In an appeal of a $35 million federal Telephone Consumer Protection Act class action settlement initially involving a dispute over coupon settlements, the U.S. Court of Appeals for the Eleventh Circuit vacated and remanded the trial court’s approval of the class action settlement due to Article III standing problems with the settlement class.

In so ruling, the Eleventh Circuit held that:

  • Under TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), “[e]very class member must have Article III standing in order to recover individual damages”; and
  • Under Frank v. Gaos, 139 S. Ct. 1041 (2019), Article III’s standing requirements “extend[] to court approval of proposed class action settlements”; and
  • In a putative nationwide class action, the TransUnion rule must still be applied even if some of the class members do not have standing under Eleventh Circuit case law but might have standing in another circuit; and
  • In the Eleventh Circuit, under Salcedo v. Hanna, 936 F.3d 1163, 1172 (11th Cir. 2019), a single unwanted text message does not give rise to Article III standing. However, the Eleventh Circuit has not yet decided whether a single phone call to a cellphone can give rise to Article III standing.

A copy of the opinion in Susan Drazen v. Godaddy.com, LLC is available at: Link to Opinion.

The named plaintiff filed a putative class action alleging that the defendant violated the TCPA when it allegedly called and texted the putative class members “solely to market its services and products through a prohibited automatic telephone dialing system.” See 47 U.S.C. § 227(a)(1), (b)(1)(A).

The action was consolidated with two other similar actions against the same defendant pending in other trial courts in other circuits. In addition, because Cordoba v. DIRECTV, LLC, 942 F.3d 1259, 1273 (11th Cir. 2019), requires that the named plaintiffs must have standing, and under Salcedo v. Hanna, 936 F.3d 1163, 1172 (11th Cir. 2019), a single unwanted text message does not give rise to Article III standing, one of the named plaintiffs in one of the consolidated actions who had only received a single text message was removed.

After considering the briefing of the parties, the trial court held that “even though some of the included class members would not have a viable claim in the Eleventh Circuit, they do have a viable claim in their respective Circuit [because of a circuit split]. Thus, [the defendant] is entitled to settle those claims in this class action although this Court would find them meritless had they been brought individually in the Eleventh Circuit.” In other words, the trial court “allowed text-message only recipients to remain in the class, even though they lacked Article III standing under” Eleventh Circuit case law.

The trial court approved certification of the class for purposes of settlement in accordance with the proposed settlement agreement after conducting a Rule 23(a) analysis for numerosity, commonality, typicality, and adequacy, and a Fed. R. Civ. P. 23(b)(3) analysis for predominance, although the Eleventh Circuit noted that it did not also conduct an analysis of the mandatory Rule 23(e)(2) factors, which is mandatory when “a class [is] proposed to be certified for purposes of settlement.”

A settlement class member objected to the class settlement, and then appealed challenging various aspects of the class settlement not relating to Article III standing. Even though the issue was not briefed by the parties, the Eleventh Circuit sua sponte held that “the class definition does not meet Article III standing requirements,” and vacated the final approval of the settlement and remanded “to give the parties an opportunity to revise the class definition.”

On appeal, the Eleventh Circuit first examined recent relevant rulings from the Supreme Court of the United States.

  • Under Frank v. Gaos, 139 S. Ct. 1041 (2019), Article III’s standing requirements “extend[] to court approval of proposed class action settlements.” The Eleventh Circuit stated that “from Gaos, we take the following: even at the settlement stage of a class action, we must assure ourselves that we have Article III standing at every stage of the litigation.”
  • Under TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), “1) To satisfy the concrete injury requirement for standing, a plaintiff alleging a statutory violation must demonstrate that history and the judgment of Congress support a conclusion that there is Article III standing; 2) ‘Every class member must have Article III standing in order to recover individual damages.’”

