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Class Action Countermeasures Discussions of the Strategic Considerations Involved In Class Action Defense

“Future Injury” versus “Fool Me Once” – McNair v. Synapse Group Inc.

Posted in Certification

To get lawsuits into court and past preliminary motions, plaintiffs often have to argue some pretty stupid things. They have to argue that they did not know coffee is hot or that they trusted Google Maps directions over their own eyes. Sometimes, to get a class action that far, plaintiffs’ lawyers have to argue that entire populations that dumb, such as when they argue that people did not know that Nutella is fattening. What’s a defense lawyer to do in situations like this?

The Third Circuit has offered some help. The lawsuit, McNair v. Synapse Group, Inc. (3d Cir. 2012), involved the high-stakes, high-pressure business of magazine subscriptions. Each of the named plaintiffs had bought a magazine subscription through Synapse, one of those offers that involved crazily low rates and–unless cancelled–automatic renewal. As most behavioral economists would tell you, making a default "automatic renewal" would be very profitable, because most people won’t bother to cancel a magazine subscription. But the plaintiffs alleged that Synapse stacked the deck even further in its favor, by disguising its automatic renewal notices as just so much junk mail. (According to internal documents, Synapse had determined that fewer people cancelled after an unmarked notice than after one marked "Automatic Renewal.")

The plaintiffs had originally brought their case as a class action for damages, but the trial court determined that, since the lawsuit was based on allegations of fraud, individualized issues (like reliance) would predominate over common ones.

So the plaintiffs amended their complaint to seek injunctive relief instead. Synapse opposed, arguing that, since the plaintiffs would not suffer any future injury, they could not seek injunctive relief. (The plaintiffs’ response was twofold: (1) it was not always clear which subscription deals were Synapse deals, and (2) given a good enough initial deal, they could not guarantee they would not subscribe again.) The trial court allowed the amendment, reasoning that it was possible one of the plaintiffs might wind up subscribing with Synapse again. Two years later, it declined to certify this new class as well, this time because those same individualized issues meant the proposed class was not cohesive enough to justify certification under Rule 23(b)(2).

The plaintiffs appealed under Rule 23(f). The central question the Third Circuit faced was whether plaintiffs in this situation (fooled once, might get fooled again) had standing to seek injunctive relief. In this case, it concluded they did not. It began by describing the "future injury" requirement for injunctive relief

When, as in this case, prospective relief is sought, the plaintiff must show that he is "likely to suffer future injury" from the defendant’s conduct. Lyons, 461 U.S. at 105. In the class action context, that requirement must be satisfied by at least one named plaintiff.

And it then turned to what the plaintiffs had actually alleged about their harms.

Appellants have effectively acknowledged that they, unlike the class members they seek to represent, are not Synapse customers and are thus not currently subject to Synapse’s allegedly deceptive techniques for obtaining subscription renewals. Unless they decide to subscribe again, then, there is no reasonable likelihood that they will be injured by those techniques in the future. They do not allege that they intend to subscribe again.

[Internal citations omitted.] Having set up the reasoning, the Third Circuit offered a very blunt assessment of the plaintiffs’ argument that, despite having been allegedly deceived once, they would not be able to avoid the same problem in the future.

Perhaps [plaintiffs] may accept a Synapse offer in the future, but, speaking generally, the law accords people the dignity of assuming that they act rationally, in light of the information they possess. … If Appellants’ suggestion is that they may not be able to help themselves when confronted with a really good subscription offer, they have still not provided a basis for standing. Pleading a lack of self-restraint may elicit sympathy but it will not typically invoke the jurisdiction of a federal court.

(Emphasis added.)  

The McNair opinion has some clear uses for defense counsel. The most obvious is its clear explication of the future injury rule, and its implicit affirmance of the cohesiveness requirement of Rule 23(b)(2). But it may serve even more use as an object lesson: from both a rhetorical and a practical standpoint, it still makes sense to argue to a court that your opponents are not stupid, and it’s rarely a good idea to argue to a court that your clients are.