Article III Standing and Rule 23(b)(3) Certification: Emerging - - PowerPoint PPT Presentation

Article III Standing and Rule 23(b)(3) Certification: Emerging Litigation Trends

Strategies for Plaintiff and Defense Counsel to Pursue or Challenge Certification

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WEDNES DAY, DECEMBER 18, 2013

Presenting a live 90-minute webinar with interactive Q&A

Jeffrey A. Leon, Part ner, Complex Litigation Group, Highland Park, Ill. Daniel R. Karon, Part ner, Goldman Scarlato Karon & Penny, Cleveland S abrina H. S t rong, Part ner, O’Melveny & Myers, Los Angeles

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I Sa Saw her Sta r Standin ing g There re. Understanding Standing in Class Actions

Strafford Webinars December 18, 2013

Daniel R. Karon Goldman Scarlato Karon & Penny, P.C. Jeffrey A. Leon Complex Litigation Group, LLC Sabrina H. Strong O’Melveny & Myers LLP

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Introduction to Article III Standing

• A. Constitutional requirements
• 1. Injury-in-Fact

Plaintiff must have suffered actual or threatened injury as the result of defendant’s alleged illegal conduct that’s concrete and particularized and actual or imminent, not conjectural or hypothetical

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Introduction to Article III Standing

• 2. Traceability or Causation

Plaintiff’s alleged injury must be traceable to challenged action Indirect injury OK if traceable to defendants’ acts or omissions Plaintiff must show some causal connection between injury and defendant’s conduct.

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Introduction to Article III Standing

• 3. Redressability

Established when favorable decision would amount to significant increase in likelihood that plaintiff would obtain relief that directly redresses the injury suffered.

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Introduction to Article III Standing

• B. Prudential requirements
• 1. Generalized Grievances

Standing not warranted for generalized grievances shared by many Understood to be job of

• ther governmental institutions,

like Congress

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Introduction to Article III Standing

• 2. Third-Party Standing

Litigants must assert their own legal rights and interests and can’t rest claim on the legal rights or interests of third parties.

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Introduction to Statutory Standing

Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998)

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Introduction to Statutory Standing

Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998)

• Court can’t decide merits-based or cause-of-action questions first

(e.g., does statute allow damages for violations) (Rule 12(b)(6) question) . . . . . . although, “the merits inquiry [such as whether cause of action exists] and the statutory standing inquiry often overlap.”

• Article III standing - as opposed to statutory standing – has “nothing

to do with the text of the statute relied upon.”

• Because unlike Article III standing, statutory standing involves

whether plaintiff comes within “zone of int erest s” for which the cause of action is available.

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Introduction to Statutory Standing

Plaintiff’s claimed redressable injuries:

Plaintiff’s “right to know about [toxic chemical] releases and [Plaintiff’s] interests in protecting and improving the environment and the health

• f its members have been, are being, and will be adversely affected by

[Defendant’s] actions in failing to provide timely and required information under EPCRA.”

But the Court considered Plaintiff’s claimed injury unredressable:

“Having found that none of the relief sought by [Plaintiff] would likely remedy its alleged injury in fact, we must conclude that [Plaintiff] lacks standing to maintain this suit, and that we and the lower courts lack jurisdiction to entertain it.”

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But wait . . .

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Introduction to Statutory Standing

Stevens’ concurrence in judgment:

Question: Does the EPCRA “confer[] federal jurisdiction over citizen

suits for wholly past violations”?

Answer: “[T]he Court should answer the statutory question first.

Moreover, because the EPCRA, properly construed, does not confer jurisdiction over citizen suits for wholly past violations, the Court should leave the constitutional question for another day.”

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Introduction to Statutory Standing

“[If the EPCRA] authorizes citizen suits for wholly past violations, the district court has jurisdiction over these actions; if it does not, the court lacks jurisdiction.” The Court’s “inquiry as to standing must begin with a determination of whether the statute in question authorizes review at the behest of the plaintiff.” The Court should “turn[] to the constitutional standing question only after determining that standing exist[s] under the statute.” “[G]iven a choice between two jurisdictional questions – one statutory and the other constitutional – the Court has the power to answer the statutory question first.” [A]nd if no right of action exists, questions of standing and jurisdiction become immaterial.

