On June 18, 2015, the Eighth Circuit decided another class action case involving Missouri borrowers who took out second mortgages on their homes and alleged that various assignees and purchasers violated the Missouri Second Mortgage Loan Act (“MSMLA”) by charging and collecting impermissible fees. See Wong v. Wells Fargo Bank N.A. et. al., Case No. 14-1921 (8th Cir. June 18, 2015). The plaintiffs had obtained their second mortgage loans on their homes through Bann-Corr. Like in Thomas, Bann-Cor executed the loan agreements but then sold or assigned the loans and accompanying liens to various purchasers and assignees, the defendants in the action. The plaintiffs alleged that defendants either directly or indirectly charged or received fees in the transactions that were impermissible under the MSMLA. Although the district court resolved many motions on various topics, the district court’s granting of a motion to dismiss on Article III standing grounds is relevant to this blog post.
An oft-litigated issue we class action lawyers face is Article III standing vis-à-vis plaintiffs and unnamed plaintiffs who have not suffered an actual injury. We know that Article III requires a plaintiff to show (1) an injury in fact, (2) a causal connection between the injury and the defendant’s allegedly unlawful conduct, and (3) the injury is capable of redressability. In this case, the district court determined that the causal connection between the alleged charging or collecting of improper fees and the defendants who never personally serviced or were assigned the named borrowers loans was lacking because the defendants had never collected the impermissible fees from the named borrowers.
On appeal, the plaintiffs argued several different theories allowed them to evade Article III standing. First, they argued that the class certification order conferred standing upon the named borrowers. Not so. The Court said that a class certification order does not confer standing on a plaintiff who otherwise lacks it. See Lewis v. Casey, 518 U.S. 343, 357 (1996) (“That a suit may be a class action … adds nothing to the question of standing, for even named plaintiffs who represent a class must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent.”). Second, plaintiffs argued that the “juridicial link” doctrine provided them standing. This doctrine, the Court explained, allows a “named plaintiff to bring a class action against parties that did not cause the named plaintiff’s injury if the plaintiffs suffered identical injuries by parties related through a conspiracy or concerted scheme and suing all parties in one action would be expeditious.” The plaintiffs argued that because the case had been certified as a class, the standing requirements should be assessed with reference to the class as a whole, and not with reference to just the named plaintiffs. The Court noted that it had not previously addressed the “juridicial link” doctrine, but it rejected plaintiffs’ argument. In doing so, the court relied on courts in other circuits who found the juridicial link doctrine inapplicable to plaintiffs suing assignees of second mortgages and in other similar financing cases.