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September 17, 2021 Articles

Putative Class Member Standing as a Prerequisite for Certification

An explanation of unresolved issues after TransUnion v. Ramirez and the current circuit court divide.

By Melanie A. Conroy

On June 25, 2021, the Supreme Court issued its much-anticipated 5–4 ruling in TransUnion LLC v. Ramirez, No. 20-297. In a 27-page opinion by Justice Kavanaugh, the Court reversed the Ninth Circuit’s decision upholding the certification of a class of consumers whom the credit reporting agency TransUnion had mistakenly labeled as potential terrorists and drug traffickers. Of these consumers, only a fraction had their misleading credit reports provided to third parties. Therefore, only that portion of the class had, by the Court’s analysis, established a concrete harm sufficient to confer constitutional standing.

Notwithstanding the Court’s reversal, there was a fundamental point on which the Ninth Circuit and Supreme Court were in complete agreement. Underpinning its decision below, the Ninth Circuit declared: “[W]e hold that every member of a class certified under Rule 23 must satisfy the basic requirements of Article III standing at the final stage of a money damages suit when class members are to be awarded individual monetary damages.” Ramirez v. TransUnion LLC, 951 F.3d 1008, 1017 (9th Cir. 2020). In the abstract, the Supreme Court agreed: “Every class member must have Article III standing in order to recover individual damages.” TransUnion, No. 20-297, slip op. at 15 (citing Tyson Foods, Inc. v. Bouaphakeo, 577 U. S. 442, 466 (2016) (Roberts, C.J., concurring)).

Despite this agreement in theory, the Supreme Court ultimately overruled the lower decision in application, finding that the vast majority of the certified class had not met the requirements of Article III standing to recover monetary damages. The unique posture of TransUnion when it reached the Supreme Court shaped the scope of its holding; before the Supreme Court considered the questions raised, a jury had determined liability and reached a damages award. Therefore, TransUnion’s appeal concerned the post-trial distribution of damages to class members and did not directly address the class certification process under Rule 23 of the Federal Rules of Civil Procedure. On that issue, the Court remanded for further proceedings: “On remand, the Ninth Circuit may consider in the first instance whether class certification is appropriate in light of our conclusion about standing.” TransUnion, No. 20-297, slip op. at 27. This further consideration was necessary because, as Justice Kavanaugh explained, “We do not here address the distinct question whether every class member must demonstrate standing before a court certifies a class. See, e.g., Cordoba v. DIRECTV, LLC, 942 F. 3d 1259, 1277 (CA11 2019).” TransUnion, No. 20-297, slip op. at 15 n.4.

In light of this footnote, all federal courts are now in the position of the Ninth Circuit on remand and must determine whether class certification under Rule 23 is appropriate if, under the rubric for standing set forth in TransUnion, a proposed class includes putative members who do not satisfy the requirements of Article III.

A number of circuit courts have already answered this question based on the Court’s prior guidance, and one might expect that the Court’s holding in TransUnion will further solidify, rather than resolve, the growing split on this question. Circuit court decisions on this issue that date before TransUnion were based on the Court’s earlier guidance in Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), and Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). To be more precise concerning the circuit split that ensued, these decisions fell more along a spectrum than a sharp dividing line. The chart below represents this spectrum, and the discussion that follows provides an overview of the circuit court decisions that form the range of holdings on the question of whether the standing of putative class members is a prerequisite to Rule 23 certification. These are the decisions that each circuit must now revisit in light of TransUnion.

Number of Putative Class Members Required to Have Standing for Rule 23 Certification

Number of Putative Class Members Required to Have Standing for Rule 23 Certification
All Putative Class Members Nearly All Case-Specific Not Required
2d and 8th Circuits 1st, 9th, and D.C. Circuits 4th,* 7th, 10th,* and 11th Circuits 3d, 5th, and 6th Circuits

* Denotes that the court has not directly addressed the issue to date and thus this categorization is drawn from related precedent or dicta.

