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Litigation News

Litigation News | 2020

Loss of $3.76 Is Sufficient for Standing

Christopher Gerald Binns


  • Class action moves forward based on temporary loss of use of money.
  • Section leaders agree with the outcome but caution that it should not be viewed as a bright-line rule on the amount of damages sufficient to support other similar lawsuits.
Loss of $3.76 Is Sufficient for Standing
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A loss of less than $4 can provide standing to bring a consumer class action lawsuit. A federal appellate court revived a class action that the trial court had dismissed for lack of concrete injury, holding that the named plaintiff’s temporary inability to have and use $3.76 is, in fact, a concrete injury sufficient to confer Article III standing. ABA Section of Litigation leaders agree with the outcome of the case, but caution that it should not be viewed as a bright-line rule on the amount of damages sufficient to support other, similar lawsuits.

The Loss of Use of Money Is a Concrete Injury

In Van v. LLR, Inc., the named plaintiff Katie Van filed suit on behalf of LLR, Inc., customers in Alaska, alleging improper sales tax charges. LLR had refunded Van the $531.25 in taxes she paid, but Van alleged that the refunded sales tax failed to account her inability to use the $531.25, and was thus damaged by LLR’s failure to account for the $3.76 in interest that had accumulated. The U.S. District Court for the District of Alaska dismissed the case on the basis that $3.76 “is too little to support Article III standing.”

The U.S. Court of Appeals for the Ninth Circuit reversed the district court. Relying on precedent from the Seventh Circuit and Eleventh Circuit, the Ninth Circuit held that the lost time value of money—even temporarily, and even for a small amount—is not too speculative an injury to support Article III standing. The court explained that its decision reflects the well-established principle that tort victims should be compensated for the loss of use of money by an award of damages or prejudgment interest.

The appellate court distinguished its prior decision in Skaff v. Meridien North America Beverly Hills, LLC. The plaintiff in Skaff had alleged that a hotel improperly assigned him to a room that did not have a shower accessible to individuals with disabilities before learning of the mistake and correcting it. The Ninth Circuit affirmed dismissal of the lawsuit, holding that the brief delay caused by the incorrect room assignment was too trifling to confer Article III standing. In contrast to Skaff, the Van plaintiff suffered a cognizable and concrete injury through the loss of her money through sales tax charges related to several purchases over a period ranging from months to over a year.

Anticipating potential issues on remand in Van, the appellate court clarified that Van’s injury was the loss of use of her money, not lost interest income. “Interest is a simple way of measuring and remedying Van’s injury, not the injury itself,” the court explained.

A Sensible Outcome

“The Ninth Circuit got the law of standing right,” states Adam Polk, San Francisco, CA, cochair of the Section of Litigation’s Class Action & Derivative Suits Committee. “There should not be line drawing as a matter of standing,” he opines. Polk further explains that “there are other factors that are brought to bear” that act as “safeguards against absurd results,” such as the economics of bringing a class action lawsuit and the various challenges available to defendants under Rule 12.

“It does make sense that the court found that there is standing even though the dollar amount is relatively small,” agrees Donald R. Pocock, Winston-Salem, NC, cochair of the Section’s Consumer Litigation Committee. “Class actions were specifically invented to address small claims,” he explains. The case is about standing, not the merits, and one should not blur “the lines of merit analysis with whether someone can come to court to have merits heard,” adds Pocock.

Line Drawing Is Difficult

The specific amount of damages that can confer standing will vary from case to case, Pocock cautions. While $3.76 was at issue in Van, “there are a lot of cases” in which “the award to the claimants was less than one dollar,” he observes. Yet, Pocock acknowledges, “[a]t some point in time it does become somewhat absurd to establish standing based upon a penny.”

However, it is a difficult line to draw because a case with a low dollar amount “might not be worth it to somebody but it may be worth it to somebody else, and it might be worth it if it happens 100 million times,” Pocock notes. Polk agrees, because there are a number of other grounds for dismissal afforded to defendants in consumer class action lawsuits.

Ultimately, whether there is a specific floor on damages for federal class action lawsuits may be “a legislative question,” Pocock opines.