Supreme Court Refuses To Allow Class Action To Extend Deadline For Filing Suit

Today, in CalPERS v. ANZ Securities, Inc. (pdf), the Supreme Court recognized a crucial limitation on the doctrine that allows a class action to toll the deadline for absent class members to bring their own separate individual suits. We’ve been following this issue in the CalPERS appeal for some time. (See our previous reports on this appeal.)

In a 5-4 decision authored by Justice Kennedy, the Court held that the American Pipe tolling doctrine does not apply to statutes of repose. As a result, the three-year statute of repose in the Securities Act of 1933 barred a suit that CalPERS had filed against the underwriters for certain Lehman Brothers debt securities more than three years after the securities were issued, but while a timely class action bringing similar claims was pending.

Even though lower courts had divided on the question and four Justices dissented, the majority’s reasoning follows fairly directly from established precedents. Consistent with Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, the Court easily determined that the three-year period allowed for suits under § 13 of the Securities Act is a statute of repose. That statutory provision “creates a fixed bar against future liability,” “admits of no exception,” and “runs from the defendant’s last culpable act” rather than “the accrual of the claim.” Tellingly, the majority observed, § 13 also contains a separate one-year statute of limitations.

The majority then explained that statutes of repose are not subject to equitable tolling, as CTS Corp. v. Waldburger held. “The purpose and effect of a statute of repose . . . is to override customary tolling rules arising from the equitable powers of courts.” Statutes of repose, the Court emphasized, reflect a legislative determination that “there should be a specific time beyond which a defendant should no longer be subjected to protracted liability.” The “unqualified nature of that determination . . . forecloses the extension of the statutory period based on equitable principles.”

The only remaining question was whether the class-action tolling rule established by American Pipe & Construction Co. v. Utah provides for equitable tolling. Looking to American Pipe itself, the Court had no trouble answering that question affirmatively: “The source of the tolling rule applied in American Pipe is the judicial power to promote equity.” Having concluded that § 13’s three-year period is a statute of repose, that statutes of repose cannot be equitably tolled, and that American Pipe provides for equitable tolling, the Court ruled that American Pipe tolling could not apply to § 13’s three-year period.

The points raised by CalPERS in opposition did not persuade the majority. American Pipe tolling, the majority concluded, could properly be restricted to statutes of limitations. Otherwise, individual suits filed after expiration of § 13’s repose period could expand a defendant’s litigation burdens and liability beyond that imposed by a timely class action. The importance of opt-out rights would not justify ignoring mandatory time limits set by statute. Any risk of burdensome protective filings by class members seemed overblown to the Court. And the word “action” in the operative portion of § 13 could not be read to mean a claim brought in a class action on a separate date by a separate named party in a separate suit.

Writing for the dissenters, Justice Ginsburg argued that tolling § 13’s repose period would not implicate any of the reasons for that period because the class action gave the defendants all the notice of liability that they needed. She also described risks that some class members could lose their rights to proceed individually and that protective filings by other class members would “gum up the works of class litigation.” Interestingly, she also urged class counsel and district courts to notify class members as the expiration of any repose period approaches.

The CalPERS decision continues a longstanding trend of taking statutes of repose seriously. The Court is right to do so. When a legislature enacts an unqualified statute of repose, it is telling litigants and courts that the threat of litigation must end on a date certain. Judge-made tolling rules should not second-guess that instruction. As the Supreme Court recognized, there is no good reason to take a different approach just because a class action is or was pending.

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Solicitor General weighs in against NLRB’s anti-arbitration rule

As many of our readers know, the Supreme Court will hear arguments next term in a trio of cases examining whether class waivers in employment arbitration agreements are enforceable under the Federal Arbitration Act. Many observers—including the two of us—believed that the issue had been settled by the Supreme Court’s decisions in AT&T Mobility LLC v. Concepcion (2011) and American Express Co. v. Italian Colors Restaurant (2013). But—as detailed on our blog—in 2012 the National Labor Relations Board concluded in the D.R. Horton case that Section 7 of the National Labor Relations Act (NLRA), which protects the ability of employees to engage in “concerted activities” (for example, union organizing), supersedes Concepcion (and by extension, American Express) and requires that employees be allowed to bring class actions (either in court or in arbitration).