Restrictive Circuits Requiring That All Putative Class Members Have Standing for Certification

The Second and Eighth Circuit Courts have articulated the most stringent standards for putative class member standing at the class certification stage. The Second Circuit, while it does not require absent class members to “submit evidence of personal standing,” is firm that “no class may be certified that contains members lacking Article III standing.” Denney v. Deutsche Bank AG, 443 F.3d 253, 263–64 (2d Cir. 2006). To satisfy this standing at the class certification stage, “[t]he class must . . . be defined in such a way that anyone within it would have standing” under Article III. Id.

The Eighth Circuit subsequently adopted the Second Circuit’s approach, stating that “a named plaintiff cannot represent a class of persons who lack the ability to bring a suit themselves.” Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023, 1034 (8th Cir. 2010). See also Halvorson v. Auto-Owners Ins. Co., 718 F.3d 773, 778 (8th Cir. 2013) (“In order for a class to be certified, each member must have standing and show an injury in fact that is traceable to the defendant and likely to be redressed in a favorable decision.”); In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604, 616 (8th Cir. 2011) (“A district court may not certify a class . . . ‘if it contains members who lack standing.’”).

Circuits That Permit Only a “De Minimis” Number of Putative Class Members without Standing

The First, Ninth, and D.C. Circuits all embrace the legal theory underlying the most stringent standard but allow for the presence of a “de minimis” number of putative class members who could not individually satisfy the standing requirements of Article III. The First Circuit reversed the certification of a class in which 10 percent of putative class members were uninjured, determining that “[s]uch a result would fly in the face of the core principle that class actions are the aggregation of individual claims, and do not create a class entity or re-apportion substantive claims.” In re Asacol Antitrust Litig., 907 F.3d 42, 56 (1st Cir. 2018). The court distinguished its earlier precedent by noting “this is not a case in which a very small absolute number of class members might be picked off in a manageable, individualized process at or before trial.” Id. at 53 (distinguishing In re Nexium Antitrust Litig., 777 F.3d 9, 25 (1st Cir. 2015) (“We think that a certified class may include a de minimis number of potentially uninjured parties”).

The Ninth Circuit originally adopted the Second Circuit’s more stringent approach. Mazza v. Am. Honda Motor Co., 666 F.3d 581, 594 (9th Cir. 2012) (“‘No class may be certified that contains members lacking Article III standing.’” (quoting Denney)). But, over time, the Ninth Circuit embraced the de minimis exception, holding that “even a well-defined class may inevitably contain some individuals who have suffered no harm as a result of a defendant’s unlawful conduct.” Torres v. Mercer Canyons Inc., 835 F.3d 1125, 1137 (9th Cir. 2016). The Ninth Circuit recently reiterated its adoption of the exception, noting that “[a]lthough we have not established a threshold for how great a percentage of uninjured class members would be enough to defeat predominance, it must be de minimis.” Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 993 F.3d 774, 792–93 (9th Cir. 2021).

The D.C. Circuit has also applied a de minimis analysis, assuming that the lower court correctly recognized such an exception and determining that “5% to 6% constitutes the outer limits of a de minimis number.” In re Rail Freight Fuel Surcharge Antitrust Litig., MDL No. 1869, 934 F.3d 619, 625 (D.C. Cir. 2019). The court determined that 2,037 putative class members far exceeded a de minimis number and refused to evaluate the standing of putative class members on a revenue-share basis, explaining “revenue is irrelevant to predominance, which looks to whether elements such as causation and injury may be proved through common evidence, not how much the defendants benefited from any wrongdoing.” Id. at 626.

Circuits That Embrace a Case-by-Case Analysis

The Seventh and Eleventh Circuits, and perhaps also the Fourth and Tenth Circuits, favor a more case-by-case approach when considering whether a putative class that includes uninjured members may be certified under Rule 23. These circuits have articulated a skepticism that class certification may be granted when a large number of putative class members cannot satisfy Article III standing. The Seventh Circuit expressly held that the presence of uninjured class members “does not preclude class certification” but may be a barrier “if it is apparent that it contains a great many persons who have suffered no injury[.]” Kohen v. Pac. Inv. Mgmt. Co. LLC & PIMCO Funds, 571 F.3d 672, 677–78 (7th Cir. 2009). The court later clarified that it does not adopt a specific measure for “great many” but instead embraces a case-by-case analysis. Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 825 (7th Cir. 2012) (“There is no precise measure for “a great many.” Such determinations are a matter of degree, and will turn on the facts as they appear from case to case.”).

