Standing After Spokeo: One Year Later THURSDAY, OCTOBER 5, 2017 1pm - - PowerPoint PPT Presentation

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Class Certification and Article III Standing After Spokeo: One Year Later

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific THURSDAY, OCTOBER 5, 2017

Robert J. Herrington, Co-Chair , National Products Liability and Mass Torts Practice, Greenberg Traurig, Los Angeles Jeffrey A. Leon, Partner, Quantum Legal, Highland Park, Ill. Andrew C. Nichols, Partner, Winston & Strawn, Washington, D.C.

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I Saw her Standing There. Article III Standing and Class Certification After Spokeo Strafford Webinars October 5, 2017

Jeffrey A. Leon Quantum Legal LLC jeff@qulegal.com

• Article III (or Constitutional) Standing
• Statutory (or Zone of Interest) Standing

TYPES OF STANDING

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7 7

ARTICLE III STANDING

The source of much litigation: Section 2 of Article III of the United States Constitution “The judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of the United States…to controversies…between citizens of different states”

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“Cases” or “Controversies” = Article III Standing

Article III Standing

The “Case or Controversy” Inquiry has two levels:

• Constitutional Requirements
• Prudential Requirements

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Article III Standing

Constitutional Requirements:

 Injury-In-Fact  Traceability (Causation)  Redressability

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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. No advisory opinions.

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Article III Standing

Article III Standing

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

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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ARTICLE III STANDING

Prudential Requirements

 Generalized Grievances  No Third Party Standing

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Article III Standing

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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Article III Standing

No 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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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 interests” 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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SPOKEO, INC. V. ROBINS, 136 S. Ct. 1540 (May 24, 2016): What it Says, What It Means

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What Spokeo Was About

• An alleged violation of FCRA (Fair Credit Reporting Act)
• Spokeo was alleged to have published false info about the

plaintiff in its people search engine that misstated his age and education, etc.

• 9th Circuit had held that the alleged FCRA violation was of a

statutory right belonging to the Plaintiff and that the Plaintiff had “personal interests in the handling of his credit information [that] are individualized rather than collective.” Accordingly, the Plaintiff was found to have standing.

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The Spokeo Result: Vacated and Remanded, 6-2

• Held that the Ninth Circuit’s “analysis [of plaintiff’s Article

III standing] was incomplete” because a plaintiff must “allege an injury that is both ‘concrete and particularized’” and that “the Ninth Circuit’s analysis focused on the second characteristic (particularity), but it overlooked the first (concreteness).”

• “Particularization is necessary to establish injury in fact, but

it is not sufficient. An injury in fact must also be ‘concrete’. Under the Ninth circuit’s analysis, however, that independent requirement was elided”

• “’Concrete’ is not, however, necessarily synonymous with

‘tangible’ …. We have confirmed in many of our previous cases that intangible injuries can nevertheless be concrete.”

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The Spokeo Result: Vacated and Remanded, 6-2

“In determining whether an intangible harm constitutes injury in fact, both history and the judgment of Congress play important roles….because Congress is well-positioned to identify intangible harms that meet minimum Article III requirements….” However, “Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury in fact requirement whenever a statute grants a person a statutory right….Article III standing requires a concrete injury even in the context of a statutory

• violation. For that reason, Robins could not, for example, allege

a bare procedural violation, divorced from any concrete harm, and satisfy the injury in fact requirement….This does not mean, however, that the risk of real harm cannot satisfy the requirement of concreteness.”

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The Spokeo Result: Vacated and Remanded, 6-2

• “[N]ot all inaccuracies causeh arm or present any material risk of harm. An

example that comes ready to mind is an incorrect zip code. It is difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm.”

• Remanded because the Ninth Circuit’s analysis was incomplete and

statingthat “[w]e take no position as to whether the Ninth Circuit’s ultimate conclusion—that Robins adequately alleged an injury in fact—was correct.”

