The United States District Court for the Northern District of California partially granted and partially denied a motion to dismiss based on the standing of 18 named plaintiffs from 13 different states seeking class certification under the consumer protection and privacy laws of 48 states arising from plaintiffs’ purchases of numerous cell phone models.
Plaintiffs sued the software developer of a cell phone network diagnostic tool and numerous mobile device manufacturers who installed the tool on their phones alleging that the software intercepted and transmitted their personal information in violation of federal and state consumer privacy and protection laws. Defendants moved to dismiss on the grounds that the plaintiffs lacked standing to assert claims under the law of the 35 states in which none resided. Defendants also asserted that plaintiffs lacked standing to assert claims against defendants under state laws in which they did not purchase defendants’ products. For example, while the Illinois plaintiff allegedly purchased one of the defendants’ phones in that state, no named plaintiffs purchased the other defendants’ phones in Illinois. Plaintiffs responded that the court should exercise the discretion afforded to the court by cases such as Ortiz. v. Fibreboard Crop, 527 U.S, 815 (1999) and Amchem Products, Inc. v. Windsor, 521 U.S. 591(1997) and defer consideration of the standing questions until after deciding class certification.
The court first recognized that the “chicken or egg” question of whether to consider standing before or after class certification — when the unnamed plaintiffs become parties to the suit — was unresolved in the Ninth Circuit. The court also observed that district courts across the country, including sister courts in California, were split on this issue. Those deferring the standing issue until after certification followed the Supreme Court’s express statements in Ortiz and Amchem, both involving a global settlement of mass tort class actions, that resolution of certification issues was “logically antecedent” to standing. Others narrowly interpreted Ortiz and Amchem as providing only a limited exception to the rule that standing is a threshold pleading issue. Many of these courts also articulated prudential arguments for resolving the standing issue at the pleading stage to avoid the prolonged and expensive implications of plaintiffs’ position only to be faced with the same problems months down the road at certification.
After analyzing the countervailing positions extensively, the court concluded that “a more nuanced reading” of the logically antecedent doctrine was required to afford the court flexibility in managing the order of resolution of standing issues. On the facts of this case, the court held plaintiffs do not have standing in advance of certification to assert claims under state laws in which they do not reside or did not purchase their mobile device. The court expressed reservations of subjecting the device manufacturers to the expense of nationwide discovery without plaintiffs first securing representatives from those states to assert claims under their laws. However, as to the named plaintiffs’ ability to sue under their own state laws the defendants from whom other named plaintiffs purchased devices, the court exercised discretion to defer the standing determination until after certification. The court reasoned that the defendants were properly in the case having sold a device to at least one plaintiff and the potential burden of adjudicating class certification was less expansive than in permitting plaintiffs to sue each defendant under the laws of 35 other states. The court granted plaintiffs leave to amend to add additional named representatives from the 35 other states.