Commercial Litigation and Arbitration

Must All Absent Class Members Have Suffered Injury? — Circuit Split

In re Deepwater Horizon, 739 F.3d 790 (5th Cir. 2014):

[T]he crux of BP's standing argument is that Article III "preclude[s] certification of a settlement class that includes members that have suffered no injury" or "who suffered no harm caused by the Deepwater Horizon incident." In BP's view, because an unidentified number of such individuals have received and may continue to receive payments under the class settlement, Article III requires this court to reverse the district court's order of December 21, 2012.

In two respects, BP is correct. First, the elements of Article III standing do indeed include both an injury in fact and a causal connection to the defendant's conduct.15 Second, under the previous decisions of this circuit, both of these elements must be present as a threshold matter of jurisdiction whenever a district court certifies a class under Rule 23.16

15   See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992).

16   See Cole, 484 F.3d at 721-22; Rivera, 283 F.3d at 318-19.

It is striking, however, that BP makes no attempt to identify a standard that we should apply to determine whether these elements are satisfied in this case. The frequent references in BP's briefs to the "vast numbers of members who suffered no Article III injury" are disconnected from any discussion of pleading requirements, competent evidence, or the standards of proof by which the parties' contentions are evaluated during different stages of litigation. In particular, BP's arguments fail to explain how this court or the district court should identify or even discern the existence of "claimants that have suffered no cognizable injury" for purposes of the standing inquiry during class certification and settlement approval.

In the following sections, therefore, we review the law governing the standard applicable to Article III questions in the specific context of Rule 23, and then turn to examine the facts of the present case. As explained below, although the relevant authorities suggest two possible approaches to Article III questions at the class certification stage, both of these approaches require us to reject BP's standing argument. Whichever test is applied, therefore, Article III does not mandate reversal in this case.


As the Supreme Court explained in Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992), the elements of Article III standing are constant throughout litigation: injury in fact, the injury's traceability to the defendant's conduct, and the potential for the injury to be redressed by the relief requested. As Lujan emphasized, however, the standard used to establish these three elements is not constant but becomes gradually stricter as the parties proceed through "the successive stages of the litigation." In Lewis v. Casey, 518 U.S. 343, 358, 116 S. Ct. 2174, 135 L. Ed. 2d 606 (1996), the Supreme Court reaffirmed this formulation:

   Since they are not mere pleading requirements, but rather an indispensable part of the plaintiff's case, each element of standing must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation. At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we presume that general allegations embrace those specific facts that are necessary to support the claim. In response to a summary judgment motion, however, the plaintiff can no longer rest on such mere allegations, but must set forth by affidavit or other evidence specific facts, which for purposes of the summary judgment motion will be taken to be true. And at the final stage, those facts (if controverted) must be supported adequately by the evidence adduced at trial.17

Lujan and Lewis provide a useful blueprint, therefore, but do not comprehensively address all conceivable stages of litigation in which Article III standing may need to be addressed. This quoted passage does not explain, in particular, how courts are to evaluate standing for the purposes of class certification and settlement approval under Rule 23.

17   Lewis, 518 U.S. at 358 (quoting Lujan, 504 U.S. at 561) (alterations and internal quotation marks omitted).

In attempting to answer this question, courts have followed two analytical approaches. According to one approach, which has been endorsed by three Justices concurring in Lewis,18 several circuits, and an influential treatise,19 the inquiry hinges exclusively on the Article III standing of the "named plaintiffs" or "class representatives." This test requires courts to ignore the absent class members entirely***.

In the years since Lewis, this approach to the standing inquiry during class certification has been followed by the Seventh,21 Ninth,22 and Third Circuits.23 Additionally, the Tenth Circuit has adopted this test at least in "class action[s] seeking prospective injunctive relief" and arguably also in class actions for damages as well.24 As stated in a frequently cited decision by the Seventh Circuit, Kohen v. Pacific Investment Management Co. LLC, 571 F.3d 672, 677 (7th Cir. 2009), it is "almost inevitable" that "a class will . . . include persons who have not been injured by the defendant's conduct[] . . . because at the outset of the case many of the members of the class may be unknown, or if they are known still the facts bearing on their claims may be unknown." According to Kohen, however, even this "inevitability" does not preclude Article III standing during the Rule 23 stage.25

18   Id. at 395-96 (Souter, J., concurring in part, dissenting in part, and concurring in the judgment; joined by Ginsburg, J., and Breyer, J.).

19   W. Rubenstein, A. Conte & H. Newberg, Newberg on Class Actions § 2:3 (5th ed. 2011) ("These passive members need not make any individual showing of standing because the standing issue focuses on whether the named plaintiff is properly before the court, not whether represented parties or absent class members are properly before the court.").