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Standing challenge # 1

Manifestation of injury to plaintiff (i.e., does “injury-in-fact” to plaintiff exist?)

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Standing Challenge #1 Manifestation of Injury – standing doesn’t exist

In re Barnes & Noble Pin Pad Litig., No. 12-cv-8617, 2013 WL 4759588, at * 3 (N.D. Ill. Sept. 3. 2013)

“Nothing in the Complaint indicates Plaintiffs have suffered either a ‘certainly impending’ injury or a ‘substantial risk’ of an injury, and therefore, the increased risk is insufficient to establish standing.”

DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299, 305, 307 (Tex. 2008)

“[P]laintiffs could accidentally unlatch their Gen-3 seatbelt buckles and subject themselves to harm, though that has never happened . . . .” (“Ripeness” issue here?) “[T]he rights of ten million vehicle owners and lessees across the United States should not be adjudicated in an action brought by three plaintiffs who cannot show more than the merest possibility

• f injury to themselves.”

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But . . .

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Standing Challenge #1

“Premium-Price Theory” May Overcome No-Manifestation-of-Injury Argument

I In re Hydroxycut Mktg. & Sales Practices Litig., 801 F.

• Supp. 2d 993, 1002 (S.D. Cal. 2011)

“[T]he injury to Plaintiffs occurred at the time they purchased the Hydroxycut products and did not receive the benefit of their

• bargain. Plaintiffs have lost the money they paid for the product

and have alleged an economic injury.”

In re Whirlpool Corp. Front Loading Washer Prods. Liability Litig., 722 F.3d 838, 856 (6th Cir. 2013)

“If defective design is ultimately proved, all class members have experienced injury as a result of the decreased value of the product purchased.” (notably, opinion doesn’t discuss standing)

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Standing Challenge #2

May plaintiffs’ counsel include states where class representatives don’t reside?

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Standing Challenge #2 Yes

In re Processed Egg Prods. Antitrust Litig., 851 F. Supp. 2d 867, 886-87 (E.D. Pa. 2012)

“An Article III standing inquiry simply does not require considering the elements of a state claim as ‘jurisdictional prerequisites.’ To inject the condition that Plaintiffs must satisfy certain elements of the state antitrust claims into a constitutional standing analysis would result in an impermissible out-of-the-box merits inquiry.”

Sullivan v. DB Investments, Inc., 667 F.3d 273, 307, 347 (3d Cir. 2011)

“[S]tatutory standing is simply another element of proof for an antitrust claim, rather than a predicate for asserting a claim in the first place.”

Dissent: “[O]ne must actually have a legal claim before getting in

line for a legal recovery.”

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Standing Challenge #2 No

In re Wellbutrin XL Antitrust Litig., 260 F.R.D. 143, 158 (E.D.

• Pa. 2009)

“The plaintiffs' argument that they have general Article III standing is insufficient to establish standing with respect to particular claims. The Court finds that the plaintiffs have standing to assert claims only under the laws of those states where the plaintiffs are located or their members reside.”

In re Terazosin Hydrochloride Antitrust Litig., 160 F. Supp. 2d 1365, 1371 (S.D. Fla. 2001)

“[E]ach claim must be analyzed separately, and a claim cannot be asserted on behalf of a class unless at least one named plaintiff has suffered the injury that gives rise to that claim. . . . Analyzing each of [plaintiffs’] state law claims separately, it is clear that no named plaintiff suffered an injury giving rise to an antitrust claim in [the states where neither any plaintiff resides nor purchased Terazosin].”

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Standing Challenge #3

May class representatives assert claims with respect to products that they haven’t bought?

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Standing Challenge #3

Before we answer . . . Courts consider this question different ways:

 Standing issue  Class-certification issue

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Standing Challenge #3 Is there standing? Yes

Anderson v. Jamba Juice Co., 888 F. Supp. 2d 1000, 1005 (N.D. Cal. 2012)

The “critical inquiry” is whether the products purchased versus not purchased are substantially similar. Here, all claims were based on “All Natural” label but had different flavors. Court denied motion to dismiss for lack of standing.

