Tagged: Standing

District of New Jersey Analyzes Article III Standing Requirement in the Class Action Context Under the Supreme Court’s Decision in TransUnion

In a post-TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021) victory for the class action defense bar, the District of New Jersey has further clarified the standing requirement for showing concrete harm. In Schultz v. Midland Credit Management., Inc., the Honorable Madeline Cox Arleo, U.S.D.J. granted defendant Midland Credit Management, Inc.’s (“Midland”) motion for summary judgment because the plaintiffs failed to establish concrete harm and thus lacked standing. In Schultz, the plaintiffs filed a putative class action against Midland alleging that the collection agency issued collection letters with false Internal Revenue Service (IRS) reporting language in violation of the Fair Debt Collection Practices Act (FDCPA). Midland sent letters to the plaintiffs stating: “We will report forgiveness of debt as required by IRS regulations. Reporting is not required every time a debt is canceled or settled, and might not be required in your case.” Pursuant to the Department of Treasury and IRS regulations, Midland only needed to report discharges of indebtedness greater than $600. As the plaintiffs’ debts were below the $600 threshold, the plaintiffs argued that the IRS reporting language was false, deceptive, and misleading in violation of the FDCPA because the language implied that “there could be ‘negative consequences with the [IRS]’ and ‘deliberately fail[ed] to disclose that such reporting is required under...

Lack of Plaintiff Article III Standing Proves Fatal to Eleventh Circuit in FACTA Class Action Settlement

In a 7-to-3 en banc decision, the Eleventh Circuit vacated a high-stakes $6.3 million class settlement on standing grounds. In James Price v. Godiva Chocolatier, Inc., et al, the court held that a named plaintiff lacked standing to bring a claim under the Fair and Accurate Credit Transactions Act (FACTA) on behalf of a proposed settlement class. The plaintiff, Dr. David Muransky, filed a class action complaint against Godiva claiming a violation of FACTA, which prohibits “merchants from printing more than the last five digits of the card number (or the card’s expiration date) on receipts offered to customers.” After visiting a Godiva retail store in Florida, the plaintiff was handed a receipt that contained the first six and the last four digits of his credit card number–a technical violation of FACTA. The plaintiff claimed that the violation was “statutory in nature” and did “not intend[] to request any recovery for personal injury.” The plaintiff further framed the class’s harm from violations as “irreparable harm as a result of the defendant’s unlawful and wrongful conduct,” and that “Plaintiff and members of the class continue to be exposed to an elevated risk of identity theft.” The putative class was so large that Godiva could have faced statutory damages, punitive damages, and costs of more than $342...

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...

Third Circuit Rejects Buyer’s Remorse as a Cognizable Injury Under Article III

In In Re: Johnson & Johnson Talcum Powder Products Marketing, Sales Practices and Products Liability Litigation, the United States Court of Appeals for the Third Circuit held that buyer’s remorse, without more, does not constitute an economic injury sufficient to establish standing under Article III of the United States Constitution. Plaintiff brought a putative class action against defendant Johnson & Johnson, alleging that perineal use of defendant’s baby powder by women could lead to an increased risk of ovarian cancer. Plaintiff did not allege that she had developed or was at an increased risk of developing ovarian cancer. Nor did she allege that the product was defective in performing the functions for which it was advertised. Furthermore, Plaintiff had used all the product and, thus, was not seeking reimbursement for a product she cannot use. Rather, Plaintiff alleged that she would not have bought the baby powder had she known that it could lead to an increased risk of cancer. The District Court of New Jersey dismissed her complaint for lack of Article III standing. The Third Circuit affirmed. It relied on its analyses in Finkelman v. Nat’l Football League and Cottrell v. Alcon Laboratories to determine that Plaintiff’s allegations were too conjectural to establish standing. It explained that, although a plaintiff need not allege the exact...

Third Circuit Relies on Spokeo to Shed Light on What is Needed For Article III Injury-in-Fact Standing

In Long v. SEPTA, the Third Circuit considered whether and when a violation of a statute is a standing-conferring injury-in-fact satisfying the Constitution’s “case or controversy” requirement. At issue in Long was whether the plaintiffs, who were denied employment by SEPTA when background checks disclosed disqualifying criminal histories, could sue SEPTA for failing to provide them with copies of their rights under the Fair Credit Reporting Act (FCRA) and copies of their background consumer reports before being denied employment, both of which are required by FCRA. The district court dismissed the complaint, stating that the plaintiffs did not allege a “concrete injury in fact,” because the alleged FCRA violations were “bare procedural violations.” On appeal, the Third Circuit affirmed the dismissal of the claim based on SEPTA’s failure to provide the plaintiffs notice of their FCRA rights. The Court held that, because the plaintiffs understood their rights well enough to bring the suit, they were not injured by SEPTA’s failure to give them notice of those rights and, therefore, lacked standing to pursue the claim. But the Third Circuit reversed the dismissal of the claim based on SEPTA’s failure to provide copies of the plaintiffs’ consumer reports. The Third Circuit applied the two tests “for whether an intangible injury can be . . . concrete”...