Over the past several years, a circuit split has developed over whether the Board’s approach in D.R. Horton rests on correct interpretations of the FAA and NLRA, with the majority of courts rejecting the Board’s position. In January, the Supreme Court granted review in three cases—NLRB v. Murphy Oil USA, Inc., Epic Systems Corp. v. Lewis, and Ernst & Young LLP v. Morris—to resolve the split. Briefing on the merits is now underway. We filed our amicus brief on behalf of the U.S. Chamber last Friday, and—while we believe our brief makes compelling arguments (which we discuss below)—the big development in these cases was the amicus brief that the United States filed on Friday.

Significantly, the United States has changed its position since last October, when the DOJ represented the NLRB in filing the petition for certiorari in Murphy Oil. That petition was a full-throated defense of the D.R. Horton rule, consistent with efforts by a number of federal agencies during the Obama Administration to circumvent Concepcion by banning class waivers or banning predispute arbitration entirely. Last Friday, however, the United States broke with the Board’s position, filing an amicus brief in support of Murphy Oil and the other two companies.

As the government explained in its brief on Friday, the Solicitor General’s office has concluded that its earlier briefs got the issue wrong:

In Murphy Oil, this Office previously filed a petition for a writ of certiorari on behalf of the NLRB, defending the Board’s view that agreements of the sort at issue here are unenforceable. After the change in administration, the Office reconsidered the issue and has reached the opposite conclusion. Although the Board’s interpretation of ambiguous NLRA language is ordinarily entitled to judicial deference, courts do not defer to the Board’s conclusion as to the interplay between the NLRA and other federal statutes. We do not believe that the Board in its prior unfair-labor-practice proceedings, or the government’s certiorari petition in Murphy Oil, gave adequate weight to the congressional policy favoring enforcement of arbitration agreements that is reflected in the FAA.

While the United States’ brief is worth reading in full, here are some highlights:

  • “[T]he Court has made clear that statutory authorizations to pursue class actions in court for violations of particular federal laws is insufficient to override the FAA’s directive that agreements to arbitrate must be enforced.”
  • No one contends that the Fair Labor Standards Act—which is the basis for plaintiffs’ underlying claims—“overrides the FAA’s directive that their arbitration agreements should be enforced.”
  • “None of the specific rights enumerated in” Section 7 of the NLRA, which describes “concerted activities for the purpose of collective bargaining or other mutual aid and protection, “involves the conduct of litigation.”
  • “In no other context … has [Section 7] been construed to expand the availability of class or collective remedies beyond those that are authorized by the laws that directly address those issues.”
  • “Because the question is whether the NLRA contains a specific command from Congress precluding bilateral arbitration, the Board cannot supply the requisite clarity” needed to override the FAA “by gap-filling.”
  • “The Court’s decisions also make clear that, for purposes of determining the enforceability of the arbitration agreements at issue here, the right to pursue a collective action under [the FLSA] is a procedural rather than a substantive FLSA right.”
  • Even if it were permissible for the Board to interpret “residual language” (referring to “other concerted activities”) in Section 7 of the NLRA “to cover litigation conduct,” “it does not follow that the right to prosecute a collective action is a substantive NLRA right … if the Board’s reading is permissible, it is because the residual phrase can reasonably be construed to cover procedural matters as well as substantive ones.”
  • The “savings clause” contained in Section 2 of the FAA, which “permits courts to invalidate an arbitration agreement based on generally applicable contract defenses,” does not support using the Board’s interpretation of the NLRA to strike down arbitration agreements.
  • “Just as the savings clause was held not to encompass the state-law rule at issue in Concepcion”—which had held preempted the California rule declaring “class-action waivers contained in certain consumer contracts” unenforceable—“it does not encompass the analogous federal-law rule that the Seventh and Ninth Circuits derived from the NLRA” in Epic and Ernst & Young.

