On April 12, the Eleventh Circuit Court of Appeals vacated an $8 million class-action settlement for lack of standing. While the issue was not raised by the district court or either party on appeal, the court ruled that the plaintiffs lacked standing to seek injunctive relief because they did not allege they planned to purchase again the brain performance supplements at issue.
In Williams v. Reckitt Benckiser LLC, three plaintiffs filed three separate class action complaints that were later consolidated in the Southern District of Florida. The plaintiffs alleged that the defendants’ advertising of its brain performance supplements, which claimed that the supplements would improve “focus,” “accuracy” and “concentration,” and that the product had been clinically tested, was false and misleading in violation of multiple state unfair trade practices laws. The parties quickly reached a settlement that included injunctive relief prohibiting defendants from using the terms “clinically proven,” “science proved,” and “clinically tested and shown,” in their marketing for a period of two years. The district court approved the settlement. However, one class member appealed, arguing the $8 million benefit to the class was “illusory” because the claims process was structured in a way that class members would only receive a fraction of that amount.
Without addressing the merits of the objecting class member’s claims, the appellate court found that because the plaintiffs failed to allege any continuing or imminent harm, they lacked standing to seek injunctive relief. “[E]ven if a plaintiff can establish standing to pursue separate claims for monetary relief based on allegations of past harm, before a court may grant the plaintiff injunctive relief, the plaintiff must separately establish a threat of ‘real and immediate,’ as opposed to ‘conjectural or hypothetical,’ future injury.” The court found that in this case, the plaintiffs not only did not allege that they planned to purchase the supplements in the future, they instead gave “every indication” to the contrary because the products are “worthless.”
While the court did not find error in the monetary relief granted, because the injunctive relief “formed an integral part of the district court’s calculus of its overall fairness,” the entire award was set aside and the case was remanded.
This case is another reminder to defense counsel of the importance of conducting a thorough review of plaintiff’s standing throughout all phases of a class action. While plaintiffs’ lack of standing can lead to a defense victory at the pleading stage, it can also undo a class settlement agreement.