Featured Expert Contributor on Civil Justice/Class Actions

Frank Cruz-Alvarez is a partner, and Sofia M. Perla is an associate, with Shook, Hardy & Bacon L.L.P. in the firm’s Miami, FL office.

Susan Drazen v. GoDaddy, LLC came before the Eleventh Circuit presenting class action and attorneys’ fees questions.  Instead of answering those questions, the court focused on its own subject-matter jurisdiction, reviewing Article III standing requirements and instructing that class actions be treated no differently than any other case (at least in terms of Article III standing).

The plaintiffs in this case sued GoDaddy for violating the Telephone Consumer Protection Act of 1991, which effectively created telemarketing “do not call” lists.  Each plaintiff had received unsolicited communications from GoDaddy, ranging from a single text message to several phone calls.  As a remedy, GoDaddy offered each class member $35 cash or $150 in vouchers, with over half of the class members choosing the vouchers.  The question presented to the court was whether those vouchers classified the settlement as a “coupon settlement” under the Class Actions Fairness Act, which would subject the attorneys’ fees award to higher judicial scrutiny, and likely, a smaller reward.  The court, however, completely circumvented the parties’ question, focusing entirely on their own subject-matter jurisdiction.

As the GoDaddy opinion reminds us, federal courts are obligated by the Federal Rules of Civil Procedure to inquire into subject-matter jurisdiction whenever it may be lacking, even where, as here, neither party has raised the issue for the court.  The appeals court reviewed law-school fundamentals to resolve the issue before them.  The GoDaddy court began its analysis with the U.S. Supreme Court’s Spokeo decision, which established that a plaintiff who sues to vindicate a right purportedly granted to it by a statute must also satisfy Article III standing.  From Spokeo and other concurrent decisions, the Eleventh Circuit synthesized that Article III standing is required at each stage of the litigation, including the settlement stage.  What’s more, every class member must have standing at all times, not only the named class members.  As the court put it, Article III standing is not simply checked at the door when dealing with class actions.

The court next folded the class definition question into its analysis—asking whether the definition included members that had no Article III standing to bring a claim.  If so, the definition itself could not stand.  To pass constitutional muster, the plaintiff class members included in the definition must be able to show an injury-in-fact that is concrete and particularized, and actual and imminent, as well as causation, and redressability). 

The class definition the district court certified in GoDaddy included individuals who received only a single text message from the website.  That holding was at odds with an Eleventh Circuit precedent, Salcedo v. Hanna, which instructs that a single unwanted text message is not sufficient to meet the concrete injury requirement for Article III standing.  The trial court permitted the definition even though it was at odds with Salcedo because a circuit split would allow plaintiffs in other jurisdictions to have standing based on a single unwanted text message.  The appeals court tell us this is improper.  The class definition should be refined based on the controlling precedent within that circuit, and it is not the job of the trial court to resolve a circuit split.  The part of the definition that improperly permitted class members without Article III standing invalidated the definition.  However, instead of correcting the class definition by eliminating the improper portion, the court questioned whether those who received a single unwanted phone call from GoDaddy met the concrete injury requirement for standing.  Without any briefing on that peripheral question, the court vacated the class certification and the settlement, giving the parties an opportunity to redefine the class in accordance with Article III standing requirements.

The court also listed a separate basis for vacating the class certification: courts evaluating statutory bases for standing must look to history to find a common-law analogue to the statutory harm, in order to satisfy the concrete injury requirement of Article III standing.  The trial court here conducted no such analysis, giving the appeals court a second reason to invalidate the class certification.

Although the appeals court made no real holding and remanded the case to the trial court to essentially begin anew, this case is significant because it clarifies that the rules for Article III standing are the same across the board.  Whether plaintiffs are claiming a statutory violation or have joined together in a class, this case spells out the fact that all plaintiffs must possess Article III standing.  Class members do not lose their identity as plaintiffs merely because they join together as a class.  Each and every class member is required to satisfy Article III standing at all points in the litigation.  Similarly, plaintiffs who have statutory standing cannot circumvent Article III standing by pointing to the statutory violation alone.  The plaintiff must also satisfy Article III standing by pointing to a historical analogue evidencing the concreteness of the plaintiff’s injury.  With these reminders, the court’s GoDaddy opinion suggests that Article III standing is not losing strength any time soon.