The United States’ brief, in short, endorses the view that Concepcion requires rejection of the D.R. Horton rule.

By contrast, the NLRB is expected to take a different approach. The Board’s brief is due on August 9. Unless the Board’s composition changes by that date, and the newly-constituted Board repudiates D.R. Horton in time—which is possible but not likely—the Board presumably will defend its current position.

This internecine disagreement is certain to garner attention; in fact, it already has.

But it is worth noting that disagreements between the Executive Branch and independent agencies in the Supreme Court are not unprecedented—particularly at the time of a change in Administrations. Two high-profile examples: in the “seven dirty words” case, FCC v. Pacifica Foundation, the Ford Administration had supported the FCC in the court of appeals, but filed an amicus brief in the Supreme Court arguing the FCC’s order violated the First Amendment. And in Dirks v. SEC, which set the rules for insider trading prosecutions, the Reagan Administration filed an amicus brief opposing the SEC’s position.

Most importantly, for the reasons we explain in our brief on behalf of the U.S. Chamber, the position taken by the United States in its amicus brief rests firmly on the Supreme Court’s precedents interpreting the FAA.

First, the Court has repeatedly held that any asserted conflict between one federal statute and the FAA exists only when the other federal statute contains a “contrary congressional command” overriding the FAA’s mandate that arbitration agreements be enforced according to their terms. Section 7 of the NLRA doesn’t mention arbitration at all; indeed, it doesn’t even mention class actions or joint litigation. That statute accordingly doesn’t include the requisite “contrary congressional command” needed to support the Board’s D.R. Horton rule.

Second, the “effective vindication” exception to the FAA’s requirement that arbitration agreements be enforced—most recently addressed by the Court in American Express—provides the Board’s rule with no support either. The arbitration agreements don’t bar claimants from bringing claims under the FLSA. Moreover, class and collective actions are a procedural mechanism, not a substantive right, and in any event, the NLRA does not confer a right to engage in class or collective actions.

Third, the FAA’s “savings clause” (discussed above) does not apply. The savings clause saves state contract laws of general applicability from FAA preemption; it does not apply to federal laws, which are subject to the Court’s “contrary congressional command” test. In any event, as noted above, Concepcion held that the savings clause does not “save” rules prohibiting waivers of class procedures, because such rules interfere with the bilateral nature of arbitration and thus “create[] a scheme inconsistent with the FAA.”

Fourth, there are powerful policy justifications for preserving employment arbitration agreements. Most workplace grievances are individualized and therefore could not be pursued as part of a class or collective action. Indeed, without individual arbitration, most of those claims could not be pursued at all, because litigation in court is frequently too expensive to serve as a realistic option for employees seeking to vindicate their rights.

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Supreme Court’s Decision In Bristol-Myers Squibb v. Superior Court Rejects Expansive View Of Specific Jurisdiction

We’ve previously blogged about Bristol-Myers Squibb v. Superior Court (“BMS”), in which the Supreme Court granted certiorari to review a decision of the California Supreme Court that adopted an unusual—and extraordinarily expansive—view of California courts’ power to exercise specific personal jurisdiction over a defendant.

We filed an amicus brief on behalf of the Chamber of Commerce of the United States of America, the California Chamber of Commerce, the American Tort Reform Association, and the Civil Justice Association of California, arguing that the California court’s holding conflicted with numerous Supreme Court decisions making clear that in order to invoke specific jurisdiction, a plaintiff’s claims must arise out of the defendant’s in-state conduct.  (The views in this post are ours, and not those of our clients.)

The case was argued in April, and the Court announced its decision today. The result is an 8-1 opinion rejecting the California Supreme Court’s approach and, in our view, recognizing important limits imposed by the Fourteenth Amendment’s due process clause on the ability of courts to adjudicate cases that aggregate the claims of plaintiffs from many jurisdictions.

