The Whistleblower & Anti-Fraud Blog
Opinions warn against conflating FRCP 23 elements with constitutional standing.
Defendants battling proposed class actions based on alleged violations of state law have long argued that any certified class should be limited to residents of the states in which the named plaintiffs reside. Absent class members from other states should be excluded, they urge, because the named plaintiffs supposedly only have “standing” to bring claims under the laws of their own states and not others. Scores of district courts have agreed, limiting the geographical scope of classes and leaving large numbers of injured victims without relief.
Now, however, a consensus is emerging at the appellate level that this is incorrect.
The First, Seventh and now the Second Circuit Courts of Appeal have issued decisions clarifying that proposed class representatives need only have standing to assert their own state law claims, not those of absent class members. Instead, the only issue raised by the potential applicability of the laws of different states to the claims of unnamed class members, the decisions say, is whether the proposed class satisfies the “predominance” and “manageability” requirements of Rule 23 of the Federal Rule of Civil Procedure, i.e., that common issues predominate over individual issues and that the members of the class are identifiable through objective criteria. The decisions warn that the standing requirements of Article III of the United States Constitution should not be conflated with these elements of Rule 23 which are distinct.
The Second Circuit’s Langan decision
The leading case is Langan v. Johnson & Johnson Consumer Companies, Inc. There, the Second Circuit rejected the defendant’s argument that the plaintiff had no “standing to bring a class action on behalf of unnamed, yet-to-be-identified class members from other states under those states’ … laws.” Instead, it held that “as long as the named plaintiffs have standing to sue the named defendants, any concern about whether it is proper for a class to include out-of-state, nonparty class members with claims subject to different state laws is a question of predominance under Rule 23(b)(3), not a question of [standing] under Article III.”
The court explained that class actions under Rule 23 are “an exception to the general rule that one person cannot litigate injuries on behalf of another.” By such rule, Congress “authorized plaintiffs to bring … a suit in federal court on behalf of, not just themselves, but others who were similarly injured.” Although the class action plaintiff has not “actually suffered the injuries suffered by her putative class members” and therefore would not “normally” have standing to bring those suits, Congress has nevertheless legislated that named plaintiffs who have “the same interest” and “suffered the same injury” as absent class members will have a “sufficient stake in the outcome of her putative class members’ cases” to adequately represent those class members.
Accordingly, the relevant question raised by the potential applicability of different states’ laws is “at what point the claim of a named plaintiff is so different from the claims of her would-be class members that the exception that we make to the general standing requirements for class actions should not apply.” Treating supposed differences as an issue under Rule 23 rather than Article III “makes sense”, the court further reasoned, because “it acknowledges the obvious truth that class actions necessarily involve plaintiffs litigating injuries that they themselves would not have standing to litigate.” Since named class action plaintiffs are “not required to have individual standing to press any of the claims belonging to their unnamed class members, it makes little sense to dismiss the state law claims of unnamed class members for want of standing when there was no requirement that the named plaintiffs have individual standing to bring those claims in the first place.”
The Seventh and First Circuits are in accord. The Seventh Circuit held similarly in Morrison v. YTB Int’l, Inc. There, the court indicated that the question of whether the laws of other states might govern the claims of unnamed, out-of-state class members “has nothing to do with [the named plaintiff’s] standing, though it may affect whether a class should be certified – for a class action arising under the consumer-fraud laws of all 50 states may not be manageable, even though an action under one state’s law could be.”
Likewise, In re Asacol Antitrust Litig., the court rejected the contention that the named plaintiffs lacked “standing to bring claims on behalf of class members whose claims arise under the laws of the twenty-two states within which no named plaintiff has either resided or purchased the relevant … products during the class period.” It reasoned that “[r]equiring that the claims of the class representative be in all respects identical to those of each class member in order to establish standing would confuse the requirements of Article III and Rule 23… [and] render superfluous the Rule 23 commonality and predominance requirements because any case that survived such a strict Article III analysis would by definition present only common issues.”
Accordingly, it held that the only relevant question was whether the applicability of other states’ laws left the class representatives “with an insufficient personal stake in the adjudication of the class members’ claims” to adequately represent those class members under Rule 23.
These appellate decisions should lay to rest the frequently asserted canard that multistate class actions require a named class representative from each relevant state. The truth is that, if the laws of the different states sought to be covered by the proposed class are sufficiently similar, a class representative from any of those states should suffice.
Class actions — and, in particular, those on behalf of consumers, which typically are based on alleged violations of state rather than federal law — have increasingly faced legal obstacles. The rejection of the lack-of-standing defense in multistate class actions is one of the few, significant pro-consumer legal developments in this area that we have seen in years.
Contact a class action attorney
If you know of potential class action claims and would like to speak to experienced class action attorney, reach out to Mark A. Strauss for a free consultation.