SHARE

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on print
Share on email

SEARCH

PARACTICE AREAS

QUICK LINKS

Consumer Class Standing Faces Uncertainty In 11th Circ.

By Adam Foslid, Ian Ross and Erica Perdomo

(Originally featured by Law360 at: https://www.law360.com/articles/1199426/)

A recent opinion from the U.S. Court of Appeals for the Eleventh Circuit could transform statutory consumer protection class actions in the court’s jurisdiction. In Salcedo v. Hanna, the Eleventh Circuit considered an interlocutory appeal of a putative class action brought under the Telephone Consumer Protection Act and held that receipt of a single unsolicited text message sent in violation of the TCPA does not, in and of itself, create the requisite Article III standing for a plaintiff to bring a case in federal court.[1] 

In so holding, the Eleventh Circuit made clear that a court’s Article III standing inquiry in the TCPA context must focus “on the qualitative nature of the injury” to the individual plaintiff. For this reason, some practitioners have hailed Salcedo as the death knell of TCPA class action litigation in the Eleventh Circuit, but that remains an open question because the Eleventh Circuit has not yet decided the larger issue of whether unnamed putative class members are required to establish Article III standing. 

That larger issue has created a split among other U.S. circuit courts. The Second, Eighth, Ninth and D.C. Circuits have held that each member of a putative class must independently establish an Article III case and controversy, while the First, Third and Seventh Circuits have held that a court may certify a class so long as the named plaintiff has standing.

As explained below, the Eleventh Circuit’s resolution of this issue, together with the corresponding standing implications of Salcedo, could drastically alter the continued viability of TCPA and other statutory consumer protection class actions brought under, among other consumer protection statutes, the Fair Debt Collections Practices Act and the Fair Credit Reporting Act. 

The Salcedo Decision

In Salcedo, a former client of the law firm of Alex Hanna, John Salcedo, claimed that Hanna and his firm violated the TCPA by sending a text message to Salcedo offering a discount on legal services. Salcedo filed suit in the Southern District of Florida on behalf of himself and a putative class of recipients of the same text message, alleging that the text “caused [him] to waste his time answering or otherwise addressing the message,” and “resulted in an invasion of [his] privacy and right to enjoy the full utility of his cellular device.”[2] 

In response, Hanna and his firm filed a motion to dismiss arguing that these allegations were insufficient to establish that Salcedo had Article III standing to pursue his TCPA claim. Although the district court denied Hanna’s motion, it certified the standing question to the Eleventh Circuit, finding that it “[involved] a controlling question of law as to which there is a substantial ground for difference of opinion.”[3]

On appeal, the Eleventh Circuit reversed, holding that Salcedo did not have standing to pursue his TCPA claim. The Eleventh Circuit concluded that legislative findings about telemarketing and historical context did not support treating Salcedo’s alleged harm as a concrete injury in fact that confers Article III standing under the TCPA.[4]

In reaching this conclusion, the Eleventh Circuit rejected the U.S. Court of Appeals for the Ninth Circuit’s reasoning in Van Patten v. Vertical Fitness Group LLC, where the court held that, regardless of the qualitative harm actually suffered by the plaintiff, a named plaintiff’s receipt of two unsolicited text messages was sufficient to establish standing for a TCPA claim.[5]

According to the Salcedo court, Congress was “concerned [more] about intrusive invasions of privacy into the home” when it enacted the TCPA, and “less … about calls [or texts] to cell phones.”[6] To the Eleventh Circuit, the harms associated with analogous common law actions such as invasion of privacy, intrusion upon seclusion and nuisance “differ so significantly in degree” from the harm of receiving a text message that history does not support a finding of concrete harm for the latter.[7] 

“The chirp, buzz, or blink of a cell phone receiving a single text message is more akin to walking down a busy sidewalk and having a flyer briefly waved in one’s face. Annoying, perhaps, but not a basis for invoking the jurisdiction of the federal courts.”[8]

The Direct Implications of Salcedo

Although the Salcedo opinion clearly holds that the receipt of one text message without any additional harm is insufficient to establish Article III standing, the Eleventh Circuit avoided establishing a hard-and-fast quantitative test for standing, focusing instead “on the qualitative nature of the injury.”[9] This emphasis on individualized harm creates an opportunity for defendants in TCPA cases to challenge the alleged standing of named plaintiffs and unnamed putative class members.

At the pleading stage, defendants will use Salcedo to argue that the harm allegedly suffered by named plaintiffs is insufficiently concrete and material to establish an Article III case and controversy. In response, named plaintiffs will try to:

  • Plead around Salcedo with specific allegations designed to satisfy its qualitative standing inquiry, such as the kind of invasions into private home life that the Eleventh Circuit identified as being at the core of the TCPA’s purpose;
  • Find named plaintiffs who received more than one text message and suffered some sort of qualitatively concrete harm; or
  • File TCPA class actions in state courts, which won’t be bound by Salcedo or its progeny.

 

Regardless of the responsive strategies employed by named plaintiffs, Salcedo clearly makes it more difficult for them to establish Article III standing in TCPA cases.

