The Eleventh Circuit last month issued a significant class action opinion in Cordoba v. DirectTV, LLC, vacating a class certified in a TCPA class action and remanding the case. The issue underlying the court’s decision was whether large parts of the class as certified had standing. Because the plaintiff did not establish that common issues regarding class members’ standing predominated over individualized issues, class certification could not stand.
Plaintiff Cordoba alleged that defendants DirectTV and Telecel (a company hired to do telemarketing for DirectTV) failed to maintain “internal do-not-call lists” and called him 18 times, even after he had demanded not to be contacted. He sued DirectTV and Telecel under the TCPA and sought to represent two classes, one of which comprised all individuals who received more than one telemarketing call from Telecel on behalf of DirectTV during the time period in which Telecel failed to maintain an internal do-not-call list. The district court certified both putative classes. DirectTV sought interlocutory review under Rule 23(f), which the Eleventh Circuit granted as to the internal do-not-call list class.
In reversing class certification, the Eleventh Circuit focused on two main issues: Article III standing and predominance under Rule 23(b)(3).
Standing: The defendants raised two standing challenges. First, the defendants argued that under the Supreme Court’s decision in Spokeo, the receipt of an unwanted phone call was not, in and of itself, a sufficiently concrete, particularized injury to satisfy Article III’s “injury-in-fact” requirement. Second, the defendants argued that even if receipt of an unwanted phone call was an “injury in fact,” that injury was not “fairly traceable” to the alleged violation of the TCPA, i.e., the defendants’ failure to maintain an internal do-not-call list.
On the first issue, the Eleventh Circuit ultimately concluded that receiving an unwanted phone call is by itself, an injury in fact, even if such an injury “might not be significant in the grand scheme of things.” As the court reasoned, in much the same way as the receipt of an unwanted fax can be an injury in fact by tying up resources and diverting attention, unwarranted phone calls also can be injuries in fact because they “use some of the phone owner’s time and mental energy, both of which are precious.”
As for whether that injury was “fairly traceable” to the defendants’ failure to maintain a do-not-call list, the court concluded that the named plaintiff had asked not to be called, so he could fairly trace his injury to Telecel’s failure to maintain an internal do-not-call list. But the court did not stop with the named plaintiff. It carried its analysis into the certified class and noted that if an individual “never asked Telecel not to call them again, it doesn’t make any difference that Telecel hadn’t maintained an internal do-not-call list. Telecel could and would have continued to call them even if it had meticulously followed the TCPA and FCC regulations.” Thus, for class members that did not request to be added to a do-not-call list, their alleged injuries would not be “fairly traceable” to Telecel’s challenged conduct, and they, therefore, would lack Article III standing.
The court rejected the notion that an “unrestricted telemarketing campaign,” standing alone, could give rise to standing. It found that such a campaign is the kind of bare procedural harm that Spokeo disallows, and it further found that the critical fact for traceability was whether the class member requested to be added to a do-not-call list. Each class member’s conduct was therefore relevant (and dispositive on the class certification issue).
Predominance: Having concluded that members of the class who did not ask DirectTV to stop calling them would lack standing, the court then turned to the “more difficult question” of what role “standing” “plays in the class certification analysis.” In other words, the court then asked so what?
The court began its analysis by noting that proving absent class member standing is not a requirement of class certification. Instead, the court held that the case as a whole is justiciable if the named plaintiff has standing and that a class can be certified where the named plaintiff has demonstrated his or her standing, even if it is apparent that absent class members may not have standing. In so holding, the court departed from the majority of circuits, including the Second, Fifth, Eighth, and D.C. Circuits, which have held that a class that includes members who do not have standing cannot be certified. Instead, the court seemingly joined the minority rule of the Seventh and Third Circuits, which do not require that absent class members have standing as a prerequisite for class certification.
But that was not the end of the inquiry. Even though not a prerequisite to class certification, the court recognized that proving the standing of absent class members was still relevant to the analysis because absent class members cannot ultimately recover unless they have standing. At some point, “each plaintiff will likely have to provide some individualized proof that they have standing — i.e., each plaintiff will have to provide some evidence that he or she called Telecel or otherwise communicated that they did not wish to be called, and their injury is therefore traceable to Telecel’s violation of the law.” The court recognized that the individualized nature of proving standing posed a “powerful problem” to predominance under Rule 23(b)(3), particularly given that the evidence showed that as few as 5% of the putative class members may have asked Telecel not to call them.
Having identified this problem, the court then found that the district court wholly failed to address it. The lower court made no findings about how to address traceability, and the Eleventh Circuit found this failure to be an abuse of discretion.
Takeaways: We note several main points from Cordoba.
First, in Cordoba, the Eleventh Circuit has seemingly adopted the approach of the First Circuit in dealing with absent class member standing. That is, although eschewing the adoption of the bright-line rule that operates in the majority of circuits, whereby a class cannot be certified if it includes absent members without standing, the court nevertheless made clear that individualized issues related to absent class member standing could still defeat predominance; but as in many cases, whether predominance is defeated turns on a determination of how much individual litigation would be too much. A court could potentially certify a class that includes a few members without standing, provided that sorting the wheat from the chaff will not require too much individualized fact-finding. (However, as we’ve discussed elsewhere, any procedure whereby class members without standing are not removed until post-judgment could run afoul of the Seventh Amendment.) But it’s a different story for “a class with potentially many more, even a majority, who do not have Article III standing,” and where identifying those with standing and those without will require individualized proof.
Second, standing challenges under Spokeo, as we have noted before, can be the gift that keeps on giving in class cases, and may have more value at class certification than at the motion to dismiss stage. Spokeo can be a powerful tool to defeat statutory class actions, but it is not necessarily a tool that can be used to obtain a dismissal in all cases. Instead, by requiring class representatives to demonstrate standing across a class of allegedly similarly-situated members, it makes class certification more fact-intensive and thus more difficult.
Third, this case heightens the importance of ascertainability. Defendants may consider emphasizing that a plaintiff must demonstrate how it will solve concrete standing problems for the people that fall within the class definition, and a plaintiff cannot carry that burden without producing a class definition that draws clear lines between who is in and who is out. At the same time, though, Cordoba highlights that it may not be sufficient to oppose certification merely by arguing that predominance or ascertainability problems exist, without actually proving that those problems are real. Many courts have rejected defendants’ predominance objections as speculative or hypothetical; be prepared, if possible, to prove that the putative class as defined will include a substantial number of members who lack standing or injury and that it will require lots of individualized proof to determine who is a proper class member.