The immediate impact of the decision is to limit the forums where nationwide mass actions in state court can proceed to those states in which the defendant is subject to general jurisdiction (usually the state of incorporation and principal place of business).  In addition, as we discuss below, the decision raises substantial questions about whether nationwide class actions can proceed in jurisdictions where a defendant is not subject to general jurisdiction.

Background

The question presented in BMS involves specific jurisdiction, which is one of two forms of personal jurisdiction—the doctrine that permits a court to exercise its power over the “person” of a defendant. Specific jurisdiction empowers a court to adjudicate particular claims relating to a defendant’s conduct within or relating to the forum; in order to be subject to specific jurisdiction, the defendant must have established contacts with the forum, and the lawsuit must arise out of those contacts.

As the Supreme Court put it in Walden v. Fiore, its most recent decision on the scope of specific jurisdiction: “[f]or a State to exercise jurisdiction consistent with due process, the defendant’s suit-related conduct must create a substantial connection with the forum State.” That is why the BMS Court termed specific jurisdiction “case-linked”—in contrast to “all-purpose” general jurisdiction, which allows a court to “hear any claim against that defendant, even if all the incidents underlying the claim occurred in a different State.”

In BMS, 592 plaintiffs who reside outside California joined together with 86 California resident plaintiffs to sue BMS in California, asserting various product-defect claims based on their use of BMS’s blood-thinning drug Plavix.

BMS moved to dismiss the out-of-State plaintiffs’ claims for lack of personal jurisdiction, arguing that California lacked specific jurisdiction over these plaintiffs’ claims because none of the events relevant to their claim occurred in California: they did not take the drug in California, it was not marketed to them in California, and it was not designed or manufactured in California. But the California Supreme Court held that California courts could exercise specific jurisdiction over these claims. It took the position that specific jurisdiction does not require that a plaintiff’s claims “arise directly from the defendant’s forum contacts” or be causally linked to those contacts in any way. Instead, the court held, it was sufficient that the in-state and out-of-state plaintiffs’ claims were “based on the same allegedly defective product and the assertedly misleading marketing and promotion of that product” as part of a “common nationwide course of distribution.”

The Court’s Decision

The Supreme Court reversed the California Supreme Court by a vote of 8-1. Writing for the majority, Justice Alito emphasized that “specific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.” If a state has no “legitimate interest” in particular claims, a defendant should not be forced to “submit[] to the coercive power” of the state with respect to those claims.

Justice Alito explained that specific jurisdiction therefore requires “a connection between the forum and the specific claims at issue.” “When there is no such connection,” he stated, “specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State.”

Applying that requirement, the majority held that California could not exercise specific jurisdiction over BMS with respect to the nonresidents’ claims. The nonresidents did not “claim to have suffered harm in” California, and “all the conduct giving rise to [their] claims occurred elsewhere.” Moreover, because specific jurisdiction cannot be based on activities “unconnected” with the claims at issue, “[t]he mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California— and allegedly sustained the same injuries as did the nonresidents,” or that “BMS conducted research in California on matters unrelated to Plavix,” was irrelevant to specific jurisdiction.

Implications for Mass and Class Actions

The BMS decision reaffirms long-settled limits on personal jurisdiction.  It makes clear that lower courts may not loosen the rules governing “case-linked” specific jurisdiction in the wake of the Court’s decision in Daimler (reaffirmed last month in BNSF Railway Co. v. Tyrrell) emphasizing the strict limits on “all-purpose” general jurisdiction.

One issue left open by the decision is how much of a connection between a plaintiff’s claims and the forum state is required to permit the assertion of specific jurisdiction. The Court did not have to decide that issue because there was no connection at all between California and the claims of the non-California plaintiffs. But the question of what connection is required will certainly arise in the future.