In addition to arguing against an individual named plaintiff’s standing, defendants will use Salcedo to challenge the standing of unnamed putative class members through motions to strike class allegations or in oppositions to class certification motions. To be sure, Salcedo may serve as an impediment to TCPA class certification to the extent named plaintiffs are now required to plead more particularized concrete injuries distinct from those of some or all of the other putative class members.

This dynamic not only creates an argument that the named plaintiff is an inadequate class representative, it provides defendants with an additional basis to challenge Rule 23 predominance, which requires that “questions of law or fact common to class members predominate over any questions affecting only individual members.”[10]

In this regard, class action defendants will argue that unnamed putative class members are required to establish Article III standing and that, as a result of Salcedo, individualized issues as to the qualitative harm suffered by those unnamed class members predominate over common ones. Plaintiffs lawyers will try to counter by arguing that the individualized harm suffered by unnamed class members is irrelevant to Rule 23’s predominance inquiry because, for standing purposes, a court may certify a class so long as there is a case and controversy with the named plaintiff.   

The Circuit Split on Class Member Standing

U.S. circuit courts are split on the issue of whether unnamed class members are required to establish Article III standing in order to certify a class action. The Second, Eighth, Ninth and D.C. Circuits have held that each member of a class must have independent standing.[11] The First, Third and Seventh Circuits, on the other hand, have held that a court may certify a class so long as the named plaintiff has standing under Article III.[12]

The Eleventh Circuit has not “directly tackled the issue of whether a plaintiff must demonstrate that putative class members have Article III standing at the class certification stage.”[13] Perhaps Salcedo will provide the impetus for the Eleventh Circuit to rule — through an interlocutory appeal or otherwise — on this open issue.   

The Potential Broader Implications of Salcedo

Salcedo’s implications with respect to the standing requirements of named plaintiffs appear significant, and attorneys defending TCPA cases now have another argument in their favor. Whether Salcedo is also a weapon for TCPA defendants opposing Rule 23 predominance is an open question, one that may only be answered when the Eleventh Circuit decides whether all putative class members are required to have Article III standing.

Indeed, if, the Eleventh Circuit follows the Second, Eighth, Ninth and D.C. Circuits and holds that unnamed class members must have Article III standing, such a decision, coupled with Salcedo, could transform TCPA class action litigation. In other words, if the Eleventh Circuit requires plaintiffs to establish individualized standing for the entire putative class by looking at the qualitative nature of each member’s injury, plaintiffs may be unable to satisfy Rule 23’s predominance requirement and, therefore, certify TCPA class actions.

That type of ruling, together with Salcedo, could have broader implications and ultimately stop the flow of TCPA and other statutory consumer protection class actions in the Eleventh Circuit, like those brought under the FDCPA and FCRA, where some class members will not have readily identifiable, qualitatively concrete injuries necessary to establish standing. This result would have a particularly large impact in the Southern and Middle Districts of Florida, which have become two of the country’s most popular venues for plaintiffs filing statutory consumer protection class action litigation.[14]   

 


Adam Foslid and Ian Ross are partners and Erica Perdomo is an associate at Stumphauzer Foslid Sloman Ross & Kolaya PLLC.

[1] Salcedo v. Hanna, No. 17-14077, 2019 WL 4050424 (11th Cir. Aug. 28, 2019).

[2] Id. at *3.

[3] Id. at *1.

[4] Id. at *4–*7.

[5] Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037 (9th Cir. 2017).

[6] Salcedo, 2019 WL 4050424, at *5.

[7] Id.

[8] Id. at *7.

[9] Id. (quoting Saladin v. City of Milledgeville, 812 F.2d 687, 691 (11th Cir. 1987)).

[10] Fed. R. Civ. P. 23(b)(3).

[11] Denney v. Deutsche Bank, 443 F.3d 253, 263-64 (2d Cir. 2006); Halvorson v. Auto-Owners Ins. Co., 718 F.3d 773, 779 (8th Cir. 2013); Mazza v. Am. Honda Motor Co., 666 F.3d 581, 594 (9th Cir. 2011); In re Rail Freight Fuel Surcharge Antitrust Litig., MDL., No. 1869, 725 F.3d 244, 252 (D.C. Cir. 2013).

[12] AstraZeneca AB v. UFCW (In re Nexium Antitrust Litig.), 777 F.3d 9, 25 (1st. Cir. 2015); Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353, 363 (3d Cir. 2015); Kohen v. Pacific Inv. Mgmt. Co., LLC, 571 F.3d 672, 676 (7th Cir. 2009); see also, DG ex rel. Stricklin v. Devaughn, 594 F.3d 1188, 1198 (10th Cir. 2010).

[13] Randolph v. J.M. Smucker Co., 303 F.R.D. 679, 691 (S.D. Fla. 2014).

[14] See https://webrecon.com/webrecon-stats-for-july-2019-forget-doldrums-summer-pops/; https://webrecon.com/webrecon-stats-for-june-2019/.

Consumer Class Standing Faces Uncertainty In 11th Circ.