In Drazen v. Pinto, –F.4th–, 2022 WL 2963470 (July 27, 2022), the Eleventh Circuit vacated a district court’s decision to certify a class under Rule 23 and approve the class settlement because the class included members who lacked Article III standing.
This case involves three consolidated class actions against GoDaddy.com, each of which alleges the company violated the Telephone Consumer Protection Act of 1991 (“TCPA”) by using a prohibited automatic telephone dialing system to make unsolicited contact with plaintiffs through calls and texts to market its services and products.
The parties submitted a proposed class settlement agreement to the district court and defined the class as “All persons within the United States who received a call or text message to his or her cellular telephone from Defendant from November 4, 2014 through December 31, 2016.”
The district court requested additional briefing in view of the holding in Salcedo v. Hanna, 936 F.3d 1162 (11th Cir. 2019), which found that the receipt of a single text message was not a sufficiently concrete injury to give rise to Article III standing. The parties amended the proposed class definition and removed one of the named plaintiffs who had only received a single text message. The district court approved this class definition, finding that precedent determined that only named plaintiffs must have standing pursuant to Cordoba v. DIRECTV, LLC, 942 F.3d 1259 (11th Cir. 2019).
The district court also permitted single-text message only recipients to remain in the class, even though they lacked Article III standing under Salcedo. The district court allowed them to remain because they only made up about 7% of the class and because they may have a viable claim in their respective circuits due to a circuit split.
This matter was appealed by a potential class member who objected to the approval of attorney’s fees and costs accompanying the settlement. Before reaching the question presented on appeal, the Eleventh Circuit took it upon itself to consider whether it had subject matter jurisdiction under Article III.
Considering the Supreme Court’s opinion in Frank v. Gaos, — U.S. –, 139 S. Ct. 1041 (2019), the Eleventh Circuit held even at the settlement stage of a class action, there must be Article III standing. Further, under the findings in TransUnion LLC v. Ramirez, — U.S. –, 141 S. Ct. 2190 (2021), “[e]very class member must have Article III standing in order to recover individual damages.”
The Eleventh Circuit concluded “the Cordoba inquiry into standing for certification purposes through Rule 23 merges with the TransUnion analysis of damages recovery to lead us to the following conclusion: 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 court rejected the proposed class definition because it included individuals who received only a single text message, which violated the Eleventh Circuit’s holding in Salcedo. The Court vacated the class certification and settlement and remanded for further briefing to redefine the class to comply with TransUnion. Specifically, because precedent establishes that receipt of a single text does not constitute a sufficient injury under the TCPA, the Eleventh Circuit instructed the parties to focus on whether receipt of a single cell phone call is sufficient to meet the concrete injury requirement of Article III.
The Eleventh Circuit applied sound analysis of recent Supreme Court holdings to reach its decision on Article III standing requirements for class action settlements. Defendants should remain cognizant of these principles and this decision when trying to defeat class certification. If the parties reach a class wide settlement, it remains important to tailor the class definition to those who have actually suffered a concrete injury.