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October 28, 2015 Practice Points

Standing and Class Issues on Review in New Supreme Court Term

By Maxwell Herman

A new Supreme Court term has begun! And among the matters being considered are several questions that could have significant impact on the landscape of complex litigation.

Whether a defendant can render a plaintiff’s case moot and his or her ability to represent a class inadequate by making him or her an offer of complete relief prior to certification.
In Campbell-Ewald Co. v. Gomez, the plaintiff filed a lawsuit on behalf of himself and a class of individuals who allegedly received unsolicited text messages in violation of the Telephone Consumer Protection Act of 1991 (TCPA), 47 U.S.C. § 227. The TCPA prohibits the use of automated dialing systems to send text messages to cell phones without the recipient’s consent. The TCPA provides recipients of unsolicited texts with a right of action to recover $500 per violation, which may be trebled in the case of knowing violations. Prior to the filing of plaintiff’s class-certification motion, the defendant made a Rule 68 offer of judgment that purportedly would have afforded the plaintiff complete relief ($1503 plus costs and an injunction). The plaintiff refused.

On certification from the Ninth Circuit, the defendant argues that an offer of full satisfaction moots a plaintiff’s claim where a plaintiff cannot attain a better result in court. The defendant further argues that the offer made to the plaintiff rendered him an inadequate class representative because he thereafter lacked a personal interest in the outcome of the case. The plaintiff counters that an unaccepted offer of relief is without operative effect in law and that an exception to the rule of mootness is necessary to stop defendants from frustrating statute-based class actions by “picking-off” named plaintiffs.

Oral argument was heard on October 14.

Whether an uninjured plaintiff has standing to enforce a private right of action based on the violation of a federal statute and its provision of statutory damages.
In Spokeo, Inc. v. Robins, the plaintiff alleges that the defendant, an Internet-based aggregator of personal information, violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681, by posting inaccurate information indicating that he has more experience and a stronger financial situation than he has in reality. The FCRA provides consumers with a private right of action to pursue actual damages or statutory damages “of not less than $100 and not more than $1,000.” On appeal to the Ninth Circuit, the court held that the plaintiff has constitutional standing to represent himself and a putative class based on statutory damages, despite no actual harm.

On certification, the defendant argues that a congressional override of Article III’s injury-in-fact requirement violates the separation of powers by delegating the executive’s enforcement power to private parties and stretching the judiciary’s sphere of authority. The defendant further argues that the FCRA’s statutory-damages provision was never intended to abrogate the necessity of actual harm, but only to ensure recovery for plaintiffs faced with difficult quantification of damages. The plaintiff counters that the true separation-of-powers issue arises if the judiciary frustrates Congress’s intent to provide the plaintiff with a remedy and additionally argues that violation of a statutorily created right is in itself actual harm for which statutory damages are a remedy.

Oral Argument is scheduled for November 2.

Whether a damages class action can be certified where liability and damages of disparately harmed plaintiffs will be determined by statistical sampling; and, whether a damages class action can be certified where the class contains uninjured plaintiffs.
In Tyson Foods, Inc. v. Bouaphakeo, the plaintiffs are a certified class of hourly workers who allege that they are entitled to compensation for unpaid time spent changing in and out of protective equipment. The plaintiffs all worked in the same factory, but spent varied amounts of time changing depending on their roles. To overcome these variations, a divided Eighth Circuit allowed the plaintiffs to use “common statistical evidence” to prove liability and damages, rather than to engage in inefficient and cost-prohibitive individual determinations. The result was a single-sum verdict from which each class member will receive a pro-rata portion.

On certification, the defendant argues that the use of statistical sampling violates the Rules Enabling Act, 28 U.S.C. § 2702, because it reduces the plaintiffs’ burden to prove individual damages and precludes defendants from raising defenses to individual claims. The defendant further argues that the class should never have been certified because certain class members were not entitled to overtime pay and thus lacked individual standing. There is currently a circuit split over whether all members of a class must have an injury sufficient to establish standing, or only the named plaintiff.

Oral argument is scheduled for November 10.

Maxwell Herman, Brewer, New York City, NY

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