Chapter § 5.04 Other Considerations Before Filing a Class Action

• Jurisdiction: United States
• Publication year: 2020

§ 5.04 Other Considerations Before Filing a Class Action

Before filing a class action, proposed class counsel should confirm, at a minimum, that a named plaintiff satisfies the standing requirements of Article III of the U.S. Constitution and that the suit is not barred by the relevant statute of limitations or statute of repose. We discuss these matters and an additional consideration (i.e., personal jurisdiction).

[1] Satisfying Standing Requirements

The doctrine of standing arises from Article III, which limits the subject matter jurisdiction of federal courts to “Cases” and “Controversies.”⁷⁵ To establish Article III standing, a plaintiff must have “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.”⁷⁶ Injury in fact is the “foremost” of standing’s three elements. The Supreme Court reiterated in Spokeo, Inc. v. Robins⁷⁷ that, to show injury in fact, a plaintiff must suffer “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.”⁷⁸ An injury is particularized when it affects “the plaintiff in a personal and individual way,”⁷⁹ and a concrete injury is one that “actually exist[s]”—i.e., is “real,” rather than “abstract.”⁸⁰

As the party invoking federal jurisdiction, the plaintiff bears the burden to establish standing.⁸¹ Each element “must be supported . . . with the manner and degree of evidence required at the successive stages of the litigation.”⁸² Furthermore, the court has a duty to ensure that standing exists at each stage of and throughout a case.⁸³

The standing requirement doesn’t change in the class action context. “[N]amed plaintiffs who represent a class must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent.”⁸⁴ Stated differently, named plaintiffs “without personal standing cannot predicate standing on injuries suffered by members of the class but which they themselves have not or will not suffer.”⁸⁵ Accordingly, if none of the “named plaintiffs purporting to represent a class establishes the requisite of a case or controversy with the defendants” as to a specific claim, “none may seek relief on behalf of himself or any other member of the class” with respect to that claim.⁸⁶ Defendants should generally challenge the standing of a named plaintiff at the pleading stage as a successful challenge can result in complete dismissal of the suit or a significant narrowing of the claims.

While it is well established that a named plaintiff must have standing to bring claims on behalf of a putative class, it is less clear whether unnamed class members’ standing must be established prior to class certification. Indeed, there is arguably a circuit split on this issue.⁸⁷ Most federal courts of appeals have held that, at the class certification stage, a putative class satisfies standing if at least one named plaintiff meets the requirement; absent class members need not have standing to certify the class.⁸⁸ But courts also recognize that a class member may recover damages or obtain the benefit of injunctive relief only if the class member establishes standing before the entry of judgment.⁸⁹

Therefore, even in jurisdictions that do not require absent class members’ standing to be proven prior to class certification, “whether absent class members can establish standing may be exceedingly relevant to the class certification analysis required by Federal Rule of Civil Procedure 23.”⁹⁰ For instance, in Cordoba v. DIRECTV, LLC, the Eleventh Circuit held that the individualized proof required to establish the standing of unnamed class members presented a “powerful problem” under Rule 23(b)(3)’s predominance factor.⁹¹ Thus, the court held that district courts must consider under Rule 23(b)(3) before certification “whether the individualized issue of standing will predominate over the common issues . . . when it appears that a large portion of the class does not have standing . . . and making that determination for these members of the class will require individualized inquiries.”⁹²

Courts following the majority rule also address absent class members’ standing at the class certification stage via the class definition. For example, in Kohen v. Pacific Investment Management Company, the Seventh Circuit held that “a class should not be certified if it is apparent that it contains a great many persons who have suffered no injury at the hands of the defendant.”⁹³

A minority of circuit courts have explicitly refused to certify a class in which absent members lack standing. In Denney v. Deutsche Bank AG,⁹⁴ the Second Circuit stated that “[t]he filing of a suit as a class action does not relax [the] jurisdictional requirement” that a plaintiff must have standing. Therefore, “no class may be certified that contains members lacking Article III standing.”⁹⁵ Similarly, in Avritt v. Reliastar Life Insurance Company, the Eighth Circuit, citing Denney, stated that “a class cannot be certified if it contains members who lack standing.”⁹⁶

All in all, as for Article III standing at the class certification stage, defendants should generally focus on establishing that the proffered definition of the class is overly broad and purports to include absent class members who may not have suffered an injury in fact—and raising individualized issues relating to proof of standing in connection with the predominance inquiry. Plaintiffs, on the other hand, may seek to avoid some of the standing issues highlighted above by ensuring the named plaintiffs are litigating harms identical to those suffered by the other putative class members and defining the proposed class (as much as possible) to limit it to those who suffered a concrete harm. Also, some plaintiffs have sought to avoid federal standing requirements by attempting to bring class actions in state courts where Article III does not apply, although those courts often may have similar standing requirements.

[2] Statutes of Limitation and Statutes of Repose

Statutory bars can be divided into two categories: statutes of limitations and statutes of repose.⁹⁷ While both types of statutes “are mechanisms used to limit the temporal extent or duration of liability for tortious acts,” each serves a distinct purpose.⁹⁸ First, statutes of limitations are designed at encourage plaintiffs to diligently prosecute their known claims. Accordingly, limitation periods begin to run when the cause of action “accrues”—i.e., “when the plaintiff can file suit and obtain relief.”⁹⁹ In personal injury cases, for example, this will usually be “when the injury occurred or was discovered.”¹⁰⁰ Statutes of repose, on the other hand, are enacted to give more explicit and certain protection to defendants. These statutes “effect a legislative judgment that a defendant should be free from liability after the...