 U.S. 258, 265-268, 112 S. Ct. 1311, 117 L. Ed. 2d 532 (1992) (relying [***16] on Associated General Contractors in finding a proximate-cause requirement in the cause of action created by the Racketeer Influenced [*1387] and Corrupt Organizations Act (RICO), 18 U.S.C. §1964(c)); Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 456, 126 S. Ct. 1991, 164 L. Ed. 2d 720 (2006) (affirming that Holmes "relied on a careful interpretation of §1964(c)"). Lexmark's arguments thus do not deserve the "prudential" label.
Static Control, on the other hand, argues that we should measure its "prudential standing" by using the zone-of-interests test. Although we admittedly have placed that test under the "prudential" rubric in the past, see, e.g., Elk Grove, supra, at 12, 124 S. Ct. 2301, 159 L. Ed. 2d 98, it does not belong there any more than Associated General Contractors does. Whether a plaintiff comes within "the 'zone of interests'" is an issue that requires us to determine, using traditional tools of statutory interpretation, whether a legislatively conferred cause of action encompasses a particular plaintiff's claim. See Steel Co. v. Citizens for Better Environment, 523 U.S. 83, 97, 118 S. Ct. 1003, 140 L. Ed. 2d 210, and n. 2 (1998); Clarke v. Securities Indus. Ass'n, 479 U.S. 388, 394-395, 107 S. Ct. 750, 93 L. Ed. 2d 757 (1987); Holmes, supra, at 288, 112 S. Ct. 1311, 117 L. Ed. 2d 532 (Scalia, J., concurring in judgment). As Judge Silberman [***17] of the D. C. Circuit recently observed, "'prudential standing' is a misnomer" as applied to the zone-of-interests analysis, which asks whether "this particular class of persons ha[s] a right to sue under this substantive statute." Association of Battery Recyclers, Inc. v. EPA, 716 F.3d 667, 675-676, 405 U.S. App. D.C. 100 (2013) (concurring opinion). 3
3 The zone-of-interests test is not the only concept that we have previously classified as an aspect of "prudential standing" but for which, upon closer inspection, we have found that label inapt. Take, for example, our reluctance to entertain generalized grievances--i.e., suits "claiming only harm to [the plaintiff's] and every citizen's interest in proper application of the Constitution and laws, and seeking relief that no more directly and tangibly benefits him than it does the public at large." Lujan v. Defenders of Wildlife, 504 U.S. 555, 573-574, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992). While we have at times grounded our reluctance to entertain such suits in the "counsels of prudence" (albeit counsels "close[ly] relat[ed] to the policies reflected in" Article III), Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 475, 102 S. Ct. 752, 70 L. Ed. 2d 700 (1982), we have since held that such suits do not present constitutional "cases" or "controversies." See, e.g., Lance v. Coffman, 549 U.S. 437, 439, 127 S. Ct. 1194, 167 L. Ed. 2d 29 (2007) (per curiam); DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 344-346, 126 S. Ct. 1854, 164 L. Ed. 2d 589 (2006); Defenders of Wildlife, supra, at 573-574, 112 S. Ct. 2130, 119 L. Ed. 2d 351. They are barred for constitutional reasons, not "prudential" ones. The limitations on third-party standing are harder to classify; we have observed that third-party standing is "'closely related to the question whether a person in the litigant's position will have a right of action on the claim,'" United States Dep't of Labor v. Triplett, 494 U.S. 715, 721, 110 S. Ct. 1428, 108 L. Ed. 2d 701, n. ** (1990) (quoting Warth v. Seldin, 422 U.S. 490, 500, n. 12, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975)), but most of our cases have not framed the inquiry in that way. See, e.g., Kowalski v. Tesmer, 543 U.S. 125, 128-129, 125 S. Ct. 564, 160 L. Ed. 2d 519 (2004) (suggesting it is an element of "prudential standing"). This case does not present any issue of third-party standing, and consideration of that doctrine's proper place in the standing firmament can await another day.
In sum, the question this case presents is whether Static Control falls [**404] within the class of plaintiffs whom Congress has authorized to sue under §1125(a). In other words, [***19] we ask whether Static Control has a cause of action under the statute. 4 [*1388] [**LEdHR6]  That question requires us to determine the meaning of the congressionally enacted provision creating a cause of action. In doing so, we apply traditional principles of statutory interpretation. We do not ask whether in our judgment Congress should have authorized Static Control's suit, but whether Congress in fact did so. Just as a court cannot apply its independent policy judgment to recognize a cause of action that Congress has denied, see Alexander v. Sandoval, 532 U.S. 275, 286-287, 121 S. Ct. 1511, 149 L. Ed. 2d 517 (2001), it cannot limit a cause of action that Congress has created merely because "prudence" dictates.
4 We have on occasion referred to this inquiry as "statutory standing" and treated it as effectively jurisdictional. See, e.g., Steel Co. v. Citizens for Better Environment, 523 U.S. 83, 97, 118 S. Ct. 1003, 140 L. Ed. 2d 210, and n. 2 (1998); cases cited id., at 114-117, 118 S. Ct. 1003, 140 L. Ed. 2d 210 (Stevens, J., concurring in judgment). That label is an improvement over the language of "prudential standing," since it correctly places the focus on the statute. But it, too, is misleading, since "the absence of a valid (as opposed to arguable) cause of action does not implicate subject-matter jurisdiction, i.e., the court's statutory or constitutional power to adjudicate the case.'" Verizon Md. Inc. v. Public Serv. Comm'n of Md., 535 U.S. 635, 642-643, 122 S. Ct. 1753, 152 L. Ed. 2d 871 (2002) (quoting Steel Co., supra, at 89, 118 S. Ct. 1003, 140 L. Ed. 2d 210); see also Grocery Mfrs. Ass'n v. EPA, 693 F.3d 169, 183-185 (CADC 2012) (Kavanaugh, J., dissenting), and cases cited therein; Pathak, Statutory Standing and the Tyranny of Labels, 62 Okla. L. Rev. 89, 106 (2009).
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