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Article III Standing and Class Certification After Spokeo: Implications and Strategies for Plaintiff and Defense Counsel

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific THURSDAY, JULY 28, 2016

Amy Laurendeau, Partner, O'Melveny & Myers, Newport Beach, Calif. Jeffrey A. Leon, Partner, Quantum Legal, Highland Park, Ill.

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I Saw her Standing There. Article III Standing and Class Certification After Spokeo Strafford Webinars July 28, 2016

Jeffrey A. Leon Quantum Legal LLC Amy Laurendeau O’Melveny & Myers LLP

• Article III (or Constitutional) Standing
• Statutory (or Zone of Interest) Standing

TYPES OF STANDING

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ARTICLE III STANDING

The source of much litigation: Section 2 of Article III of the United States Constitution “The judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of the United States…to controversies…between citizens of different states”

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“Cases” or “Controversies” = Article III Standing

Article III Standing

The “Case or Controversy” Inquiry has two levels:

• Constitutional Requirements
• Prudential Requirements

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Article III Standing

Constitutional Requirements:

 Injury-In-Fact  Traceability (Causation)  Redressability

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Injury-in-Fact Plaintiff must have suffered actual or threatened injury as the result of defendant’s alleged illegal conduct that’s concrete and particularized and actual or imminent, not conjectural or hypothetical. No advisory opinions.

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Article III Standing

Article III Standing

Traceability or Causation Plaintiff’s alleged injury must be traceable to challenged action.

 Indirect injury OK if traceable to defendants’

acts or omissions

 Plaintiff must show some causal connection

between injury and defendant’s conduct.

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Introduction to Article III Standing

Redressability Established when favorable decision would amount to significant increase in likelihood that plaintiff would obtain relief that directly redresses the injury suffered.

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ARTICLE III STANDING

Prudential Requirements

 Generalized Grievances  No Third Party Standing

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Article III Standing

Generalized Grievances Standing not warranted for generalized grievances shared by many. Understood to be job of

• ther governmental institutions,

like Congress.

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Article III Standing

No Third-Party Standing Litigants must assert their own legal rights and interests and can’t rest claim on the legal rights or interests of third parties.

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Statutory Standing

Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998)

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Introduction to Statutory Standing

Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998)

• Court can’t decide merits-based or cause-of-action questions first

(e.g., does statute allow damages for violations) (Rule 12(b)(6) question) . . . . . . although, “the merits inquiry [such as whether cause of action exists] and the statutory standing inquiry often overlap.”

• Article III standing - as opposed to statutory standing – has “nothing

to do with the text of the statute relied upon.”

• Because unlike Article III standing, statutory standing involves

whether plaintiff comes within “zone of interests” for which the cause of action is available.

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Introduction to Statutory Standing

Plaintiff’s claimed redressable injuries:

Plaintiff’s “right to know about [toxic chemical] releases and [Plaintiff’s] interests in protecting and improving the environment and the health

• f its members have been, are being, and will be adversely affected by

[Defendant’s] actions in failing to provide timely and required information under EPCRA.”

But the Court considered Plaintiff’s claimed injury unredressable:

“Having found that none of the relief sought by [Plaintiff] would likely remedy its alleged injury in fact, we must conclude that [Plaintiff] lacks standing to maintain this suit, and that we and the lower courts lack jurisdiction to entertain it.”

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But wait . . .

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Introduction to Statutory Standing

Stevens’ concurrence in judgment:

Question: Does the EPCRA “confer[] federal jurisdiction over citizen suits for wholly past violations”? Answer: “[T]he Court should answer the statutory question first. Moreover, because the EPCRA, properly construed, does not confer jurisdiction over citizen suits for wholly past violations, the Court should leave the constitutional question for another day.”

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Introduction to Statutory Standing

“[If the EPCRA] authorizes citizen suits for wholly past violations, the district court has jurisdiction over these actions; if it does not, the court lacks jurisdiction.” The Court’s “inquiry as to standing must begin with a determination of whether the statute in question authorizes review at the behest of the plaintiff.” The Court should “turn[] to the constitutional standing question only after determining that standing exist[s] under the statute.” “[G]iven a choice between two jurisdictional questions – one statutory and the other constitutional – the Court has the power to answer the statutory question first.” [A]nd if no right of action exists, questions of standing and jurisdiction become immaterial.

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SPOKEO, INC. V. ROBINS, 136 S. Ct. 1540 (May 24, 2016): What it Says, What It Means

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What Spokeo Was About

• An alleged violation of FCRA (Fair Credit Reporting Act)
• Spokeo was alleged to have published false info about the

plaintiff in its people search engine that misstated his age and education, etc.