We proposed one answer in a separate amicus brief for the Chamber supporting the cert petition in GlaxoSmithKline, LLC v. M.M. ex rel. Meyers, another case challenging a lower court’s broad assertion of specific jurisdiction. We explain that a court should:

  • Identify the defendant’s purposeful claim-related activity within the forum;
  • Determine whether that activity gave rise to the plaintiff’s claim; and
  • Assess whether the causal connection between the activity and the claim is sufficient to create the “substantial connection” that due process requires.

As part of the last inquiry, the court should consider both (a) whether the in-forum activity is sufficient to support the conclusion that the obligation underlying the suit was incurred there, and (b) whether permitting an assertion of specific jurisdiction based on that activity will intrude on the sovereignty of other States, because one or more States have a significantly greater connection to the underlying obligation than the forum State. The latter consideration is particularly appropriate in light of the BMS Court’s focus on the forum state’s “legitimate interest in the claims in question”—“[a]s we have put it,” the Court said, “restrictions on personal jurisdiction ‘are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective States.’”

Another issue likely to gain substantial attention is how personal jurisdiction applies in the class action context.(Justice Sotomayor flagged the issue in footnote 4 of her dissent.)  Some courts have held that as long as the forum State may exercise specific jurisdiction over the named plaintiffs’ claims, it automatically may also adjudicate the claims of the absent class members—even if it would not be able to exercise specific jurisdiction if the absent class members’ claims were asserted in a separate case. That reasoning is significantly undermined by today’s decision, which squarely held that “[t]he mere fact that other plaintiffs” could invoke case-specific jurisdiction in California—because they obtained and ingested the drug in California—“does not allow the State to assert specific jurisdiction over the nonresidents’ claims.”

The Supreme Court has repeatedly explained—both under the Rules Enabling Act (which is the basis for Federal Rule of Civil Procedure 23’s authorization of class actions) and (by extension) as a matter of due process—that the class action device cannot alter the substantive legal standards applicable to a claim, and in particular cannot deprive a defendant of defenses that would be available against absent class members. That principle, combined with the reasoning of today’s decision, provides class action defendants with powerful arguments to challenge class actions filed in states that cannot exercise personal jurisdiction with respect to absent class members’ claims. After all, if the nonresidents’ claims in BMS could not proceed on the theory that aggregation with the California residents’ claims through joinder established personal jurisdiction, it is hard to see how the combination of such claims in a class action (another form of joinder) could be treated differently.

A final issue left open by BMS is whether the Fifth Amendment’s due process requirement might apply differently to exercises of jurisdiction by federal courts. But this issue does not arise frequently. For the Fifth Amendment to apply, Congress must provide for expansive personal jurisdiction by authorizing nationwide service of process in a particular statute—and Congress rarely does this, as the Court explained in the BNSF decision last month in rejecting the argument that the federal statute there (the Federal Employers’ Liability Act) expanded federal courts’ power to exercise personal jurisdiction.

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Court refuses to certify 5-hour Energy false-advertising class action for lack of common proof

The U.S. District Court for the Central District of California recently issued an interesting decision (pdf) denying class certification in 15 consolidated consumer class actions against the maker of 5-hour ENERGY drinks.

In the consolidated cases, captioned In re 5-Hour Energy Marketing and Sales Practices Litigation, the plaintiffs allege that 5-hour Energy drinks were falsely advertised as providing hours of energy. The plaintiffs asserted claims under California, Missouri, New Mexico, New Jersey, New York, and Pennsylvania law, and sought certification of state-specific classes. On June 6, 2017, the court denied class certification because the plaintiffs had failed to show that their alleged state-law deception theory was commonly experienced by consumers. In class action vernacular, individual, not common, issues predominated in violation of Federal Rule of Civil Procedure 23(b)(3).

To follow the certification analysis, it is important first to understand that to prevail on their false advertising claims under the relevant state laws, the plaintiffs were required to show that the alleged false advertising – the label statements ‘five hour energy’ and ‘hours of energy’ – were materially important to the plaintiffs’ decisions to purchase 5-hour Energy.