The Eleventh Circuit has likewise acknowledged that “in some cases a court might reasonably certify a class that includes some putative members who might not have satisfied the requirements of Lujan and decide to deal with the problem later on in the proceeding, but before it awarded any relief.” Cordoba v. DIRECTV, LLC, 942 F.3d 1259, 1277 (11th Cir. 2019). Emphasizing Kohen’s analysis that “a great many” class members without standing could pose a barrier to certification, the court observed “there is a meaningful difference between a class with a few members who might not have suffered an injury traceable to the defendants and a class with potentially many more, even a majority, who do not have Article III standing.” Id. at 1276–77.

The Fourth Circuit may well also fall under this approach, although its discussion of this topic is too sparse to say with any certainty. The court did not find standing a barrier to certification when there was “not a large number of uninjured persons included within the plaintiffs’ class” and parsed the theory of harm presented, suggesting openness to a case-by-case approach. Alig v. Quicken Loans Inc., 990 F.3d 782, 792 (4th Cir. 2021). See also Krakauer v. Dish Network, L.L.C., 925 F.3d 643 (4th Cir. 2019) (“[T]he question of how best to handle uninjured class members . . . must be left for another day.”).

Although the Tenth Circuit has not decided this issue for a proposed class seeking monetary damages, in a class action for injunctive relief, the court embraced its sister circuit’s reasoning in Kohen. DG ex rel. Stricklin v. Devaughn, 594 F.3d 1188, 1198 (10th Cir. 2010) (quoting Kohen, 571 F.3d at 677: “[A] class will often include persons who have not been injured by the defendant’s conduct. . . . Such a possibility or indeed inevitability does not preclude class certification.”).

Permissive Circuits That Do Not Require Putative Class Member Standing for Certification

The Third, Fifth, and Sixth Circuits represent the more permissive end of the spectrum, determining that the constitutional standing of putative class members is not a requisite to a Rule 23 certification analysis. The Third Circuit has held that “requiring Article III standing of absent class members is inconsistent with the nature of an action under Rule 23” because “we do not expect a plaintiff to be ‘able to identify all class members at class certification.’” Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353, 367 (3d Cir. 2015). The Third Circuit explained that these concerns are already addressed through the Rule 23 mechanism due to the requirement of class representative standing because “a properly formulated Rule 23 class should not raise standing issues” when “it is axiomatic that ‘a class representative must be part of the class and possess the same interest and suffer the same injury as the class members.’” Id. at 368.

The Fifth Circuit has also embraced reasoning that only class representative standing is required at the class certification stage. It observed that “the Supreme Court has repeatedly instructed that we should first decide whether a proposed class satisfies Rule 23, before deciding whether it satisfies Article III—and that there is no need to answer the latter question if the class fails under the former.” Flecha v. Medicredit, Inc., 946 F.3d 762, 768–69 (5th Cir. 2020).

The Sixth Circuit has also adopted the more permissive rule that “[e]ven if some class members have not been injured by the challenged practice, a class may nevertheless be appropriate.” In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig., 678 F.3d 409, 420 (6th Cir. 2012). In another case, over a dissent stating that “the majority affirms a class definition that includes a clutch of members without standing,” the Sixth Circuit rejected a more stringent standing requirement and held that it was unnecessary to identify all class members at the certification stage, instead requiring the class representative only to present a theory of injury that could apply to the entire class as defined. Rikos v. Procter & Gamble Co., 799 F.3d 497, 505, 509 n.9 (6th Cir. 2015) (stating that it is unnecessary to “enter a circuit split over whether it is sufficient that the named class plaintiff has standing”). See also In re Carpenter Co., 2014 WL 12809636, at *2 (6th Cir. 2014) (“whether standing is established is dependent upon whether the definition of the class is sufficiently narrow to exclude uninjured parties”).

Melanie A. Conroy is of counsel at Pierce Atwood LLP’s Boston, Massachusetts, office.

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