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Key Takeaway:
- In the Eleventh Circuit, every class member must have Article
III standing in order to recover individual damages. - Be mindful of how courts confront class definitions in your
forum. Article III standing requirements may apply even to
settlements depending on the jurisdiction.
In August 2019, plaintiff Susan Drazen filed a class action
complaint against GoDaddy.com, LLC (“GoDaddy”) for
alleged violations of the Telephone Consumer Protection Act of 1991
(“TCPA”). Drazen alleged that GoDaddy called and
texted her through a prohibited automatic dialing system.
After Drazen’s case was consolidated with other cases
asserting similar TCPA violations against GoDaddy, the named
plaintiffs proposed a class action settlement agreement.
Importantly, the class definition included those who had received
just a single text message from GoDaddy. Under Eleventh
Circuit precedent, receipt of a single text message does not confer
Article III standing due to lack of injury. However,
operating under the premise that only the named plaintiffs must
have standing, the district court nevertheless approved the class
action settlement.
On appeal by an objector to final approval of the settlement
agreement, the Eleventh Circuit sua sponte
raised the issue of standing. The court confronted the
approximately 7% of the class members that did not have standing
because they had received just one text message. Reiterating
the Supreme Court’s holding in TransUnion, the
Eleventh Circuit wrote that “[t]o recover individual damages,
all plaintiffs within the class definition must have
standing.” Drazen v. Pinto, 41 F.4th
1354, 1361 (11th Cir. 2022) (quoting TransUnion LLC v.
Ramirez, 141 S. Ct. 2190, 2208 (2021)).
In TransUnion, the Supreme Court explained that while
ordinarily in non-class litigation, parties may settle whenever
they want, this is not the case in class litigation, where
settlements may only be finalized with district court approval.
The Eleventh Circuit likened absent class members’
recovery from a court-approved class action settlement to absent
class members’ recovery after trial, reasoning that standing
would have to be satisfied in either case. Thus, the court
held that “when a class seeks certification for the sole
purpose of a damages settlement under Rule 23(e), the class
definition must be limited to those individuals who have Article
III standing.” The Eleventh Circuit remanded the case
for the parties to redefine the class.
This case is significant in that it establishes the standing
requirement for absent class members at the settlement stage.
This decision, however, creates tension with the Ninth
Circuit’s en banc decision
in Olean Wholesale Grocery Co-op Inc. v. Bumble Foods
LLC, 31 F. 4th 651 (9th Cir. 2022), which rejected prior Ninth
Circuit decisions suggesting a per se rule that
“Rule 23 does not permit the certification of a class that
potentially includes more than a de minimis number of uninjured
class members.” Olean, 31 F.4th at
669. One difference in the cases is that the Eleventh
Circuit’s decision in Drazen dealt with
class settlements, while Olean dealt with class
certification. On August 8, defendants in the Ninth
Circuit’s Olean case filed a petition for
a writ of certiorari. It is possible, then, that the Supreme
Court may step in for clarity.
Practitioners should be cognizant of the jurisdictional approach
to class action standing requirements and, depending on the forum,
should be judicious in crafting class definitions in settlements to
ensure that even absent class members satisfy the injury-in-fact
requirement.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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