Lanovaz v. Twinings N. Am., Inc., No. C-12-02646, 2013 WL 2285221, * 3 (N.D. Cal. May 23, 2013)

“Because the claims for 51 of the varieties of tea are based upon the exact same label describing the same product, camellia sinensis, the court finds that Lanovaz has standing to sue on behalf

• f the purchasers of these teas and thus denies Twinings’ motion

with respect to these products. Red tea, on the other hand, is made from a different plant and is thus a significantly different product.”

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Standing Challenge #3 Is there standing? No

Miller v. Ghirardelli Chocolate Co., 912 F. Supp. 2d 861, 869- 72 (N.D. Cal. 2012)

“[P]laintiff may have standing to assert claims for unnamed class members based on products he or she did not purchase so long as the products and alleged misrepresentations are substantially similar,” and here, the products were not substantially similar.

Johns v. Bayer Corp., No. 09-CV-1935, 2010 WL 476688, at * 5 (S.D. Cal. Feb. 9, 2010)

“[Plaintiff] cannot expand the scope of his claims to include a product he did not purchase or advertisements relating to a product that he did not rely upon. The statutory standing requirements of the UCL and CLRA are narrowly prescribed and do not permit such generalized

• allegations. Plaintiff, therefore, has standing under the UCL and CLRA

to pursue his claim regarding [the] product [he purchased] and the representations contained on that product; but he lacks standing to pursue any other alleged claim under the UCL or CLRA.”

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Standing Challenge #3 Class-certification issue – standing exists

Aguilar v. Boulder Brands, Inc., No. 12-cv-01862, 2013 WL 2481549, at * 3 (S.D. Cal. June 10, 2013)

“Plaintiff’s ability to represent class members injured by similar products should be analyzed under Rule 23, not on a motion to dismiss.”

Forcellati v. Hyland’s, Inc., 876 F. Supp. 2d 1155, 1161 (C.D. Cal. 2012)

“[W]e agree with the numerous recent decisions that have concluded that Defendants’ argument is better taken under the lens

• f typicality or adequacy of representation, rather than standing.”

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Does Article III standing exist when plaintiff, aware of an alleged misrepresentation, is pursuing only injunctive relief?

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Does Article III standing exist when plaintiff, aware of an alleged misrepresentation, is pursuing only injunctive relief? No

No threat of future harm means no standing

Campion v. Old Republic Home Protection Co., 861 F.

• Supp. 2d 1139 (S.D. Cal. 2012)

Even if plaintiff were to purchase another home-warranty plan from defendant, he now has knowledge of defendant’s alleged misconduct.

Castagnola v. Hewlett-Packard Co., No. 11-cv-05772, 2012 WL 2159385 (N.D. Cal. June 13, 2012)

Defendant allegedly deceived consumers into enrolling in a fee- based website membership. No standing because plaintiffs were now aware of this conduct.

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Does Article III standing exist when plaintiff, aware of an alleged misrepresentation, is pursuing only injunctive relief? Yes

“No” would thwart the consumer-protection laws

Ries v. Arizona Beverages USA, No. 10–01139 RS, 2012 WL 5975247 (N.D. Cal. Nov. 27, 2012)

Plaintiff would not be able to rely on future representations that the drink is “natural,” which is the kind of harm that California’s consumer- protection statutes are designed to redress.

Koehler v. Litehouse, Inc., No. 12-cv-04055, 2012 WL 6217635 (N.D. Cal. Dec. 13, 2012)

Court finds that injunctive relief is proper; otherwise, consumers would be unable to obtain relief under consumer protection laws.

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Questions? Comments? Compliments?

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Tha Thank yo nk you! u!

Daniel R. Karon (216) 390-2594 karon@gskplaw.com Jeffrey A. Leon (847) 433-4500 jeff@complexlitgroup.com Sabrina H. Strong (213) 430-6113 sstrong@omm.com

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