Summary
- This article provides an overview of the current state of the law on the standing of unnamed plaintiffs on the circuit court level.
The U.S. Supreme Court has yet to squarely rule on whether unnamed class members must have Article III standing for a court to certify or enter judgment in a damages class action. Thus, circuit and district courts have addressed this hotly contested issue in various—and sometimes conflicting—ways.
The only cases in which uniformity in the decisions can be found are injunctive relief cases, in which the focus is on the conduct of the defendant, not on compensation for the plaintiff’s alleged injuries. Accordingly, injunctive relief cases usually require only that at least one of the named plaintiffs have standing. See, e.g., Melendres v. Arpaio, 784 F.3d 1254, 1262 (9th Cir. 2015); Bates v. UPS, 511 F.3d 974, 985 (9th Cir. 2007); DG v. Devaughn, 594 F.3d 1188, 1198 (10th Cir. 2010); J.D. v. Azar, 925 F.3d 1291, 1324 (D.C. Cir. 2019).
Generally, damages cases are decided differently from injunctive relief cases and circuit courts approach the issue, if at all, in different ways. The majority view is the so-called “de minimis” rule, which allows for certification where a relatively small number or percentage of the putative class (usually no more than 5 or 6 percent) lacks standing. This rule usually requires a mechanism or plan that would eventually winnow out those without standing to protect the defendants’ Seventh Amendment and due process rights and to compensate only those who were injured. At the other end of the spectrum, some circuit courts require that all the plaintiffs must have standing in order to obtain class certification.
This article provides an overview of the current state of the law on the standing of unnamed plaintiffs on the circuit court level.
In In re Nexium Antitrust Litigation, 777 F.3d 9, 21 (2015), the First Circuit affirmed certification despite evidence that 5.8 percent of the class members were uninjured. The court proposed that each unnamed class member could submit testimony that, “given the choice, he or she would have purchased the generic[]” product and that “[s]uch testimony, if unrebutted would be sufficient to establish injury in an individual action.” Id. at 20.
In contrast, the First Circuit reversed certification in United Food & Commercial Workers Unions & Employers Midwest Health Benefits Fund v. Warner Chilcott Ltd. (In re Asacol Antitrust Litigation), 907 F.3d 42 (1st Cir. 2018), in which10 percent of the unnamed class members were uninjured. Distinguishing Nexium, which involved unrebutted class member testimony, the court noted that the defendant in Asacol intended to refute declarations on injury. The court also rejected the plaintiff’s proposal to have a claims administrator vet class-member declarations, stating that it “would fail to be ‘protective of defendants’ Seventh Amendment and due process rights.’” Id. at 53. Similarly, the court rejected the plaintiff’s proposal to have an expert calculate aggregate damages, holding that it would mean that a named plaintiff could bring suit on behalf of a large class of uninjured people and “[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.” Id.
In Denney v. Deutsche Bank AG, 443 F.3d 253, 263–64 (2d Cir. 2006), the Second Circuit held that “no class may be certified that contains members lacking Article III standing. . . . The class must . . . be defined in such a way that anyone within it would have standing.”
Notably, in 2020, the U.S. District Court for the Eastern District of New York rejected the defendant’s claim that Denny barred certification where the evidence indicated that 5.7 percent of the unnamed class members were uninjured: “The Supreme Court and Second Circuit . . . have never suggested that a certain percentage or number of uninjured plaintiffs would automatically bar class certification.” In re Restasis (Cyclosporine Ophthalmic Emulsion) Antitrust Litig., 2020 WL 2555556, at *17 (E.D.N.Y May 5, 2020). In January 2021, another Eastern District of New York case followed Restasis: In B & R Supermarket, Inc. v. Mastercard International, Inc., 2020 U.S. Dist. LEXIS 248650, at *77–78 (E.D.N.Y. Jan. 19, 2021), without citation to Denney. Likewise, the U.S. District Court for the Southern District of New York cited Restasis (but not Denney) in In re Namenda Indirect Purchaser Antitrust Litigation, 2021 U.S. Dist. LEXIS 26566, at *84 (S.D.N.Y. Feb. 11, 2021), finding that the percentage of uninjured was “almost certainly de minimis, and perhaps non-existent” and concluding that “the fact that some putative class members may be uninjured does not automatically defeat predominance.” Thus, there appears to be a movement, at least in the Eastern and Southern Districts of New York, to follow the de minimis rule.
