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In Re: Apa Assessment Fee Litigation Ellen G Levine, et al v. American Psychological Association

May 30, 2012


The opinion of the court was delivered by: John D. Bates United States District Judge


This matter is before the Court on [16] defendants' motion to dismiss plaintiffs' claims for unjust enrichment and violations of California consumer protection laws. Plaintiffs, on behalf of a proposed class, claim that they paid a "special assessment" or a "practice assessment" to the American Psychological Association ("APA") for use by its lobbying arm, the American Psychological Association Practice Organization ("APAPO"), under the mistaken belief that payment of that assessment was required for membership in the APA. Compl. [ECF 15] ¶ 22. Plaintiffs contend that the APA intentionally misled its members by stating that payment of the special assessment was mandatory, when, in fact, the APA considered the payment of the assessment to be "purely voluntarily." Id. These misrepresentations, plaintiffs argue, unjustly enriched the APA and APAPO and violated California consumer protection laws. Id. ¶¶ 33-53. Defendants argue that plaintiffs cannot bring the quasi-contract claim of unjust enrichment when an actual contract governs the relationship between the APA and its members; that the APA's statements were not misleading; and that choice of law principles dictate that District of Columbia law, not California law, applies to this dispute. The Court agrees with defendants that plaintiffs' claims as currently stated suffer from fatal threshold flaws and therefore must be dismissed.

I. Background

These facts are drawn from [15] plaintiffs' complaint. In the context of this motion to dismiss, the Court takes the allegations in the complaint as true. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).

The APA is "the world's largest organization representing psychologists" and has "hundreds of thousands of members" throughout the United States. Compl. ¶¶ 2, 15. As a 501(c)(3) organization, the APA may not engage in significant lobbying. Id.¶ 15. Hence, in 2001, the APA formed the APAPO, a 501(c)(6) organization, to "conduct[ ] professional advocacy and lobbying" on behalf of the APA's members. Id. ¶¶ 3, 5, 15. The APA and the APAPO have the same membership list, board of directors, physical address, and accounting and billing system. Id. ¶ 13. Plaintiffs allege that at all relevant times "each of the Defendants was the agent, servant, representative, officer, director, partner or employee of the other. . . . [and was] engaged in a joint venture, partnership and common enterprise." Id. ¶ 14.

Plaintiffs' complaint is based on payments made by APA members to support the APAPO's activities. According to plaintiffs, the "APA has been assessing clinicians -- those psychologists who actually practice clinical psychology and do psychotherapy -- a special fee with their APA dues, which is represented to those clinicians on their billing statements as a mandatory practice assessment, which is then allocated by APA leadership to the APAPO." Id. ¶

15. Plaintiffs point to several statements that they claim misleadingly imply that the special assessment was mandatory. They assert that the APA's website stated in 2002 and for a number of years thereafter that members "must pay" the special assessment. Id. ¶ 17. The annual dues statement came pre-printed with the amount of the special assessment filled in, and the instructions explained that members who provided "any" health services "must pay" the special assessment. Id. ¶ 16. Additionally, the APA announced in 2005 that it would no longer exempt new members from payment of the special assessment, but that instead "all APA members who are licensed psychologists will be billed the assessment." Id. ¶ 18 (internal quotation marks omitted). When the APA eventually began allowing online payment of dues, the website did not allow members to forego payment of the special assessment. Id. ¶ 19.

In 2010, some APA members discovered that "the purportedly mandatory APAPO special or practice assessment fee was purely voluntary" and disseminated that information to members of an APA email list. Id. ¶ 22. Thereafter, the APA made some efforts to clarify to members that payment of the special assessment to fund the APAPO was not, in fact, a condition of membership in the APA. On May 5, 2010, members of the APA/APAPO board explained in an APA newsletter that:

The manner in which the APA, APAPO, and Division dues have been combined on past due statements does not make clear that the mandatory practice assessment payment is required for APAPO membership but not for APA membership. The 2011 dues statement instructions will be modified to clarify this point.

