Takeaway: While courts continue to grapple with efforts by class action defendants to “pick off” a named plaintiff by mooting his or her individual damages claim, class representatives pressing claims for injunctive and declaratory relief remain subject to well-settled Article III standing limitations. Where a class defendant has an independent basis for challenging the named plaintiff’s damages claim (such as an inability to prove an essential substantive requirement for monetary relief), these standing limitations provide powerful tools to terminate the class representative’s injunctive and declaratory relief claims prior to any class certification determination.
Since the advent of modern class action practice – following the amendments to Rule 23 in 1966 – class action defendants have tried a variety of strategies to “pick off” a named plaintiff’s damages claim. In Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), the Supreme Court held that an unaccepted offer of judgment for the full amount of the plaintiff’s individual damages claim has no force and does not serve to moot the representative’s claim. But the Supreme Court reserved judgment on whether a plaintiff’s claims would be mooted if a district court entered judgment in the plaintiff’s favor upon the defendant’s depositing the full amount of the plaintiff’s individual claim into an account payable to the plaintiff.
In Chen v. Allstate Ins. Co., 819 F.3d 1136 (9th Cir. 2016), the Ninth Circuit addressed the issue left open by the Supreme Court, holding that a “pick off” executed via an unconditional payment to the plaintiff did not suffice to moot the claim. But do these rules apply to non-monetary claims for injunctive and declaratory relief? A recent decision by the Ninth Circuit confirms that, whatever special rules courts may apply to prevent “mooting” of damages claims, injunctive and declaratory claims asserted by a putative class plaintiff remain subject to long-settled limitations on Article III standing. Long v. Ingenio, Inc., No. 15-16810, 2017 WL 1532057 (9th Cir. Apr. 28, 2017).
In Long, a business (Long Photo) claimed to have been defrauded into purchasing worthless “pay per call” advertising from an advertising and publishing company (“Yellowpages”). But Long Photo never paid for the advertising, an essential requirement for seeking restitution. It also pressed claims for injunctive and declaratory relief as a means of contesting the amounts owed to Yellowpages for the “pay per call” advertising. Long Photo not only sought individual relief, but relief on behalf of a putative class.
Yellowpages moved for summary judgment, challenging Long Photo’s ability to press any damages claim and further arguing that the parties no longer had any ongoing relationship, such that Long Photo’s claims for injunctive and declaratory relief were moot. Among other things, Yellowpages explicitly represented that it would not seek to file a claim against Long Photo for payment and deliberately did not assert a compulsory counterclaim seeking to recover the charges at issue.
The district court granted summary judgment in favor of Yellowpages and the Ninth Circuit affirmed. Regarding Long Photo’s claim for injunctive relief, the Ninth Circuit ruled that it did not have standing to pursue a claim for injunctive relief, given that the parties were no longer in a contractual relationship, Long Photo was no longer threatened by the alleged misconduct, and there was no real or immediate threat of irreparable injury. 2017 WL 1532057, at *1 (citing Hangarter v. Provident Life & Acc. Ins. Co., 373 F.3d 998, 1021-22 (9th Cir. 2004)).
Regarding Long Photo’s claim for declaratory relief, that claim also was moot, because of Yellowpages’ representation it would not pursue a claim for monetary relief and its binding waiver of any compulsory counterclaim against Long Photo for the unpaid charges. Id. (citations omitted).
Having affirmed the grant of summary judgment on Long Photo’s individual claims, the Ninth Circuit also affirmed the dismissal of the putative class action in its entirety. “Although Long’s claims for declaratory relief are moot, any class member who had paid money to Yellowpages would be free to pursue class-wide monetary and declaratory relief and could reject Yellowpages’s efforts to satisfy the original claims.” 2017 WL 1532057, at *1 (citing Campbell-Ewald, 136 S. Ct. at 670). Because other members of the putative class (unlike Long Photo) may have viable damages claim, the class claims were not “‘transitory’ so as to keep the case alive until the district court has the opportunity to rule on class certification.” Id. (citing, inter alia, Chen, 819 F.3d at 1142-43). Thus, the district court properly had dismissed “the entire lawsuit before reaching class certification.” Id. (citations omitted).
The Long decision shows that, while it continues to be difficult for class defendants to moot a named plaintiff’s damages claim (especially in the Ninth Circuit), defendants with a separate basis for attacking the named representative’s monetary claim still can employ traditional standing limitations on declaratory and injunctive relief claims to terminate putative class actions. Particularly if the Supreme Court resolves the open “damages mootness” question from Campbell-Ewald favorably for defendants, these long-established requirements for equitable relief can provide the remaining tools a defendant needs to extinguish the named plaintiff’s non-monetary claims.