Second Circuit Holds Injunctive Class of Past Purchasers Not Certifiable Under Rule 23(b)(2)
The Second Circuit recently resolved a conflict among district courts, holding that past purchasers of a product are ineligible for class certification under Rule 23(b)(2) because not all class members would benefit from injunctive relief. Specifically, explained the Court, it is unlikely a purchaser will buy the allegedly deceptive product again, and if they do, they do so with the knowledge of the alleged deception.
In Berni v. Barilla S.p.A., plaintiffs initiated a class action alleging that defendant intentionally sold its pasta in misleading boxes that concealed non-functional “slack-fill,” i.e., excessive empty space in the box. The parties reached a settlement, agreeing that defendant would include a minimum “fill-line” on its boxes, to indicate how much pasta was in the container, and a disclaimer that the pasta is sold by weight and not by volume. Neither party challenged the settlement; however, an absent class member objected, arguing that the group of past purchasers could not be certified under Rule 23(b)(2) because past purchasers were ineligible for injunctive relief. The district court disagreed and certified the injunctive class and approved the settlement. The objector appealed.
The Circuit Court vacated the district court’s order granting approval of the settlement class, reasoning that injunctive relief was not proper for the group of past purchasers and, thus, the group could not be certified under Rule 23(b)(2). Guided by the principle that injunctive relief is appropriate when there is threat of future injury, the court framed the question on appeal: “are each of the pasta purchasers likely to be harmed by Barilla in the imminent future absent injunctive relief?” The court concluded that the answer is no, and explained that “past purchasers are not bound to purchase a product again—meaning that once they become aware they have been deceived, that will often be the last time they will buy that item.” Moreover, even if past purchasers buy the product again, “there is no reason to believe that all, or even most, of the class will incur a harm anew.” The next time purchasers buy the product, they will not be under the same “illusion” that the boxes contain a certain amount of pasta; “[i]nstead, next time they buy one of the newer pastas, they will be doing so with exactly the level of information that they claim they were owed from the beginning.”
The Second Circuit acknowledged a potential inequity resulting from its decision. Specifically, the “foist[ing]” of past purchasers “into an unwelcome dilemma”—a “Catch-22”—in which “[t]he only way a consumer could enjoin deceptive conduct would be if he were made aware of the situation by suffering injury. But once the consumer learned of the deception, he would voluntarily abstain from buying and therefore could no longer seek an injunction.” That perceived inequity has made some district courts hesitant to refuse to certify past purchasers as an injunctive class. But the Circuit Court noted that an “equitable exception to Rule 23(b)(2) simply does not exist, and courts cannot create one to achieve a policy objective, no matter how commendable that objective.” The court explained that “courts cannot permit injunctive relief through class settlement when plaintiffs would otherwise lack standing to seek such relief under Article III. Where there is no likelihood of future harm, there is no standing to seek an injunction, and so no possibility of being certified as a Rule 23(b)(2) class.”
Accordingly, the Second Circuit’s decision essentially forecloses the certification of past purchasers as a class for injunctive relief under Rule 23(b)(2) for lack of standing, and makes clear that parties to a class action cannot use the settlement process to circumvent standing requirements.