Supreme Court To Address Article III Standing Problems In Class Actions ' Again

• Published date: 05 February 2025
• Subject Matter: Litigation, Mediation & Arbitration, Class Actions, Trials & Appeals & Compensation
• Law Firm: Goodwin Procter LLP
• Author: Mr Keith Levenberg

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...