• Ginsburg dissent (joined by Sotomayor) “part[ed] ways with the Court []
• n the necessity of a remand” because “Robins’ allegations carry him

across the threshold” and “I see no utility in returning this case to the Ninth Circuit to underscore what Robins’ complaint already conveys concretely”.

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Is Spokeo Meaningful?

• An article in Corporate Counsel Magazine by Shepherd Mullin attorneys called it

a “Game Changer” Which “Revamp[ed] Standing for Statutory Class Actions” because “putative classes are generally drawn broad enough to include a high percentage of individuals with nothing more than a technical claim. From that perspective, if courts have to hold mini-trials as to whether putative class members in these no harm class actions actually suffered anything more than a procedural violation, then it is hard to imagine how these cases will be able to pass the Rule 23(b)(3) predominance inquiry.”

• A client alert by lawyers at Davis Wright argues that “[t]he impact of the

Court’s decision is [] likely to be more limited than many observers and class action defendants had initially hoped….Spokeo may ultimately have a muted impact on the issue of standing in some privacy class actions, doing little more than creating an additional hurdle for plaintiffs to clear by requiring them to demonstrate both a statutory violation and, when not apparent from or intrinsic to that violation, injury in fact that is both concrete and particularized” but argued that “Spokeo’s greatest impact may potentially be the class certification phase because “if each putative class representative and class member must first prove injury [that meets the Article III threshold]…those individual questions may well predominate”.

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• A Law360 article by Balch & Bingham attorneys noted that

“[m]any commentators have opined that the Supreme Court ducked the hard question in Spokeo” but that it was significant that that the Court “expressly articulated that bare procedural violations alone will not be sufficient to confer standing without a showing of concrete injury.” Nonethless, they state that “Spokeo clarifies the law but still leaves much work for the lower courts”.

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The “New News” On Spokeo From The Circuits

Andrew C. Nichols

Partner, Winston & Strawn, LLP

anichols@winston.com

• Decisions are coming out both ways. For example, recently…
• the Ninth Circuit—in Spokeo itself—found standing
• the Second Circuit found no standing
• These decisions show two questions the Circuits often ask, which give

courts flexibility to find standing, or not

• Recently, a Third Circuit decision
• adds a third question and
• creates potential disagreement about materiality
• Implications for class-action practice

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Spokeo’s reception

• Judge O’Scannlain held for the panel that injury-in-fact

requires asking two questions: #1 – whether the statutory provisions at issue were established to protect the plaintiff’s concrete interests (as opposed to purely procedural rights), and if so #2 – whether the specific procedural violations alleged in this case actually harm, or present a material risk of harm, to such interests

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Spokeo on Remand

Spokeo – News From the Circuits

• #1 – FCRA provisions protect concrete interests in fair and accurate credit

reporting and consumer privacy. Even though these interests may be intangible, the dissemination of false information in consumer reports can itself constitute a concrete harm.

• #2 – Robins alleged actual harm because the information reported about

him—age, marital status, education background, and employment history— is the type that may be important to employers and others making use of a consumer report.

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As Applied:

Spokeo – News From the Circuits

• No:

In the context of FCRA, the alleged intangible injury caused by the inaccurate report is itself sufficiently concrete.

• Both the challenged conduct and the attendant injury have already
• ccurred. As alleged … Spokeo has indeed published a materially

inaccurate consumer report about Robins. And, as we have discussed, the alleged intangible injury caused by that inaccurate report has also

• ccurred. … It is of no consequence how likely Robins is to suffer

additional concrete harm as well (such as the loss of a specific job

• pportunity).

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But Aren’t These “Harms” Too Speculative?

Spokeo – News From the Circuits

By contrast, two weeks ago, the Second Circuit issued a ruling applying Spokeo to find no standing.

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Spokeo – News From the Circuits

• Katz v. The Donna Karan Co. LLC

arose under the Fair and Accurate Credit Transactions Act (FACTA), which provides:

[N]o person that accepts credit cards … for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale[.]

