Rb, I'm going to have to disagree with you interpretation. The first sentence of specification section C3.1.4 clearly states "The provisions of this section shall apply to I-, Z-, C_, and other open cross-section members that employ compression flanges with edge stiffeners, with exception of members that meet criteria of......."
Distortional buckling simply does not occur without lips. The lip buckles out-of-plane at its free end causing rotation of the flange. This does not occur when there aren't any lips, i.e. edge stiffeners. There is no reason to check this limit state when there are no edge stiffeners.