Certified party lacks standing to challenge certifier’s claims to fairness

Camarda v. Certified Financial Planner Board of Standards,
Inc, 2015 WL 13159050, No. 13-00871 (D.D.C. Jul. 6, 2015)
Westlaw’s impenetrable algorithm threw this up, and I’m
blogging it now because of the relatively rare discussion of direct causation
under Lexmark.  Jeffrey Camarda and Kimberly Camarda, two
financial advisors, sued the Certified Financial Planner Board of Standards (not
to be confused with that other, more prominent CFPB), a non-profit organization
that sets and enforces professional standards in personal financial planning by
granting rights to certificants to use the certification marks owned by
defendant. The Camardas were certified to use defendant’s marks for 22 years
and 14 years respectively.
The contract between CFPB and its certificants permits CFPB
to enforce its standards of professional conduct through disciplinary proedures.  Among other things, a certificant may
describe his or her practice as “fee-only” if, and only if, all of the
certificant’s compensation from all of his or her client work comes exclusively
from the clients in the form of fixed, flat, hourly percentage or
performance-based fees. In 2011, each plaintiff received a notice of investigation
that they may have violated CFPB rules on “fee-only” claims and were given a
chance to respond. After an evidentiary hearing, the hearing panel found two
allegations supported and recommended to defendant’s disciplinary and ethics
commission that a public letter of admonition be issued; plaintiffs appealed
the commission’s decision to a five-person appeals committee, which affirmed.
First, plaintiffs’ breach of contract claim failed “because
a plaintiff may not re-litigate the disciplinary proceedings of a private
organization in court.”  [Query about the
interaction between this idea and the rule that certification marks must be, in
essence, fairly available—the court points out that plaintiffs didn’t lose the
ability to use the certification mark, but I can imagine a situation where that
wasn’t enough if disfavored parties expected public condemnations as the price
of using the mark.]  Here, there was no
breach, because the CFPB followed its own rules and procedures.  “In reviewing a disciplinary action by a
private organization, courts do not ‘second-guess’ the organization’s
interpretation of its own rules or its evaluation of the evidence.”  Plaintiffs alleged that they were singled out
for enforcement in violation of the duty of good faith and fair dealing. But violation
of this duty required either bad faith or conduct that was arbitrary and
capricious, of which there was no evidence; allegedly selective enforcement isn’t
A common law unfair competition claim failed because the
parties weren’t competitors. Under D.C. law, the common-law tort of unfair
competition “is not defined in terms of specific elements, but by the
description of various acts that would constitute the tort if they resulted in
damage,” including: “defamation, disparagement of a competitor’s goods or
business methods, intimidation of customers or employees, interference with
access to the business, threats of groundless suits, commercial bribery,
inducing employees to sabotage, false advertising or deceptive packaging likely
to mislead customers into believing goods are those of a competitor.” But as a
noncompetitor, the CFPB couldn’t be liable for unfair competition.  In addition, the plaintiffs didn’t show
unfairness, because the CFPB was contractually authorized to enforce discipline
standards against them.

The Lanham Act claim failed, not because of lack of direct
competition, but because of the related problem of causation.  Under Lexmark,
a plaintiff “ordinarily must show economic or reputational injury flowing
directly from the deception wrought by the defendant’s advertising.”  Plaintiffs alleged that the CFPB made false or
misleading claims about its “fair enforcement of its rules regarding
professional conduct and its adherence to the Disciplinary Rules.”  Even assuming falsity, that statement didn’t
cause the plaintiffs any direct harm. The harm was from the sanctions imposed
on the plaintiffs, which the CFPB had every right to impose.  The harm from falsely advertising procedures
as fair was “too indirect an injury to sustain liability under section 43(a).”

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