Third Circuit Holds that Injunctive-Relief-Only Class Cannot Be Certified Where Plaintiffs Based the Threat of Future Harm on Irrational Consumer Behavior
In McNair v. Synapse, a precedential opinion, the Third Circuit held that former customers could not certify an injunctive-relief-only class asserting consumer fraud claims against defendant Synapse, Inc., the largest marketer of magazine subscriptions in the United States, because they lacked Article III standing. In short, the Third Circuit concluded that plaintiffs could not show a likelihood of future injury based on their claim that they might be deceived by the same conduct twice.
The plaintiffs alleged that Synapse duped its subscribers into continuing subscriptions by sending misleading automatic renewal notices. But they admitted that, since they were no longer Synapse customers, they were not presently subject to Synapse’s automatic renewal policy. The District Court twice denied certification, first, finding plaintiffs’ claims for monetary relief could not be certified for lack of predominance, and second, finding that their proposed injunctive-relief-only class lacked cohesion.
On appeal of the District Court’s denial of an injunctive-relief-only class, the Third Circuit addressed the threshold issue of the plaintiffs’ standing. The plaintiffs argued that the threat of future injury — a standing requirement where prospective relief is sought — was “sufficiently real and immediate” because the plaintiffs may become Synapse subscribers subject to Synapse’s allegedly fraudulent practices inasmuch as Synapse (i) is the leading magazine marketer in the U.S., (ii) makes “compelling deals” but fails to identify itself, and (iii) designs its automatic renewal notices so as to fool customers into discarding them. Attempting to prove their point, the plaintiffs also argued that they have already accepted Synapse’s offers on multiple occasions.
But the Third Circuit refused to accept that the plaintiffs would not learn from their mistakes: “Perhaps they may accept a Synapse offer in the future, but, speaking generally, the law accords people the dignity of assuming that they act rationally, in light of the information they possess.” Even if the plaintiffs did unwittingly accept a future Synapse offer, the Court reasoned, “they would only be harmed if they were again misled by Synapse’s subscription renewal techniques, which would require them to ignore their past dealings with Synapse.” The Court refused to apply the “capable of repetition yet evading review” doctrine — which the District Court apparently accepted — for the same reason, i.e., the “inescapable fact” that they cannot credibly show that they will be subject to the same allegedly offending conduct on a repeat basis. As well, the Court rejected the plaintiffs’ argument insofar as it was based on “a lack of self restraint” in refusing Synapse’s “compelling offers,” noting that such conduct “may elicit sympathy but it will not typically invoke the jurisdiction of a federal court.”
Though the Third Circuit’s holding in McNair seems narrow at first blush, the underlying rationale could prove to be a powerful weapon for defendants. Courts in the Third Circuit may be willing now more than ever to reject the claims of would-be consumer class action plaintiffs where, like in McNair and as often seems to be the case, they are premised on the assumption that consumers routinely fail to take into account all available information, including their own experience, when making purchasing decisions.