To demonstrate that class treatment of their claims was appropriate, the plaintiffs needed to show – via class-wide common proof, not from individual inquiry of each consumer – that class members “possess the same interest and suffer the same injury” as the plaintiffs themselves. Here, that meant showing that the alleged false advertising materially impacted the purchasing decisions of reasonable consumers in the same manner as it allegedly had impacted the plaintiffs. As the court underscored, “[i]f the misrepresentation or omission is not material” to the purchasing decisions of “all class members, the issue of reliance [and causation] ‘would vary from consumer to consumer’ and the class should not be certified.”

To try to meet that burden, however, plaintiffs pretty much avoided what reasonable consumers thought, relying instead on the plaintiffs’ own impressions, on defendant’s impressions, on an expert’s opinion what ‘energy’ meant, and on FDA’s definition of ‘energy.’ The court rejected all that because none of it shed light on the objective reasonable consumers’ take-away of the word ‘energy’ or how the challenged statements impacted their purchasing decisions.

Defendants, on the other hand, submitted a survey of 5-Hour Energy purchasers. It showed that a meager 2.2% of them relied on the challenged statements in the manner that the plaintiffs had alleged and, even then, only during their initial purchase. Subsequent purchases were primarily driven by the consumers’ actual experiences with the product. The survey also confirmed that consumers made their initial purchases based on many different factors having nothing to do with the challenged label statements, such as a recommendation or the product’s location at the checkout stand.

On this record, the court concluded that individual issues surrounding whether the challenged label statements deceived consumers or were material to the purchasing decisions swamped any common issues. “The element of predominance is not satisfied because Plaintiffs have not shown that they are entitled to a class-wide presumption of materiality, and thus, cannot establish reliance or causation with common proof. Without a market survey documenting consumer preferences, Plaintiffs have not shown that the ‘five hour energy’ representation is material to consumers as compared to other factors . . . Plaintiffs also have not shown that there is a prevalent definition of ‘energy’ in the market. Without such evidence, Plaintiffs cannot show an entitlement to a class-wide presumption of materiality.”

The court’s decision is a helpful reminder to businesses targeted by false-advertising litigation – it’s not enough for the plaintiffs to have evidence that they themselves were deceived by the challenged statements or omissions. Rather, the plaintiffs must be able to show – using common proof – that class members also were deceived in the same manner. Otherwise, the class trial will inevitably break down into a series of mini-trials of individualized evidence regarding particular consumers’ purchasing decisions and whether they each relied on the challenged statements or omissions.

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Supreme Court rejects end runs around Rule 23(f) by use of “voluntary dismissal” tactic

Today’s decision by the Supreme Court in Microsoft Corp. v. Baker puts an end to a tactic used by plaintiffs in the Ninth Circuit to manufacture an immediate appeal of an order denying class certification. When a federal district court grants or denies class certification, Federal Rule of Civil Procedure 23(f) allows the losing party to ask the court of appeals for permission to appeal immediately. Otherwise, the parties must litigate the case to a final judgment—the named plaintiffs’ individual claims if certification has been denied, or the class claims if certification has been granted—to obtain appellate review of the district court’s class certification determination. But the Ninth Circuit created an exception to this rule by authorizing a plaintiff who has had class certification denied to dismiss his or her individual claims with prejudice and then file an appeal from that self-generated judgment.

After the oral arguments in Baker, it seemed likely that the Supreme Court would reject that exception. And that is exactly what the Court decided today. Much more interesting is how they got there: Although all eight participating Justices agreed on the outcome, they took different approaches to the question presented.

The majority, in an opinion by Justice Ginsburg, held that the “voluntary dismissal” tactic cannot create appellate jurisdiction because such dismissals do not result in a final judgment—which is what 28 U.S.C. § 1291 requires for an appeal as of right. The Court held:

“Plaintiffs in putative class actions cannot transform a tentative interlocutory order … into a final judgment within the meaning of § 1291 simply by dismissing their claims with prejudice—subject, no less, to the right to ‘revive’ those claims if the denial of class certification is reversed on appeal.”