Id. ¶ 23 (internal quotation marks omitted). The 2011 dues statement was then modified so that it no longer said that members "must pay" the special assessment, and it specifically stated that nonpayment of the assessment did not affect APA membership. Id. ¶ 25. The APA also clarified that members could opt out of payment of the special assessment by paying their dues by phone, although there was no option to pay only the basic dues online. Id. ¶ 28.

In May 2010, Dr. Glenn Ally, a member of a committee that has "governance responsibilities" for the APA and the APAPO, explained on an APA email list why the APA had not previously characterized the special assessment as voluntary:

I'm assuming you know the statistics that psychologists are at the bottom (AT THE BOTTOM) of the list of professions regarding voluntary contributions, even political advocacy contributions. What you are suggesting here is to make the primary and largest advocacy arm of our organization dependent on the voluntary contributions of the cheapest profession around. . . Again, I don't mean to be offensive, but try running your practice on voluntary contributions and see if your family gets everything they want and deserve to have. The PO is a business and they are in the business of advocating for practice. WE have decided we need this, and we decided long ago that we were not getting enough advocacy when we had to depend on the larger "APA." We wanted our own practice advocacy for a variety of reasons. That "business" has to depend on a relatively stable revenue source. Would the lobbyist for your state organization represent you if you told him/her that you were going to pay him/her differently each year based on "voluntary donations?"

Id. ¶ 24 (internal quotation marks omitted).

Other APA members, however, gave somewhat different explanations for the APA's characterization of the special assessment as mandatory. In January 2011, in response to a request to refund past dues, the APA's Executive Director for Public and Member Communications explained that "[i]n general, licensed providers are expected to pay the assessment" even though their APA membership would not be terminated if the assessment was not paid. Id. ¶ 27. In their briefing, defendants explain that the APA regards the payment of the special assessment as a moral and professional obligation, and hence mandatory, even though payment is not a condition of membership in the APA. Defs.' Mem. in Supp. of Mot. to Dismiss ("Defs.' MTD") at 1.

Plaintiffs are two California residents and a Tennessee resident who paid special assessment fees between 2001 and 2010. Compl. ¶¶ 10-12. They represent a proposed class of "current and former APA members who have paid special or practice assessment fees as part of their annual dues, which were misrepresented as being a mandatory part of those dues." Id. ¶ 1. According to plaintiffs, the putative class paid some $6,000,000 per year in special assessments.

Plaintiffs have reformulated their complaint several times and have now consolidated two cases brought on behalf of APA members. After plaintiffs filed their consolidated class action complaint on January 31, 2011, defendants filed the instant motion to dismiss, and a hearing was held on the motion on August 11, 2011.

II. Standard of Review

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In other words, a plaintiff must "plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678.

In ruling on a motion to dismiss, "the allegations of the complaint should be construed favorably to the pleader." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Leatherman v. Tarrant Cnty. Narcotics and Coordination Unit, 507 U.S. 163, 164 (1993); Phillips v. Bureau of Prisons, 591 F.2d 966, 968 (D.C. Cir. 1979). Therefore, the factual allegations in the complaint must be presumed true, and plaintiff must be given every favorable inference that may be drawn from the allegations of fact. Scheuer, 416 U.S. at 236; Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000). The Court "need not, however, accept inferences drawn by plaintiffs if those inferences are unsupported by facts alleged in the complaint; nor must the Court accept plaintiffs' legal conclusions." Chandler v. W.E. Welch & Assoc., Inc., 533 F. Supp. 2d 94, 102 (D.D.C. 2008).

In addition to the facts alleged in the complaint, the Court may consider "any documents either attached to or incorporated by reference in the complaint, matters of which the court may take judicial notice, and matters of public record." Felder v. Johanns, 595 F. Supp. 2d 46, 58-59 (D.D.C. 2009) (citing ...

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