• 9th Circuit had held that the alleged FCRA violation was of a

statutory right belonging to the Plaintiff and that the Plaintiff had “personal interests in the handling of his credit information [that] are individualized rather than collective.” Accordingly, the Plaintiff was found to have standing.

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The Spokeo Result: Vacated and Remanded, 6-2

• Held that the Ninth Circuit’s “analysis [of plaintiff’s Article

III standing] was incomplete” because a plaintiff must “allege an injury that is both ‘concrete and particularized’” and that “the Ninth Circuit’s analysis focused on the second characteristic (particularity), but it overlooked the first (concreteness).”

• “Particularization is necessary to establish injury in fact, but

it is not sufficient. An injury in fact must also be ‘concrete’. Under the Ninth circuit’s analysis, however, that independent requirement was elided”

• “’Concrete’ is not, however, necessarily synonymous with

‘tangible’ …. We have confirmed in many of our previous cases that intangible injuries can nevertheless be concrete.”

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The Spokeo Result: Vacated and Remanded, 6-2

“In determining whether an intangible harm constitutes injury in fact, both history and the judgment of Congress play important roles….because Congress is well-positioned to identify intangible harms that meet minimum Article III requirements….” However, “Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury in fact requirement whenever a statute grants a person a statutory right….Article III standing requires a concrete injury even in the context of a statutory

• violation. For that reason, Robins could not, for example, allege

a bare procedural violation, divorced from any concrete harm, and satisfy the injury in fact requirement….This does not mean, however, that the risk of real harm cannot satisfy the requirement of concreteness.”

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The Spokeo Result: Vacated and Remanded, 6-2

• “[N]ot all inaccuracies causeh arm or present any material risk of harm. An

example that comes ready to mind is an incorrect zip code. It is difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm.”

• Remanded because the Ninth Circuit’s analysis was incomplete and

statingthat “[w]e take no position as to whether the Ninth Circuit’s ultimate conclusion—that Robins adequately alleged an injury in fact—was correct.”

• Ginsburg dissent (joined by Sotomayor) “part[ed] ways with the Court []
• n the necessity of a remand” because “Robins’ allegations carry him

across the threshold” and “I see no utility in returning this case to the Ninth Circuit to underscore what Robins’ complaint already conveys concretely”.

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Is Spokeo Meaningful?

• An article in Corporate Counsel Magazine by Shepherd Mullin attorneys called it

a “Game Changer” Which “Revamp[ed] Standing for Statutory Class Actions” because “putative classes are generally drawn broad enough to include a high percentage of individuals with nothing more than a technical claim. From that perspective, if courts have to hold mini-trials as to whether putative class members in these no harm class actions actually suffered anything more than a procedural violation, then it is hard to imagine how these cases will be able to pass the Rule 23(b)(3) predominance inquiry.”

• A client alert by lawyers at Davis Wright argues that “[t]he impact of the

Court’s decision is [] likely to be more limited than many observers and class action defendants had initially hoped….Spokeo may ultimately have a muted impact on the issue of standing in some privacy class actions, doing little more than creating an additional hurdle for plaintiffs to clear by requiring them to demonstrate both a statutory violation and, when not apparent from or intrinsic to that violation, injury in fact that is both concrete and particularized” but argued that “Spokeo’s greatest impact may potentially be the class certification phase because “if each putative class representative and class member must first prove injury [that meets the Article III threshold]…those individual questions may well predominate”.

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• A Law360 article by Balch & Bingham attorneys noted that

“[m]any commentators have opined that the Supreme Court ducked the hard question in Spokeo” but that it was significant that that the Court “expressly articulated that bare procedural violations alone will not be sufficient to confer standing without a showing of concrete injury.” Nonethless, they state that “Spokeo clarifies the law but still leaves much work for the lower courts”.

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Standing challenge #1 Manifestation of injury to plaintiff (i.e., does “injury-in-fact” to plaintiff exist?)

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Standing Challenge #1 Manifestation of Injury – standing doesn’t exist

Hochendoner v. Genzyme Corp., 2016 WL 2962148, at *5 (1st Cir. May 23, 2016)

Evaluated whether plaintiffs plausibly pled injury-in-fact. Spokeo’s “particularization requirement . . . necessitates that a plaintiff has been affected "in a personal and individual way" by the injurious conduct.” With one exception, plaintiffs did not allege facts sufficient to establish standing. “Tellingly, no specific information is provided regarding the harm, if any, that has befallen each individual

• plaintiff. Instead, the complaints offer only scattered descriptions of

generalized harms.”