15 U.S.C. § 1681c(g)(1)

• Katz alleged that Donna Karan violated

FACTA by including the first six digits

• n his receipt.

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Katz v. The Donna Karan Co. LLC

Spokeo – News From the Circuits

“[T]he critical question for standing purposes is whether the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement, which in turn depends on whether the particular bare procedural violation may present a material risk of harm to the underlying concrete interest Congress sought to protect in enacting the statutory requirement.”

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Katz v. Donna Karan Co., L.L.C.,

2017 WL 4126942, at *3 (2d Cir. Sept. 19, 2017) (emphasis in original).

Spokeo – News From the Circuits

Holding: Including the first six digits of a credit card number— though a procedural violation—is not sufficiently concrete because it does not materially increase the risk of identity theft. Reasoning: The initial six digits on a card identify the card’s issuer, not the holder, and FACTA is designed to protect the issuer.

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Katz v. Donna Karan Co., L.L.C.,

2017 WL 4126942 (Sept. 19, 2017)

Spokeo – News From the Circuits

“Given … the fact that FACTA does not prohibit printing the issuer identity on a receipt, and informed by the findings of other courts as to this issue, we conclude that … the bare procedural violation in question did not raise a material risk of harm of identity theft.”

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Katz v. Donna Karan Co., L.L.C.,

2017 WL 4126942, at *6 (2d Cir. Sept. 19, 2017)

Spokeo – News From the Circuits

What can we learn from Spokeo and Donna Karan? Confirming standing requires an inquiry into concrete harm that is: (1) statute- and (2) plaintiff-specific.

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Spokeo – News From the Circuits

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Statute-specific:

Spokeo – News From the Circuits

• Spokeo: Were the statutory provisions at issue in

FCRA established to protect the plaintiff’s concrete interests (as opposed to purely procedural rights)?

• Donna Karan: What was the underlying concrete

interest Congress sought to protect in enacting the statutory requirement in FACTA?

• Spokeo: Robins alleged actual harm because he alleged

incorrect information reported about him (age, marital status, education background, and employment history)— and ensuring the accuracy of this sort of information seems directly and substantially related to FCRA’s goals.

• Donna Karan: Katz alleged that Donna Karan violated

FACTA by including the first six digits on his receipt—that is, the number of the issuer. But FACTA does not prohibit printing the issuer identity on a receipt, and including the first six digits of a credit card number did not materially increase the risk of identity theft, which was FACTA’s goal—so there was no concrete injury.

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Plaintiff-specific:

Spokeo – News From the Circuits

The Third Circuit summarizes this two-pronged analysis this way, and adds a third—historical—question:

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When one sues under a statute alleging the very injury [plaintiff-specific question] the statute is intended to prevent [statute-specific question], and the injury has a close relationship to a harm traditionally providing a basis for a lawsuit in English or American courts [historical question], a concrete injury has been pleaded.

Susinno v. Work Out World Inc.,

862 F.3d 346, 351 (3d Cir. 2017).

Spokeo – News From the Circuits

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Susinno alleged that she received an unsolicited call on her cell phone from a fitness company called Work Out World (WOW). Susinno did not answer the call, so WOW left a prerecorded promotional offer that lasted one minute on her voicemail. Susinno filed a complaint claiming WOW’s phone call and message violated the Telephone Consumer Protection Act’s prohibition of prerecorded calls to cellular telephones.

Susinno v. Work Out World Inc.,

862 F.3d 346, 348 (3d Cir. 2017).

Spokeo – News From the Circuits

• Plaintiff-specific question
• Susinno alleged that she received an unsolicited call on her cell phone, which

triggered a prerecorded offer.

• Statute-specific question
• The TCPA addresses itself directly to single prerecorded calls from cell phones,

and states that its prohibition acts in the interest of privacy rights.