In addition, in the Eleventh Circuit, “a plaintiff has not suffered a concrete injury for Article III standing purposes when she has received a single unwanted text message.” Salcedo v. Hanna, 936 F.3d 1163, 1172 (11th Cir. 2019). However, at least in the Ninth Circuit, “a single unwanted text message is sufficient to establish a concrete injury for Article III standing purposes.” Van Patten v. Vertical Fitness Group, LLC, 847 F.3d 1037, 1043 (9th Cir. 2017).

Combining these various rulings together, the Eleventh Circuit held that “when a class seeks certification for the sole purpose of a damages settlement under Rule 23(e), the class definition must be limited to those individuals who have Article III standing.”

The Eleventh Circuit then took issue with the trial court’s conclusion “that unnamed plaintiffs with no standing in our circuit may be entertained as part of the nationwide class because they might have standing in another circuit,” ruling that “[t]he case the trial court cites for this proposition, In re Deepwater Horizon, 739 F.3d 790, 807 (5th Cir. 2014),] says nothing of the sort.” Contrary to the trial court’s ruling, the Eleventh Circuit held that “[n]owhere does that case suggest that we check Article III standing at the door when dealing with a class action.”

Turning next to the settlement class definition, the Court noted that “the universe of plaintiffs under this definition includes any individual who received a text message or phone call on their cellphone from [the defendant] in the specified period. As discussed above, under Salcedo, we have said that a single unwanted text message is not sufficient to meet the concrete injury requirement for standing. So, the class definition cannot stand to the extent that it allows standing for individuals who received a single text message from [the defendant]. Otherwise, individuals without standing would be receiving what is effectively damages in violation of TransUnion.”

According to the Eleventh Circuit, “[t]he more difficult question is whether individuals who have received a single cellphone call also have standing.”

The Court previously held that “cell phone calls may involve less of an intrusion than calls to a home phone.” See Salcedo, 936 F.3d at 1170. Similarly, in Glasser v. Hilton Grand Vacations Company, LLC, 948 F.3d 1301, 1306 (11th Cir. 2020), the Court held that “receipt of more than one unwanted telemarketing call” was sufficient to meet the “concrete injury” requirement for Article III standing. However, the Eleventh Circuit has not yet decided “whether a single phone call to a cellphone was a concrete injury for Article III standing purposes.”

“We have a problem here,” the Eleventh Circuit stated. Explaining the problem, the Court stated:

“’Unwanted’ in Cordoba had a specific meaning — individuals who were called after asking not to be called. ‘Unwanted’ in the context of the statute at issue in our case and in Glasser refers to the fact that individuals, though never asking not to be called, were called by allegedly prohibited means under the TCPA — automatic telephone dialing systems. So, to us, the standing analysis in Cordoba and the standing analysis in Glasser and our case may not necessarily be the same. In Cordoba, people asked not to be called — period. In Glasser and in our case, the individuals are not complaining about the fact they were called. They are complaining about the fact that the automatic telephone dialing system did the calling. In other words, the injury is not the call but rather the dialing system used, and it is not clear that [the defendant]’s compliance with the statute would have prevented the plaintiffs from being called.”

“The difference between Cordoba and Glasser and our case may present the need to reexamine Glasser in the future because it may affect both the injury-in-fact requirement and the causation analysis. At the very least, Cordoba and Glasser were decided pre-TransUnion, and under TransUnion plaintiffs have the burden of establishing Article III standing for statutory violations by alleging facts that would allow us to find a common-law analogue to the injury in question. See TransUnion, 141 S. Ct. at 2204. Glasser conducted no historical analysis and is suspect on that ground alone.”

Therefore, the Eleventh Circuit ruled that “[b]ecause we have not received briefing on whether a single cellphone call is sufficient to meet the concrete injury requirement for Article III standing and because TransUnion has clarified that courts must look to history to find a common-law analogue for statutory harms, we think the best course is to vacate the class certification and settlement and remand in order to give the parties an opportunity to redefine the class with the benefit of TransUnion and its common-law analogue analysis.”