Class Action
| Jurisdiction | United States,Federal |
| Citation | Vol. 74 No. 4 |
| Publication year | 2023 |
Class Action
Thomas M. Byrne
Stacey McGavin Mohr
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The United States Court of Appeals for the Eleventh Circuit worked its way through a varied menu of class-action issues during 2022, including the multifaceted problem of uninjured class members—which the court has decided to consider en banc—as well as several class-action jurisdictional issues.1 The court also declined to rehear en banc its controversial 2020 decision prohibiting class-representative incentive awards, a decision that the Supreme Court recently declined to review as well.
An appeal concerning the meaning of coupon settlements under the Class Action Fairness Act (CAFA)2 instead produced an important opinion, Drazen v. Pinto,3 addressing the certification of classes that are
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defined to include members who have not been injured. The uninjured-class-member problem can manifest itself during at least three stages of the litigation: class certification, settlement, and judgment after trial. The Supreme Court of the United States addressed the last of these in Trans Union LLC v. Ramirez,4 which established the bedrock principle that class members who do not have Article III5 standing are not entitled to participate in any damage judgment awarded to the class.6 The Court accordingly vacated a jury's award of damages under the Fair Credit Reporting Act (FCRA)7 to class members who had not been injured sufficiently to assert FCRA claims in federal court.8 But the Court expressly reserved the Rule 239 question of whether the class representative's claims were sufficiently typical of the class so that it should have been certified in the first place.10 The circuit courts of appeal are divided on whether a class that is defined to include more than a de minimis number of uninjured members should be certified. The United States Court of Appeals for the First Circuit says no, because common issues do not predominate (as required by Rule 23(b)(3))11 in a case in which 10% of the class suffered no required antitrust injury and no plan was presented to adjudicate the injury issue consistent with the defendants' rights.12 The United States Courts of Appeals for the District of Columbia, the Third Circuit, and the Fifth Circuit appear to agree.13 In Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods LLC,14 however, the en banc Ninth Circuit held that whether there are uninjured class members can be determined after certification, at trial.15 The en banc court overruled one of its panels, which had agreed with the First Circuit in holding that more than a de minimis number of uninjured class members precluded class certification.16 The rationale for the
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majority's decision was that, to satisfy Rule 23(b)(3), a district court need only determine that common issues predominate over individual issues.17 Two judges dissented from the Ninth Circuit's en banc opinion.18 The dissent focused on the fact that certification is destiny as a practical matter in a class action: few are tried, and the pressure to settle becomes overwhelming as the stakes escalate.19
The majority in Olean overlooked Rule 23(a)'s20 typicality requirement. It is hard to argue that a class representative injured, for example, by a defective product has a claim typical of members of the class who are not injured by that product. Typicality requires that the class representative '"suffer the same injury' as the class members."21 The concept underlying the typicality requirement is that the class should not have to bet on a weak horse while the defendant should not have to face the prohibitive favorite. A class populated with class members who have not been injured by the conduct complained of fails to satisfy typicality.22 But the allure of overstuffed classes is strong for class counsel. The larger the class, the larger the class settlement, and generally the larger the fee to class counsel, usually determined on the basis of a percentage of the settlement valuation. The issue seems destined for the Supreme Court, though the Court denied a petition for certiorari in Olean.23
The Eleventh Circuit previously explored the impact of uninjured members on class certification in Cordoba v. DIRECTV, LLC,24 a Telephone Consumer Protection Act (TCPA)25 case. Cordoba alleged that he received telemarketing calls in violation of the TCPA after having registered himself on the telemarketer's internal do-not-call list. Cordoba sought to represent a class of persons who received telemarketing calls while the telemarketer failed to maintain a do-not-call list. The problem was that the class members who did not ask the telemarketer not to call had no standing to sue. While Cordoba himself had standing, those class members lacked it.26 The Eleventh Circuit observed that "the fact that many, perhaps most, members of the class may lack standing is
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extremely important to the class certification decision."27 The court saw the resulting "powerful problem" as implicating Rule 23(b)(3)'s requirement that common issues predominate over individual issues in a money-damages class action.28 The district court overlooked the problem entirely, so the Eleventh Circuit vacated the certification order and remanded to give the lower court first crack at the question.29 The court in Cordoba carefully calibrated its holding:
We do not hold today that a court is required to ensure that the class definition does not include any individuals who do not have standing before certifying a class . . . . [W]e only hold that in this case the district court must consider under Rule 23(b)(3) before certification whether the individualized issue of standing will predominate over the common issues in the case, when it appears that a large portion of the class does not have standing, as it seems at first blush here, and making that determination for these members of the class will require individualized inquiries.30
Like the Olean majority, Cordoba's exclusive focus on the predominance requirement neglects to afford the typicality requirement the attention it deserves in deciding whether to authorize class adjudication.