In Neale v. Volvo Cars of North America, LLC, 794 F.3d 353 (3d Cir. 2015), the Third Circuit held that “we do not expect a plaintiff to be ‘able to identify all class members at class certification.’” Id. at 367. Instead, the court held that the standing of unnamed class members must be analyzed under Rule 23 of the Federal Rules of Civil Procedure, relying on In re Prudential Insurance Co. America Sales Practice Litigation Agent Actions, 148 F.3d 283, 307 (3d Cir. 1998) (holding that unnamed class members are not required to show Article III standing because their standing relates to “one of compliance with the provisions of Rule 23, not one of Article III standing”).
In Krakauer v. Dish Network, L.L.C., 925 F.3d 643 (4th Cir. 2019), the Fourth Circuit held that “the question of how best to handle uninjured class members . . . must be left for another day.” The court again skirted the issue in Alig v. Quicken Loans Inc., 990 F.3d 782, 792 (4th Cir. 2021), by defining “injury” in such a way that supported its conclusion that “there is simply not a large number of uninjured persons included within the plaintiffs’ class.”
In Flecha v. Medicredit, Inc., 946 F.3d 762, 768 (5th Cir. 2020), in which “[c]ountless unnamed class members lack standing[,]” the Fifth Circuit stated that “[o]ur court has not yet decided whether standing must be proven for unnamed class members, in addition to the class representative.” The court declined to reach the issue, “because 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.” Id. at 768–69.
The Sixth Circuit held in In re Whirlpool Corp. Front-Loading Washer Products Liability Litigation, 678 F.3d 409, 420 (6th Cir. 2012), that “[e]ven if some class members have not been injured by the challenged practice, a class may nevertheless be appropriate.” However, in In re Carpenter Co., 2014 WL 12809636, at *2 (6th Cir. 2014), it took a different approach without citing Whirlpool and held that “whether standing is established is dependent upon whether the definition of the class is sufficiently narrow to exclude uninjured parties.”
In Kohen v. Pacific Investment Management Co. LLC & PIMCO Funds, 571 F.3d 672, 677–78 (7th Cir. 2009), the Seventh Circuit held that the “inevitable” presence of uninjured class members “does not preclude class certification” but that class certification should be denied “if it is apparent that it contains a great many persons who have suffered no injury[.]” In Messner v. Northshore University Heathsystem, 669 F.3d 802, 825 (7th Cir. 2012), the court held that “[t]here is no precise measure for ‘a great many’” and that it is case-specific.
The Eighth Circuit has held that each class member must have standing at the certification stage in Avritt v. Reliastar Life Insurance Co., 615 F.3d 1023 (8th Cir. 2010), and in Halvorson v. Auto-Owners Insurance Co., 718 F.3d 773 (8th Cir. 2013).
Several Ninth Circuit panels have taken different approaches altogether and even conflicting with—but not expressly overturning—each other.
In Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1021 (9th Cir. 2011), the Ninth Circuit held that “we consider only whether at least one named plaintiff satisfies the standing requirements.” Stearns is an anomalous damages case because it employs the rule normally adopted in injunctive cases.
The following year, in Mazza v. American Honda Motor Co., 666 F.3d 581, 594 (9th Cir. 2012), the court held that “[n]o class may be certified that contains members lacking Article III standing.” Yet, four years later, in Torres v. Mercer, 835 F.3d 1125, 1137 (9th Cir. 2016), the Ninth Circuit adopted the de minimis rule and held 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.”