In re Barnes & Noble Pin Pad Litig., 2013 WL 4759588, at *3 (N.D. Ill. Sept. 3. 2013)

“Nothing in the Complaint indicates Plaintiffs have suffered either a ‘certainly impending’ injury or a ‘substantial risk’ of an injury, and therefore, the increased risk is insufficient to establish standing.”

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Standing Challenge #1 Manifestation of Injury – standing does exist

In re Nickelodeon Consumer Privacy Litig., 2016 WL 3513782, at *7 (3d Cir. June 27, 2016)

Evaluated standing for claims of plaintiffs (children under 13) under the federal Video Privacy Protection Act and for invasion of privacy based on allegations that defendants unlawfully collected personal information about them on the Internet. “The purported injury here is clearly particularized, as each plaintiff complains about the disclosure of information relating to his or her

• nline behavior. While perhaps "intangible," the harm is also

concrete in the sense that it involves a clear de facto injury, i.e., the unlawful disclosure of legally protected information.”

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Standing Challenge #1 Manifestation of Injury – standing does exist

Church v. Accretive Health, 2016 WL 3611543, at *2 (11th

• Cir. July 6, 2016)

Plaintiff alleged violations of the Fair Debt Collections Practices Act arising from collection letter that did not include certain disclosures required by the Act. Plaintiff did not allege actual damages, merely that she "was very angry" and "cried a lot.“ “[T]hrough the FDCPA, Congress has created a new right—the right to receive the required disclosures in communications governed by the FDCPA—and a new injury—not receiving such disclosures.”

McQuinn v. Bank of Am., 2016 WL 3947831, at *1 (9th Cir. July 22, 2016)

Mortgagors had standing to pursue claim for violation of Truth in Lending Act's notice requirement where they alleged a concrete injury—i.e., “they were deceived into paying their monthly mortgage payment to ‘an entity which ha[d] no right collect monies on [the] contract’’ and were prevented from "satisfying their obligations under the Note.”

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Also . . .

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Standing Challenge #1

“Premium-Price Theory” May Overcome No-Manifestation-of-Injury Argument

In re Hydroxycut Mktg. & Sales Practices Litig., 801 F.

• Supp. 2d 993, 1002 (S.D. Cal. 2011)

“[T]he injury to Plaintiffs occurred at the time they purchased the Hydroxycut products and did not receive the benefit of their

• bargain. Plaintiffs have lost the money they paid for the product

and have alleged an economic injury.”

In re Whirlpool Corp. Front Loading Washer Prods. Liability Litig., 722 F.3d 838, 856 (6th Cir. 2013)

“If defective design is ultimately proved, all class members have experienced injury as a result of the decreased value of the product purchased.” (notably, opinion doesn’t discuss standing)

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Standing Challenge #2

May plaintiffs’ counsel include states where class representatives don’t reside?

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Standing Challenge #2 Yes

In re Processed Egg Prods. Antitrust Litig., 851 F. Supp. 2d 867, 886-87 (E.D. Pa. 2012)

“An Article III standing inquiry simply does not require considering the elements of a state claim as ‘jurisdictional prerequisites.’ To inject the condition that Plaintiffs must satisfy certain elements of the state antitrust claims into a constitutional standing analysis would result in an impermissible out-of-the-box merits inquiry.”

Sullivan v. DB Investments, Inc., 667 F.3d 273, 307, 347 (3d Cir. 2011)

“[S]tatutory standing is simply another element of proof for an antitrust claim, rather than a predicate for asserting a claim in the first place.” Dissent: “[O]ne must actually have a legal claim before getting in line for a legal recovery.”

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Standing Challenge #2 No

In re Wellbutrin XL Antitrust Litig., 260 F.R.D. 143, 158 (E.D.

• Pa. 2009)

“The plaintiffs' argument that they have general Article III standing is insufficient to establish standing with respect to particular claims. The Court finds that the plaintiffs have standing to assert claims only under the laws of those states where the plaintiffs are located or their members reside.”

In re Terazosin Hydrochloride Antitrust Litig., 160 F. Supp. 2d 1365, 1371 (S.D. Fla. 2001)

“[E]ach claim must be analyzed separately, and a claim cannot be asserted on behalf of a class unless at least one named plaintiff has suffered the injury that gives rise to that claim. . . . Analyzing each of [plaintiffs’] state law claims separately, it is clear that no named plaintiff suffered an injury giving rise to an antitrust claim in [the states where neither any plaintiff resides nor purchased Terazosin].”