The Court explained that the “tactic would undermine § 1291’s firm finality principle, designed to guard against piecemeal appeals, and subvert the balanced solution Rule 23(f) put in place for immediate review of class-action orders.”

Indeed, Justice Ginsburg’s majority opinion focused heavily on the “careful calibration” by the Rules Committee in crafting Rule 23(f). The Court found the circumvention of Rule 23(f) troubling for many reasons. The majority explained that, under the Ninth Circuit’s approach, “the decision whether an immediate appeal will lie resides exclusively with the plaintiff.” In answer to the respondents’ argument that plaintiffs might be loath to invoke the tactic because a “dismissal with prejudice” would kill the case on the merits (if the appeal of the denial of class certification loses), the Court explained the reality “that plaintiffs with weak merits claims may readily assume that risk, mindful that class certification often leads to a hefty settlement.” Moreover, the “one-sidedness of [the] voluntary-dismissal device”—which would “permit[] plaintiffs only, never defendants, to force an immediate appeal of an adverse certification ruling”—supported the Court’s view that Congress’s adoption of the “rulemaking process” was the right mechanism to “settle the matter” of when immediate appeals of such orders should be available.

The majority did not reach the question whether plaintiffs’ voluntary-dismissal tactic deprived the court of appeals of jurisdiction under Article III’s cases-and-controversies requirement.

But in an opinion concurring in the judgment, Justice Thomas (joined by Chief Justice Roberts and Justice Alito) concluded that, although the plaintiffs’ voluntary dismissal was technically a “final decision” within the meaning of Section 1291, there was no appellate jurisdiction because the Ninth Circuit lacked Article III jurisdiction over plaintiffs’ individual claims. The plaintiffs’ decision to “consent[] to the judgment against them” eliminated any adversity between the parties—both sides had agreed that the claims should be dismissed with prejudice. The fact that plaintiffs asserted an “interest in reversing the order striking their class allegations” was not enough, in the concurring Justices’ view, because “[c]lass allegations, without an underlying individual claim, do not give rise to a ‘case’ or controversy’” within the meaning of Article III. “Those allegations are simply the means of invoking a procedural mechanism that enables a plaintiff to litigate his individual claims on behalf of a class.” (emphasis added).

That conclusion speaks to a broader debate over whether a class action is more than the sum of its parts. The answer is “no”—as we have argued in prior blog posts and a number of briefs over the years. Justice Thomas’s concurrence in Baker shows that at least three Justices agree. In other words, a procedural right such as the ability to pursue class treatment of claims cannot—standing alone—amount to a concrete interest sufficient to create the standing needed to satisfy Article III’s case-or-controversy requirement.

That standing analysis also dovetails with a significant comment made by Chief Justice Roberts in his concurring opinion last year in Tyson Foods, Inc. v. Bouaphakeo. In Part II of that opinion (joined by Justice Alito), the Chief Justice explained;

“Article III does not give federal courts the power to order relief to any uninjured plaintiff, class action or not. The Judiciary’s role is limited ‘to provid[ing] relief to claimants, in individual or class actions, who have suffered, or will imminently suffer, actual harm.’ … Therefore, if there is no way to ensure that the jury’s damages award goes only to injured class members, that award cannot stand.”

In other words, absent class members who are not injured lack standing and therefore cannot recover from a litigated class action judgment in federal court. Or, as Justice Thomas puts it in Baker, “without an underlying individual claim,” there is no case or controversy.

Of course, a concurrence by three Justices is not binding authority. Yet the seeds are there. In Tyson Foods, Justice Kennedy’s majority opinion recognized that “the question whether uninjured class members may recover is one of great importance.” And it is also telling that the Baker majority (which included Justice Kennedy) declined to reach—or even address—the Article III issue addressed by Justice Thomas’s concurrence. The important question of whether Article III requires absent class members to have standing is one that the Supreme Court can and should address eventually, and there is strong reason to believe that the Court—now at full strength with nine Justices—will recognize that the same Article III standing rules apply to all plaintiffs, “class action or not.”

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