Foundation Urges Supreme Court Review of Class Action Standing Requirements

Atlantic Legal has filed an amicus brief in Ticketmaster v. Stearns, a case involving standing to sue in a consumer class action, brought in federal court, but primarily on causes of action created by California state law. Our brief is in support of a petition for certiorari in the U. S. Supreme Court.

The questions presented are whether in federal court all members of a putative class not just the named plaintiff must have Article III standing to sue and whether the Ninth Circuit erred following Californias rule that only a named plaintiff need have standing to sue, regardless of the lack of standing of putative class members, disregarding the requirements of Article III standing. The Ninth Circuit held that a federal class action could be certified even though some members of the putative class did not have standing to bring suit on their own.

The underlying substantive claim arose under Californias Unfair Competition Law, as well as under Californias Consumer Legal Remedies Act and the federal Electronic Funds Transfer Act. The thrust of the complaint is that customers were deceived into enrolling in Ticketmasters Entertainment Rewards discount program under the false impression that they were merely completing their on-line ticket purchases. It is not disputed, however, that fewer than 2% of Ticketmasters customers who were presented with the discount offer actually enrolled in the Rewards program. It is also not disputed that some of the customers in that 2% were not deceived, but knowingly enrolled, even if they did not go on to take advantage of the programs benefits, and thus were not injured.

The district court refused to certify the proposed class of consumers who paid for the Rewards program but did not use it.

The Ninth Circuit, relying on a state courts interpretation of state law, reversed the district courts denial of class certification, believing that it was bound to follow a decision of the California Supreme Court in a different case which, as a matter of California law, allowed claims to proceed on a class basis regardless of whether all class members were injured by the defendants alleged misconduct.

Ticketmaster argues that while it might be permissible as a matter of state law for such a suit to proceed as a class action in state courts, California law and judicial decisions cannot create law that would undermine the requirements of Article III standing for suit in federal court. It argues that the irreducible constitutional minimum to establish standing demands (1) injury in fact;(2) a causal connection between the injury and the conduct complained of; and (3) that the injury can be redressed through the litigation; and (4) that to weaken the requirements of standing in class actions is inconsistent with the strictures of Article III and violates the purpose of Rule 23 that the parties it is joining together all actually have suffered injury allegedly caused by the defendant which can be redressed by action against the defendant.

Atlantic Legals brief contends that Article III standing requirements should not be defined by state law. Even Congress cannot dilute Article IIIs standing requirements by granting by statute the right to sue to a plaintiff who would not otherwise have standing. A fortiori, a state court or a state legislature cannot negate Article IIIs standing requirements.

We argue that the Ninth Circuits holding flies in the face of the Supreme Courts holding in Wal-Mart Stores v. Dukes that a class cannot be certified on the premise that [the defendant] will not be entitled to litigate its statutory defenses to individual claims (131 S.Ct. at 2561).

Moreover, there is a clear circuit split. Two federal courts of appeals examined the standing issue in light of the same California state law and came to diametrically opposed conclusions. While the Ninth Circuit imported the California rule into federal procedural jurisprudence, the Eighth Circuit held that to the extent that [the California case] holds that a single injured plaintiff may bring a class action on behalf of a group of individuals who may not have had a cause of action themselves, it is inconsistent with the doctrine of standing as applied by federal courts. Avritt v. ReliaStar Life Ins. Co., 615 F.3d 1023, 1034 (8th Cir. 2010). [A] named plaintiff cannot represent a class of persons who lack the ability to bring a suit themselves. Id.

This case is important because, as we pointed out in our amicus brief, the federal courts are seeing an increasing volume of class litigation and class actions often coerce unwarranted settlements.

To view Atlantic Legals brief, please click here.