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Standing Challenge #3

May class representatives assert claims with respect to products that they haven’t bought?

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Standing Challenge #3

Before we answer . . . Courts consider this question different ways:

Standing issue Class-certification issue

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Standing Challenge #3 Is there standing? Yes

Anderson v. Jamba Juice Co., 888 F. Supp. 2d 1000, 1005 (N.D. Cal. 2012)

The “critical inquiry” is whether the products purchased versus not purchased are substantially similar. Here, all claims were based on “All Natural” label but had different flavors. Court denied motion to dismiss for lack of standing.

Lanovaz v. Twinings N. Am., Inc., No. C-12-02646, 2013 WL 2285221, *3 (N.D. Cal. May 23, 2013)

“Because the claims for 51 of the varieties of tea are based upon the exact same label describing the same product, camellia sinensis, the court finds that Lanovaz has standing to sue on behalf

• f the purchasers of these teas and thus denies Twinings’ motion

with respect to these products. Red tea, on the other hand, is made from a different plant and is thus a significantly different product.”

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Standing Challenge #3 Is there standing? No

Miller v. Ghirardelli Chocolate Co., 912 F. Supp. 2d 861, 869- 72 (N.D. Cal. 2012)

“[P]laintiff may have standing to assert claims for unnamed class members based on products he or she did not purchase so long as the products and alleged misrepresentations are substantially similar,” and here, the products were not substantially similar.

Johns v. Bayer Corp., No. 09-CV-1935, 2010 WL 476688, at *5 (S.D. Cal. Feb. 9, 2010)

“[Plaintiff] cannot expand the scope of his claims to include a product he did not purchase or advertisements relating to a product that he did not rely upon. The statutory standing requirements of the UCL and CLRA are narrowly prescribed and do not permit such generalized

• allegations. Plaintiff, therefore, has standing under the UCL and CLRA

to pursue his claim regarding [the] product [he purchased] and the representations contained on that product; but he lacks standing to pursue any other alleged claim under the UCL or CLRA.”

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Standing Challenge #3 Class-certification issue – standing exists

Aguilar v. Boulder Brands, Inc., No. 12-cv-01862, 2013 WL 2481549, at *3 (S.D. Cal. June 10, 2013)

“Plaintiff’s ability to represent class members injured by similar products should be analyzed under Rule 23, not on a motion to dismiss.”

Forcellati v. Hyland’s, Inc., 876 F. Supp. 2d 1155, 1161 (C.D. Cal. 2012)

“[W]e agree with the numerous recent decisions that have concluded that Defendants’ argument is better taken under the lens

• f typicality or adequacy of representation, rather than standing.”

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Does Article III standing exist when plaintiff, aware of an alleged misrepresentation, is pursuing only injunctive relief?

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Does Article III standing exist when plaintiff, aware of an alleged misrepresentation, is pursuing only injunctive relief? No

No threat of future harm means no standing Campion v. Old Republic Home Protection Co., 861 F.

• Supp. 2d 1139 (S.D. Cal. 2012)

Even if plaintiff were to purchase another home-warranty plan from defendant, he now has knowledge of defendant’s alleged misconduct.

Castagnola v. Hewlett-Packard Co., No. 11-cv-05772, 2012 WL 2159385 (N.D. Cal. June 13, 2012)

Defendant allegedly deceived consumers into enrolling in a fee- based website membership. No standing because plaintiffs were now aware of this conduct.

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Does Article III standing exist when plaintiff, aware of an alleged misrepresentation, is pursuing only injunctive relief? Yes

“No” would thwart the consumer-protection laws Ries v. Arizona Beverages USA, No. 10–01139 RS, 2012 WL 5975247 (N.D. Cal. Nov. 27, 2012)

Plaintiff would not be able to rely on future representations that the drink is “natural,” which is the kind of harm that California’s consumer- protection statutes are designed to redress.

Koehler v. Litehouse, Inc., No. 12-cv-04055, 2012 WL 6217635 (N.D. Cal. Dec. 13, 2012)

Court finds that injunctive relief is proper; otherwise, consumers would be unable to obtain relief under consumer protection laws.

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Questions? Comments? Compliments?

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Th Than ank k yo you! u!

Amy J. Laurendeau (949) 823-7926 alaurendeau@omm.com Jeffrey A. Leon (847) 433-4500 jeff@complexlitgroup.com

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