• Historical question
• The TCPA prohibition on precorded calls addresses what historically was

called intrusion on seclusion. Thus, Congress was not inventing a new theory

• f injury when it enacted the TCPA.

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Susinno v. Work Out World Inc.

Spokeo – News From the Circuits

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Some Potential Disagreement About Materiality:

Spokeo – News From the Circuits

Spokeo: “As alleged in the complaint, Spokeo has indeed published a materially inaccurate consumer report about Robins.” Donna Karan: “[T]he bare procedural violation in question did not raise a material risk of harm of identity theft[.]” Work Out World: “[T]he Spokeo Court meant to reiterate traditional notions of standing. And the traditional notion of standing requires only that claimant allege some specific, identifiable trifle of injury.”

Katz v. Donna Karan Co., L.L.C. Robbins v. Spokeo Susinno v. Work Out World Inc.

Implications of Circuit interpretations

• f Spokeo for class actions…

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Spokeo – News From the Circuits

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The Plaintiff-Specific Requirement May Mean Common Issues May Not Predominate:

Spokeo – News From the Circuits

Spokeo may have gotten Robins’s important biographical information wrong, but not the important information of others—who would not have been injured. Donna Karan may have printed the first six digits of Katz’s receipt, but the last six of other plaintiffs—and

• nly the latter would have been injured.

Work Out World may have left a message for Susinno, but failed to get the voicemail of others—who presumably would not have been injured.

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Keep in Mind:

• This can arise even at the pleading stage, where the class

impermissibly may be defined to include people who face no injury,

• r only immaterial injury.
• For example, in Spokeo, suppose Robins had defined his class to

include everyone about whom Spokeo had spoken falsely on its

• website. That would capture people who suffered only trivial false

statements, such as a missing or wrong zip code.

• That class would be too large because it would include people who

suffered no concrete harm by definition.

Spokeo – News From the Circuits

This is not to say that injury must be proved as to every member before a class is certified.

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Spokeo – News From the Circuits

It is to say that the class must be properly defined:

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“A class must … be defined in such a way that anyone within it would have standing.”

Avritt v. Reliastar Life Ins. Co.,

615 F.3d 1023, 1034 (8th Cir. 2010).

“Article III … requires that the complaint allege that absent class members have been injured.”

Newberg on Class Actions

§ 2:3 (5th ed.).

Spokeo – News From the Circuits

Article III Standing and Class Certification After Spokeo

Robert J. Herrington Greenberg Traurig herringtonr@gtlaw.com

A few practical thoughts…

 The standing/removal “trap”  Dismissal without prejudice?  Implications for class certification

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Practical Tip #1 Beware the removal-standing trap

Mocek v. Allsaints USA Ltd., 220 F. Supp. 3d 910, 913 (N.D. Ill. 2016)

 FCRA complaint removed to federal court

 Federal question jurisdiction!

 Motion to dismiss – no standing under Spokeo  The court: “the jurisdictional issue is ‘easily and readily’

resolved based on the parties' post-removal agreement that federal jurisdiction is lacking”

 28 U.S.C. § 1447(c): “If at any time before final judgment it

appears that the district court lacks subject-matter jurisdiction, the case shall be remanded.”

 Case remanded and defendant owed $58k in attorneys’ fees for

improvident removal

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Practical Tip #1 Beware the removal-standing trap

Same rule applies for state claims removed under CAFA

 If “the case did not originate in federal court but was removed

there by the defendants, the federal court must remand the case to the state court from whence it came. Wallace v. ConAgra Foods, Inc., 747 F.3d 1025, 1033 (8th Cir. 2014) (food labeling)

 A “removed case in which the plaintiff lacks Article III standing

must be remanded to state court” Polo v. Innoventions Int’l, LLC, 833 F.3d 1193, 1196 (9th Cir. 2016) (supplement labeling)

 Possible “futility” exception: “a district court may dismiss a removed case

without remanding it back to state court if remand would be futile.”

 But court must have ”absolute certainty” that state court would dismiss.