Wrap Up of United States Supreme Court’s 2016-17 Term

With the close of the United States Supreme Court’s 2016-17 term, we offer this wrap up of the term’s most important business and commercial cases (excluding patent cases): Kindred Nursing Ctrs, L.P. v. Clark: The Supreme Court continued its full-throated support of arbitration agreements, again rejecting a state supreme court’s effort to apply an ostensibly arbitration-neutral rule of law to invalidate an arbitration agreement. In Kindred, the Kentucky Supreme Court held that an arbitration agreement signed by an attorney-in-fact under a broad power of attorney was invalid because the power of attorney did not expressly give the attorney-in-fact the right to waive the principal’s right to a jury trial. According to the Kentucky Supreme Court, to grant an attorney-in-fact the authority to waive a “fundamental constitutional right,” a power of attorney must grant that authority expressly and unambiguously. Because the right to access the courts and the right to a jury trial are such “fundamental constitutional rights” and because the power of attorney did not expressly and unambiguously waive them, the attorney-in-fact was not authorized to agree to arbitrate the principal’s claims, and no enforceable arbitration agreement was created. The Supreme Court found that the Kentucky Supreme Court’s facially arbitration-neutral rule—that the authority to waive “fundamental constitutional rights” must be expressed unambiguously in a power...

Supreme Court Rejects Class Action Plaintiffs’ Attempts to Circumvent Rule 23(f)

As previously discussed on this blog, the Supreme Court granted certiorari to address the question of whether federal courts of appeals have jurisdiction to review an order denying class certification after the named Plaintiffs voluntarily dismissed their claims with prejudice. In the June 12, 2017 decision in Microsoft Corp. v. Baker, the high court answered this question with a very resounding “no.” In Baker, a putative class of owners of Microsoft Corporation’s Xbox 360® video game console filed suit, alleging that the console suffered from a design defect that gouged game discs. Microsoft opposed Plaintiffs’ motion to certify the class. The District Court denied certification, citing comity considerations and relying on the class certification denial in a similar case. The Ninth Circuit denied the Plaintiffs’ 23(f) petition for interlocutory appeal. Plaintiffs then voluntarily dismissed the case with prejudice for the express purpose of obtaining immediate Ninth Circuit review of the District Court’s denial of class certification. Plaintiffs filed an appeal from the final judgment, challenging the denial of class certification, but not the order dismissing the case with prejudice. The Ninth Circuit held that it had jurisdiction under 28 U.S.C. § 1291 because the stipulated dismissal did not involve a settlement, and thus was a sufficiently adverse and appealable, final decision. The Supreme Court disagreed....

Supreme Court to Decide Whether Class Action Plaintiffs Can Ring Their Own “Death Knell” Bell

The United States Supreme Court heard oral argument last month on the issue of whether a federal court of appeals has jurisdiction to review an order denying class certification after the named plaintiffs voluntarily dismiss their individual claims with prejudice. The case comes to the Supreme Court from the Ninth Circuit’s decision in Baker v. Microsoft Corp. In Baker, a putative class of owners of Microsoft Corporation’s (Microsoft) Xbox 360® video game console filed suit, alleging that the console suffered from a design defect that gouged game discs. Microsoft opposed Plaintiffs’ motion to certify the class. The District Court denied certification, citing comity considerations and relying on the class certification denial in a similar case. Thereafter, Plaintiffs filed a 23(f) petition for interlocutory appeal with the Ninth Circuit, which was denied. The Plaintiffs then voluntarily dismissed the case with prejudice, with the express purpose of obtaining immediate Ninth Circuit review of the District Court’s denial of class certification. Plaintiffs filed an appeal from the final judgment, challenging the denial of class certification. On appeal, Microsoft argued that the Ninth Circuit lacked jurisdiction because a voluntary dismissal with prejudice does not sufficiently affect the merits of the substantive claims to constitute an appealable final judgment. However, the Ninth Circuit had previously rejected a similar argument in...

Seventh Circuit Affirms Dismissal of Data Privacy Class Action on Article III Standing Grounds

Since the United States Supreme Court decided Spokeo, Inc. v. Robins in May 2016, lower courts have struggled to consistently determine whether a plaintiff has standing to sue in federal court, which, as the Spokeo court explained, “requires a concrete injury even in the context of a statutory violation.” That is, even when Congress has made something unlawful and authorized an award of statutory damages for the unlawful act, the mere violation of that law is not itself sufficient to confer standing to sue under Article III of the U.S. Constitution. But precisely what is required to demonstrate sufficient “injury” under Article III remains unclear after Spokeo, especially in the data-breach and data-privacy contexts. In Gubala v. Time Warner Cable, Inc., however, a unanimous Seventh Circuit decision, authored by Judge Posner, held that the defendant’s possible failure to comply with a requirement contained in the Cable Communications Policy Act (requiring the destruction of personally identifiable information (“PII”) if the information is no longer necessary for the purpose for which it was collected) did not afford the plaintiff Article III standing to sue for violation of the statute where his personal information was not released or disseminated in any way. The plaintiff in Gubala had subscribed to Time Warner cable services in 2004, which required him to...

New Jersey Federal Court Relies on Spokeo to Dismiss FACTA Class Action For Failure to Allege Concrete Harm

The U.S. District Court for the District of New Jersey recently relied on the U.S. Supreme Court’s opinion in Spokeo v. Robins to grant a Rule 12(b)(1) motion to dismiss a statutory violation-based class action complaint for failure to allege a concrete injury. In Kamal v. J. Crew Group Inc., et al. the Court concluded that the plaintiff lacked standing to sue under the Fair and Accurate Credit Transactions Act (“FACTA”) because, as in Spokeo, the claims were based on a purely statutory injury, i.e., the plaintiff did not allege a “concrete and particularized” injury.