In Ramirez v. TransUnion LLC, 951 F.3d 1008, 1037 (9th Cir. 2020), the court ruled that even though not all class members had standing during the certification stage, they all must demonstrate standing before being awarded any damages. This is consistent with the well-established rule that only the injured should be compensated. See, e.g., Lewis v. Casey, 518 U.S. 343, 349, 116 S. Ct. 2174, 135 L. Ed. 2d 606 (1996). Notably, this specific holding in Ramirez is not part of the appeal pending before the Supreme Court. The question before the Supreme Court in Ramirez is whether, in a case involving more than 75 percent uninjured plaintiffs, either Article III or Rule 23 would permit a damages class action to be certified.
In Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods LLC, 2021 U.S. App. LEXIS 9880, at *25–31 (9th Cir. Apr. 6, 2021), the Ninth Circuit directed the district court to resolve the discrepancy between the plaintiff’s contention that there are 5.5 percent uninjured class members and the defendants’ claim of up to 28 percent. Although the court did not establish “a threshold for how great a percentage of uninjured class members would be enough to defeat predominance,” it held that “it must be de minimis.” Id. at *29.
Tenth Circuit
The Tenth Circuit has not decided the issue in a damages case. However, in In re EpiPen (Epinephrine Injection, USP) Marketing, Sales Practices & Antitrust Litigation, 2020 WL 1180550 (D. Kan. Mar. 10, 2020), the district court predicted that the Tenth Circuit would follow the Seventh Circuit’s de minimis approach.
In Cordoba v. DIRECTV, LLC, 942 F.3d 1259, 1277 (11th Cir. 2019), the Eleventh Circuit held:
A plaintiff need not prove that every member of the proposed class has Article III standing prior to certification, and in some cases a court might reasonably certify a class that includes some putative members who might not have satisfied the [Article III standing] requirements . . . and decide to deal with the problem later on in the proceeding, but before it awarded any relief.
In affirming the denial of certification in In re Rail Freight Fuel Surcharge Antitrust Litigation, MDL No. 1869, 934 F.3d 619, 625 (D.C. Cir. 2019), the D.C. Circuit explained how the de minimis approach works:
[T]he “few reported decisions” involving uninjured class members “suggest that 5% to 6% constitutes the outer limits of a de minimis number.” [Citation omitted.] The 12.7 percent figure in this case is more than twice that approximate upper bound reflected in analogous caselaw. Moreover, the district court considered raw numbers as well as percentages: six percent of a “class totaling only fifty-five” members might be de minimis, but 12.7 percent of this class yields “2,037 uninjured class members” (according to the common proof), all of whom would need individualized adjudications of causation and injury. Id. at 137–38. Finally, the district court stressed that the plaintiffs have proposed no “further way”—short of full-blown, individual trials—“to reduce this number and segregate the uninjured from the truly injured.”
The court also rejected the plaintiff’s argument that the 2,037 persons were de minimis because they constituted less than 1 percent of the railroad’s revenue from the alleged conspiracy: “[R]evenue 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.
According to the case description in the Ramirez appeal to the Supreme Court, 75 percent of the class members lacked standing at the certification stage. For that reason, it appears to more closely approximate the Kohen standard of “a great many persons” than any reasonable definition of “de minimis.” Indeed, Ramirez does not directly speak to the propriety of the de minimis approach or of the applicability of the “named plaintiff only” standard used by the Ninth Circuit in Stearns. Ramirez also does not directly address the viability of the “all-or-nothing” approach of the Second and Eighth Circuits and of the Ninth Circuit’s own decision in Mazza. Accordingly, although the Supreme Court’s decision in Ramirez no doubt will have a great impact on the standing of unnamed plaintiffs, its significance may be limited by the narrow facts of the case. Because it is unclear that Ramirez will resolve the divergent approaches currently employed by the circuit courts and impose a uniform standard, litigation on this issue likely will continue