Drazen addressed the related problem of uninjured class members at the class settlement stage.31 Drazen was a putative nationwide class action under the TCPA against GoDaddy.com, LLC, based on allegations of unwanted texts and cell phone calls. The parties reached a class settlement and requested the United States District Court for the Southern District of Alabama's approval.32 The district court asked for briefing on the application of Salcedo v. Hanna,33 which held that receipt of a single text in violation of the TCPA was not an injury sufficiently concrete to confer Article III standing.34 The district court concluded that only the named representatives must have standing and, further, that only 7% of the class members may have received only a single text message and therefore would not have standing under Salcedo. Although that still amounted to 91,000 class members with no standing, the court approved a class settlement.35 An objector appeared and argued, among
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other things, that the settlement involved GoDaddy vouchers which, he contended, were coupons and thus fell under 28 U.S.C § 1712(e),36 part of CAFA. Use of coupons generally restricts the amount of attorneys' fees that may be awarded in a proposed settlement. The district court ultimately disagreed that the settlement was a coupon settlement but did reduce the attorneys' fees award to $7 million. The objector appealed.37
On appeal, the parties' briefing did not address subject-matter jurisdiction.38 The court, however, vacated approval of the settlement and remanded to give the parties an opportunity to revise the class definition so as not to encompass class members with no standing.39 The court began with the principle that every class member must have Article III standing to recover individual damages, as TransUnion held.40 The court went on to hold that "when a class seeks certification for the sole purpose of a damages settlement under Rule 23(e), the class definition must be limited to those individuals who have Article III standing."41 The court also pointedly rejected an argument that if a class member would have a claim in the circuit in which they reside then the class member could be properly included in the class.42
The court then took on a "more difficult question," which was whether individuals who received a single cell phone call also have standing.43 An earlier case, Glasser v. Hilton Grand Vacations Co.,44 held that receipt of more than one unwanted telemarketing call was sufficient to meet Article III concrete injury requirements.45 But the panel did not decide whether a single phone call to a cell phone was a concrete injury for Article III standing purposes.46 And without briefing, the panel was unwilling to answer that question, instead vacating class certification to give the parties an opportunity on remand to redefine the class consistently with TransUnion.47
The court in Drazen did not hold that a class definition at the certification stage that includes uninjured class members must never be
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certified.48 Its prohibition on the inclusion of uninjured class members in a class would apply when a settlement that includes a monetary award is proposed.49
The fate of the rulings in Drazen is now uncertain. On March 13, 2023, the full Eleventh Circuit voted to rehear Drazen en banc and vacated the panel opinion.50 The case is tentatively scheduled to be heard by the en banc court in June 2023.51
A. Appellate Review
In Ruhlen v. Holiday Haven Homeowners, Inc.,52 a divided Eleventh Circuit panel held that the court lacked appellate jurisdiction to review the Middle District of Florida's sua sponte remand to state court for lack of subject-matter jurisdiction.53
The...
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