On February 14, 2014 at 9:30 a.m., the United States Court of Appeals for the District of Columbia Circuit will hear oral argument in the American Psychological Association (“APA”) Assessment Fee Class Action Litigation. On October 21, 2010, members of the APA filed a class-action lawsuit against the organization alleging that the APA falsely represented to its members (on its annual dues statements and elsewhere) that they were required to pay an annual “practice assessment” for continued APA membership.
According to the lawsuit, payment of the assessment was not in fact a condition of APA membership. Rather, the APA funneled these funds to its lobbying arm: the American Psychological Association Practice Organization (“APAPO”). The plaintiffs asserted that the APA did this because it did not believe that its members would voluntarily donate sufficient funds to the APAPO to support its lobbying activities; however, it could not mandate payment of funds for lobbying purposes as a condition of membership without jeopardizing its tax-exempt status as a charitable organization under the Internal Revenue Code. Thus, the APA allegedly tried to have it both ways: it falsely represented in its communications to its members that payment of the practice assessment was a condition of APA membership to obtain funding for the APAPO, but did not make payment of the assessment an official membership requirement to avoid potentially losing its federal tax-exempt status.
The APA filed a motion to dismiss the case arguing, among other things, that its statements to its members that they “must pay” the practice assessment were not misleading because even though payment of the practice assessment was not a condition of APA membership, its members still had a moral obligation to pay the assessment.
Although the district court conceded that the APA’s statements were arguably misleading, it nonetheless granted the APA’s motion and dismissed the lawsuit largely on technical grounds. The plaintiffs appealed the district court’s decision to the D.C. Circuit.
The appeal is captioned In re: APA Assessment Fee Litigation. The plaintiffs are represented by Tycko & Zavareei LLP (based in Washington, D.C.) and Wexler Wallace LLP (based in Chicago, Illinois).
Copies of the appellate briefs can be obtained from Hassan Zavareei at Tycko & Zavareei LLP.