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  Title	Supreme Court to Address Article III Standing Problems in Class Actions - Again
  ID	6416370
  External ID	7513543861
  Author	Keith Levenberg
  Published Date	Jan. 31, 2025, 11:23 a.m.
  Summary	On January 24, 2024, the Supreme Court granted certiorari in the case of Laboratory Corp. of America v. Davis, No. 24-0304, to decide “[w]hether a federal court may certify a class action pursuant to
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  URL	https://www.jdsupra.com/legalnews/supreme-court-to-address-article-iii-8967429/
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  Content ID	3962549
  Key	7a9cb064-51b6-4c50-9fb6-23b6a91ea756
  Content	On January 24, 2024, the Supreme Court granted certiorari in the case of Laboratory Corp. of America v. Davis, No. 24-0304, to decide “[w]hether a federal court may certify a class action pursuant to Federal Rule of Civil Procedure 23(b)(3) when some members of the proposed class lack any Article III injury.” If that question sounds familiar, that’s because it was not the first time the Court set out to address it. In 2020, the Supreme Court granted certiorari in TransUnion LLC v. Ramirez to decide a similar question: “[w]hether either Article III or Rule 23 permits a damages class action where the vast majority of the class suffered no actual injury.” But the Court managed to decide TransUnion without actually answering it. The problem was that TransUnion came to the Supreme Court at an unusual procedural posture for a class action — after a full trial and a $60 million verdict in favor of the certified class, and after the uninjured class members had already been identified. Of the 8,185 members of the TransUnion class, 6,332 of them suffered no injury other than having been subjected to a “risk of harm” that never, in fact, materialized. The Court held that this “mere risk of future harm” did not give those class members the concrete injury necessary for Article III standing to sue in federal court and reversed the Ninth Circuit’s grant of class certification. In a footnote, however, the Court in Ramirez said it would not “address the distinct question whether every class member must demonstrate standing before a court certifies a class.” Laboratory Corp. will give the Court a better opportunity to answer it. The case came to the Supreme Court from a Ninth Circuit ruling in a Rule 23(f) appeal — i.e., a direct appeal from a grant of class certification. The earlier procedural posture is important because, as the defendants pointed out in their cert petition, “With class actions, certification is often the ballgame.” The overwhelming pressure to settle claims of even dubious merit produced by a grant of class certification — recognized across the circuits as one of the foundational justifications for Rule 23(f) appeals in the first place — means that if a defendant has no opportunity to challenge class members’ lack of standing until some point between certification and final judgment, many otherwise-dispositive standing challenges might never get litigated. (And many uninjured, absent class members will receive windfall settlement checks.) The split in circuit authority that led to Laboratory Corp. has persisted among the circuits for years. Some follow a bright-line rule that “no class may be certified that contains members lacking Article III standing.” Denney v. Deutsche Bank AG, 443 F.3d 253, 264 (2d Cir. 2006). A few allow class certification regardless of the standing of absent class members, “so long as at least one named plaintiff has standing.” Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353, 368 (3d Cir. 2015). Others fall somewhere in between, allowing classes to contain uninjured members as long as there aren’t “a great many” of them — whatever that might mean. Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 825 (7th Cir. 2012). And in the Ninth Circuit, changes in the applicable legal standard could give litigants whiplash. The Ninth Circuit first held that a single class member with standing is enough to give “the entire federal class [] standing.” Bates v. UPS, 511 F.3d 974, 988 (9th Cir. 2007) ( en banc ). Then it endorsed the equivalent of the Denney rule, holding that “no class may be certified that contains members lacking Article III standing.” Mazza v. Am. Honda Motor Co., 666 F.3d 581, 594 (9th Cir. 2012). Then it shifted to another in-between position, holding that uninjured class members “do[] not necessarily defeat certification” as long as they can be “winnow[ed] out” later. Ruiz Torres v. Mercer Canyons Inc., 835 F.3d 1125, 1137 (9th Cir. 2016). Then it added a requirement that the number of uninjured class members “must be de minimis ” for the class to be certified. Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 993 F.3d 774, 792 (9th Cir. 2021). And then, finally, the en banc Ninth Circuit vacated Olean sua sponte, 5 F.4th 950 (9th Cir. 2021) and rejected the “argument that Rule 23 does not permit the certification of a class that potentially includes more than a de minimis number of uninjured class members.” 31 F.4th 651, 669 (9th Cir. 2022) ( en banc ). In so doing, the court exploited the fact that “[t]he Supreme Court expressly held open the question” about precertification standing requirements in Ramirez. The Laboratory Corp. certiorari grant puts Olean in the crosshairs — where it probably belongs. The case not only contributes to the nationwide circuit split but also reaches several confusing rulings that put the Ninth Circuit in conflict with itself. For one thing, it says that most of Mazza — including its holding that a damages class cannot be certified with members lacking Article III standing — “remain[s] good law.” But its holding that uninjured class members do not preclude class certification, even when their number is “more than [] de minimis,” is irreconcilable with Mazza. Just as problematically, that holding may not be a holding at all. While the defendants in Olean argued that there were “a large number of uninjured class members,” the Ninth Circuit disagreed and ruled that the plaintiffs “have demonstrated that all class members have standing here.” Thus, the case was hardly the appropriate vehicle for opining on the propriety of certifying a class containing uninjured members, and whatever the Ninth Circuit had to say on the matter there is arguably mere dicta — a detail no court has yet noticed. The defendants in Laboratory Corp. have the advantage of coming to the Supreme Court with a much more dramatic standing problem. Under the Labcorp brand name, they operate hundreds of medical diagnostic labs across the country. The lawsuit arises from self-service touch screen kiosks they introduced that let patients check in for appointments without stopping at the front desk. The plaintiffs sought to certify a class of blind patients who could not use the kiosks — an accessibility issue Labcorp said it addressed by “improv[ing] its front-desk services” to “incorporat[e] the same ‘express’ technology it uses in its kiosks.” Nonetheless, plaintiffs alleged that the kiosks violated the Americans with Disabilities Act and sought to certify a class of every blind patient who visited a Labcorp location with a check-in kiosk, seeking $4,000 in statutory penalties under the California Unruh Civil Rights Act for each alleged visit. The District Court rejected Labcorp’s protest that most of these people suffered no injury and certified the class. The Ninth Circuit granted Labcorp’s Rule 23(f) petition but affirmed the District Court. It was satisfied that the named plaintiff had an Article III injury because, upon visiting a Labcorp location for the apparent purpose of generating an injury on which to base his suit, he had to wait for a staff member to check him in while patients able to use the kiosk got earlier spots in the queue. There was no showing that any other class members experienced such a wait or the asserted injury of having others jump ahead of them in the queue. But the Ninth Circuit ended the standing inquiry with its analysis of the named plaintiff, adding only, in a footnote, that the uninjured class members do not matter because “more than a de minimis number of uninjured class members” “does not defeat commonality” under Olean. That was arguably wrong even under the terms of Olean itself, which recognized that “[w]hen individualized questions relate to the injury status of class members, Rule 23(b)(3) requires that the court determine whether individualized inquiries about such matters would predominate over common questions.” And because the district court must “winnow out” the “non-injured subset of class members” before final judgment, the presence of uninjured class members will defeat predominance when the process of winnowing them out presents predominating individual questions. Thus, while it is unclear whether Olean ’s minority approach will survive Supreme Court review, even an endorsement of it could lead to a reversal of class certification in Laboratory Corp. and other cases where parties opposing class certification have a record showing just how much work would need to be done to “winnow out” the uninjured.
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