Polo, 833 F.3d at 1197

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Practical Tip #1 Dealing with removal-standing trap

 Standing relates to justiciability

 Article III standing is “a part of the concept of justiciability.

Where the plaintiff lacks standing, dismissal is appropriate.”

• St. Louis Heart Ctr., Inc. v. Nomax, Inc., No. 4:15-CV-517 RLW,

2017 WL 1064669, at *3 (E.D. Mo. Mar. 20, 2017) (TCPA case)

 Divestment of federal question jurisdiction not allowed

 “Plaintiff is actually arguing that a state's more-lenient standing

requirements can divest a federal court of its 28 U.S.C. § 1331 federal question jurisdiction, which Defendant invoked by removing this case to federal court. Plaintiff does not address, and the Court finds no authority, that such divestment is possible.” Advocates for Individuals with Disabilities Found. Inc.

• v. Russell Enterprises Inc., No. CV-16-02380-PHX-JAT, 2016 WL

7187931, at *3 (D. Ariz. Dec. 12, 2016) (ADA case)

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Practical Tip #1 More ways of dealing with removal-standing trap

 Consider state standing requirements  Timing of standing challenge  Where possible, focus on statutory standing, rather than

Article III

 Consider whether Congress can create a federal claim

that does not satisfy Article III

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Practical Tip #2 Beware dismissal without prejudice

Katz v. Donna Karan Co., L.L.C., No. 15-464, 2017 WL 4126942, at *6 (2d Cir. Sept. 19, 2017)

 “[W]here a case is dismissed for lack of Article III standing, as

here, that disposition cannot be entered with prejudice, and instead must be dismissed without prejudice.” Missouri ex rel. Koster v. Harris, 847 F.3d 646, 656 (9th Cir.), cert. denied sub nom. Missouri ex rel. Hawley v. Becerra, 137 S. Ct. 2188, 198 L. Ed. 2d 255 (2017)

 “In general, dismissal for lack of subject matter jurisdiction is

without prejudice.”

Win the battle, but end up in state court?

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Practical Tip #3 Class Certification– No standing = dismissal

Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1023 (9th

• Cir. 2003)



“[W]here the sole named plaintiff “never had standing” … and where “she never was a member of the class she was named to represent,” the case must be remanded with instructions to dismiss.”

Moreno v. AutoZone, Inc., 410 F. App'x 24, 25 (9th Cir. 2010)



“Because Medrano never had a cognizable late paycheck claim against AutoZone, she cannot represent others who may have such a claim, and her bid to serve as a class representative must fail. As a result, certification of the class with [Medrano] as its representative must be vacated, and substitution of a new named plaintiff is not required.”

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Practical Tip #3 Class Certification–

Must class members have standing?

Who knows…. Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353, 362 (3d Cir. 2015)



“We now squarely hold that unnamed, putative class members need not establish Article III standing. Instead, the “cases or controversies” requirement is satisfied so long as a class representative has standing, whether in the context of a settlement or litigation class.”

Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023, 1034 (8th Cir. 2010)



“[F]ederal courts do not require that each member of a class submit evidence of personal standing, a class cannot be certified if it contains members who lack

• standing. Denney v. Deutsche Bank AG, 443 F.3d 253, 263–64 (2d Cir.2006). A

class “must therefore be defined in such a way that anyone within it would have standing.” Id. at 264. Or, to put it another way, a named plaintiff cannot represent a class of persons who lack the ability to bring a suit themselves.”

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Practical Tip #3 Class Certification–

Standing arguments still useful

Halvorson v. Auto-Owners Ins. Co., 718 F.3d 773, 779 (8th Cir. 2013)

 Rejecting certification on predominance grounds using standing

analysis

McNair v. Synapse Grp. Inc., 672 F.3d 213, 227 (3d Cir. 2012)

 “Because Appellants lack Article III standing to seek injunctive

relief, the District Court was obliged to deny class certification under Rule 23(b)(2).”

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