Class-action plaintiffs do not get a free pass on constitutional standing requirements, as the Eleventh Circuit Court of Appeals reminded litigants sua sponte in Drazen and Godaddy.com, LLC v. Pinto last week when it vacated a district court’s approval of a $35 million class-action settlement. Although the parties had not briefed the issue before the Eleventh Circuit, the court ruled that the class definition did not meet Article III’s standing requirements and remanded the case to the district court to give the parties an opportunity to revise the definition. In so ruling, the court also held that courts should apply their own jurisdiction’s standing analysis to unnamed plaintiffs in nationwide class actions, even where the standing question is the subject of a circuit split.
The litigation, originally brought by Drazen against Godaddy.com, LLC (Godaddy) in the Southern District of Alabama, involved claims that Godaddy had violated the Telephone Consumer Protection Act (TCPA) by using an automatic telephone dialing system to place marketing calls and texts without the consent of Drazen and the other putative class members. The class was initially defined 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 parties eventually submitted a proposed class settlement for approval.
Unprompted by the parties, the district court asked the parties whether the Eleventh Circuit’s 2019 ruling in Salcedo v. Hanna precluded approval of the class. The Salcedo court held that receipt of a single unwanted text message was not a sufficiently concrete injury to give rise to Article III standing. The proposed class definition in Drazen included people who had received only one text message and thus would not have standing under Salcedo. The parties narrowed the class definition slightly to reference the software used by Godaddy’s call campaign, but did not require that putative class members have received more than one text message. The district court, however, decided that the Eleventh Circuit’s 2019 decision in Cordoba v. DIRECTV, LLC meant that only the named plaintiffs need standing. The court also noted that unnamed class members who fell short of the Eleventh Circuit’s standing requirements might still have standing in other circuits. Therefore, the district court approved the class settlement.
In the meantime, a would-be class member objected to the attorneys’ fee calculation portion of the settlement. Although the district court ultimately reduced the fee award from 30% of the settlement fund to 20% because “the results obtained for the plaintiffs d[id] not justify an award at the high end of the benchmark,” this class member appealed the settlement approval to the Eleventh Circuit.
On appeal, the Eleventh Circuit re-raised the issue of subject matter jurisdiction sua sponte. Relying on the U.S. Supreme Court’s decision in TransUnion LLC v. Ramirez, discussed here and here, the Eleventh Circuit concluded that to recover individual damages, all plaintiffs within the class definition — named or unnamed — must have standing. The court harmonized its earlier Cordoba decision with Ramirez, explaining that Cordoba did not stand for the principle that unnamed class members could rely solely on the standing of the named class representative, but only that the standing analysis for class members should take place at the class certification stage, rather than as a preliminary inquiry. The Eleventh Circuit also rejected the district court’s approach to nationwide class standing, holding that a jurisdiction cannot “check our Article III requirements at the door” and must apply its own standing precedents to all class members regardless of the law of their domicile.
Since the proposed class included individuals who had only received one text message and lacked standing, the Eleventh Circuit vacated and remanded without reaching the issues presented by the appellant. It also expressly left open the question of whether a single call, as opposed to a text, was also insufficient to establish Article III standing, teeing up that question for Godaddy and future defendants.
Troutman Pepper will monitor this case on remand and will report on any significant developments.