November 01, 2018 Practice Points

Eighth Circuit: Challenging Standing May Be a Double-Edged Sword

By the Class Actions & Derivative Suits Committee

In just about any class action asserting statutory violations, including claims under the Telephone Consumer Protection Act (TCPA) or the Fair Credit Reporting Act (FCRA), the defendant may have a challenge to plaintiff’s standing. But when the case is initially filed in state court and then removed, standing challenges can create difficult strategic issues.

Take the Eighth Circuit’s decision in St. Louis Heart Ctr., Inc. v. Nomax, Inc., 899 F.3d 500 (8th Cir. 2018). The case involved alleged violations of the TCPA’s fax advertising requirements. Defendant removed the case from state court, moved to dismiss on the ground that plaintiff did not have standing because its injury was not causally connected to the alleged violation, and won.

But what did it win?  The district court dismissed the case with prejudice, but the Eighth Circuit reversed, holding that the case should have been remanded to state court. “[W]hen there is no Article III case or controversy, and 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.” Id. at 505 (emphasis in original). So, rather than ending the case, the defendant found itself where it started, in state court.

The case provides an important reminder that standing challenges may backfire. A defendant should carefully consider when and how to challenge standing in removed cases, and plaintiffs may have yet another reason to file in state court and force removal.

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