Week in Review: Ascertainability under Rule 23(b)(2) and a Dose of Spokeo

by McGuireWoods LLP

This week we consider the Sixth Circuit’s take on how Rule 23’s ascertainability requirement overlaps with the different pathways to certification under Rule 23(b), as well as some post-Spokeo dismissals of putative class actions for lack of standing.

Sixth Circuit Holds No Showing of Ascertainability Required for 23(b)(2) Class Action:  The contours of Rule 23’s implicit “ascertainability” requirement are rarely clearly defined, and often differ between circuits.  In affirming the district court’s certification of a class of individuals contesting the police department’s method of clearing the streets at 3:00 a.m., the Sixth Circuit reminded practitioners that the prong of Rule 23(b) that the class invokes also bears on the applicability of the ascertainability requirement.  In Cole v. City of Memphis, the court held that a class seeking injunctive relief and proceeding under Rule 23(b)(2) need not demonstrate that the class is ascertainable.  The court reasoned that because “[t]he main purpose of a (b)(2) class is to provide relief through a single injunction or declaratory judgment,” the concerns about administrative feasibility that the ascertainability requirement is designed to address are not at play.  Accordingly, the court joined the First, Third, and Tenth Circuits in holding that the ascertainability requirement was inapplicable to Rule 23(b)(2) classes.

District Courts Split on Standing Requirements for FACTA Claims Post-Spokeo Two months ago, we looked at a decision from the Southern District of Florida holding that a plaintiff asserting a claim under FACTA for extraneous credit card information printed on a retailer’s receipts could withstand a standing challenge on a motion to dismiss, even without specifically identifying an increased risk of identity theft.  Earlier this month, the U.S. District Court for the Western District of Missouri went the opposite way when presented with almost the exact same scenario.  In Thompson v. Rally House of Kansas City, Inc., the plaintiff brought a putative class claim alleging that a sporting goods store violated FACTA by including too many credit card digits on its receipts.  The court held that because the plaintiff failed to allege his receipt was ever at risk of exposure to would-be identify thieves (or even left his possession), and otherwise failed to identify any exposure of his credit card information, he had alleged “only a mere violation” of the statute without actual or imminent concrete harm sufficient to confer standing under Spokeo.

Consumer’s “Failure to Disclose” Class Action Cannot Survive Spokeo Challenge:  In another post-Spokeo dismissal of a putative class action, the U.S. District Court for the District of New Jersey held that a class representative’s claims against a rental car company based on its failure to disclose whether certain loyalty program terms were void in New Jersey failed for lack of concrete injury.  The court held that even if plaintiff identified a technical violation of New Jersey’s Truth-in-Consumer Contract, Warranty, and Notice Act, he alleged only “bare procedural harm, divorced from any concrete harm.” The court focused in particular on the plaintiff’s failure to allege whether any of the terms in question were in fact void under New Jersey law, reasoning that “if those provisions are ultimately applicable, it is hard to imagine what concrete harm Plaintiff suffered.”

Settlement of “All Natural” Product Labeling Suit Drives Home Import of Injunctive Relief Side Door:  In our last Week in Review post, we considered a decision in an “all natural” product-labeling case that decertified the class for the purposes of calculating damages but not for obtaining class-wide injunctive relief, and noted that limiting available class relief in this manner still left plenty of incentive for class counsel to pursue similar actions in the future due to the availability of attorneys’ fees.  To put a finer point on that, we need look no further than the preliminary approval of a settlement agreement in the Southern District of New York that called for the removal of “All Natural” and “100% Natural” from the defendant’s labels, and established a $4.5 million fund for covering class members’ claims and payment of attorneys’ fees.  Although the relief afforded class members in this settlement was not limited to injunctive relief alone, class counsel working under that limitation in future actions will argue that getting the “natural” references removed from product labels still justifies substantial fees.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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