20   Lewis, 518 U.S. at 395-96 (Souter, J., concurring in part, dissenting in part, and concurring in the judgment) (alterations and internal quotation marks omitted).

21   Kohen v. Pac. Inv. Mgmt. Co. LLC, 571 F.3d 672, 676-78 (7th Cir. 2009).

22   Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1020-21 (9th Cir. 2011) ("On the contrary, our law keys on the representative party, not all of the class members, and has done so for many years . . . . In a class action, standing is satisfied if at least one named plaintiff meets the requirements . . . ." (internal quotation marks and citations omitted)).

23   In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 306-07 (3d Cir. 1998) ("There is also ample evidence that each named party has suffered an 'injury in fact' . . . . Thus,  [*20] the named plaintiffs satisfy Article III. The absentee class members are not required to make a similar showing . . . .").

24   DG ex rel. Stricklin v. Devaughn, 594 F.3d 1188, 1197-98 (10th Cir. 2010) ("First, only named plaintiffs in a class action seeking prospective injunctive relief must demonstrate standing by establishing they are suffering a continuing injury or are under an imminent threat of being injured in the future. . . . '[A] class will often include persons who have not been injured by the defendant's conduct. . . . Such a possibility or indeed inevitability does not preclude class certification.'" (quoting Kohen, 571 F.3d at 677)).

25   Kohen, 571 F.3d at 677.

Other circuit decisions have not necessarily ignored absent class members. According to these decisions, courts must ensure that absent class members possess Article III standing by examining the class definition. Importantly, however, this approach does not contemplate scrutinizing or weighing any evidence of absent class members' standing or lack of standing during the Rule 23 stage. The most frequently cited formulation of this test is found in the Second Circuit's decision in Denney v. Deutsche Bank AG, 443 F.3d 253, 263-64 (2d Cir. 2006):   "We do not require that each member of a class submit evidence of personal standing. At the same time, no class may be certified that contains members lacking Article III standing. The class must therefore be defined in such a way that anyone within it would have standing."26 The Eighth Circuit has also applied this test,27 as have the Seventh28 and Ninth Circuits,29 despite both these latter circuits' statements in other decisions that absent class members are irrelevant to the Article III inquiry.30

26   Denney, 443 F.3d at 263-64 (citations omitted).

27   Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023, 1034 (8th Cir. 2010) (citing Denney, 443 F.3d at 263-64).

28   Adashunas v. Negley, 626 F.2d 600, 603 (7th Cir. 1980) ("In order to state a class action claim upon which relief can be granted, there must be alleged at the minimum (1) a reasonably defined class of plaintiffs, (2) all of whom have suffered a constitutional or statutory violation (3) inflicted by the defendants.").

29   Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 594 (9th Cir. 2012) (citing Denney, 443 F.3d at 263-64).

30   See Kohen, 571 F.3d at 677; Stearns, 655 F.3d at 1020-21.

If this case actually required us to do so, it might not be a simple task to choose between the Kohen test and the Denney test based on this roughly even split of circuit authority.31 It is also perhaps unclear whether our circuit has already adopted the Kohen test in Mims v. Stewart Title Guaranty Co., 590 F.3d 298 (5th Cir. 2009).


31   No clear guidance is provided by the Supreme Court's decision with the greatest relevance to Article III questions arising due to a class settlement, Amchem Products, Inc. v. Windsor, 521 U.S. 591, 612-13, 117 S. Ct. 2231, 138 L. Ed. 2d 689 (1997). The Supreme Court implied in that case that a district court could not approve a class settlement containing class members who had not yet manifested any health problems from their past exposures to asbestos. If these "exposure-only" plaintiffs' claims were not yet ripe, the Supreme Court suggested, then their inclusion in a class action would not be "in keeping with Article III constraints." Amchem, 521 U.S. at 612-13. The Supreme Court did not ultimately reach the ripeness question, however, because the asbestos-litigation class failed under a Rule 23 inquiry that the Supreme Court considered "logically antecedent to the existence of any Article III issues." Id. It is therefore unclear how the Supreme Court would eventually have approached its ripeness determination.

This case is not a vehicle, however, for us to choose whether Kohen or Denney articulated the correct test. Nor does this case require us to decide whether Mims has already adopted the Kohen test as a matter of Fifth Circuit law. For the purposes of the present case, these questions are entirely academic because BP's standing argument fails under both the Kohen test and the Denney test. As explained in the next section, both the named plaintiffs and the absent class members contemplated by the class definition include only persons and entities who can allege causation and injury in accordance with Article III.

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