Court Rules It Has Authority To Decide Whether Class Cert. Is “Logically Antecedent” to Standing Inquiries

In consumer class actions, it is not uncommon for named plaintiffs to assert state-law claims arising under the laws of states in which no named plaintiff resides. After all, many consumer suits concern products sold nationwide, and there often may be close parity between the laws of states in which named plaintiffs and unnamed plaintiffs reside.

When faced with a class action complaint structured in this way, defendants typically argue, at the pleadings stage, that named plaintiffs lack Article III standing to assert claims based on these other state laws. This is a threshold issue, according to defendants, which must be decided at the outset of the case. Plaintiffs often respond that differences between a named plaintiff’s claims and unnamed class members’ claims should be treated as an issue of adequacy and typicality under Federal Rule of Civil Procedure 23, and should be resolved at the class certification stage.

District courts in the Ninth Circuit have issued conflicting rulings on this question. Some hold that standing analysis must precede class certification, while others hold that class certification may be decided before standing is addressed. Compare Los Gatos Mercantile, 2014 WL 4774611, *4 (adopting the former approach), with Jepson v. Ticor Title Ins. Co., No. C06–1723–JCC, 2007 WL 2060856 (W.D. Wash. May 1, 2007) (concluding that whether plaintiff may represent a class consisting of residents from other states is “logically antecedent” to standing inquiries).

Judge Edward M. Chen’s recent decision in In re Carrier IQ, Inc., Consumer Privacy Litigation, 78 F. Supp. 3d 1051 (N.D. Cal. 2016), addresses these issues and is well worth reading. See id. at 1068-75. In this case, plaintiffs alleged that several defendant mobile device manufacturers sold mobile devices which surreptitiously intercepted and transmitted personal data to third parties without authorization. The complaint identified named plaintiffs from 13 states who asserted consumer protection and warranty claims under their respective state laws. Plaintiffs, however, also pleaded claims under the laws of 35 other states in which no named plaintiff either resided or purchased the mobile device.

Defendants moved to dismiss the claims asserted under the laws of these 35 other states for lack of standing. Defendants argued that plaintiffs’ standing to assert these claims was a threshold jurisdictional issue which could not be delayed until after class certification. The court, however, disagreed that it lacked authority to postpone consideration of standing. It explained that there is “no rigid rule that precludes class certification from being addressed before standing issues.” Id. at 1074. Courts have “discretion to defer questions of standing until after class certification” in circumstances such as this. Id.

The court in In re Carrier IQ nevertheless declined to postpone its consideration of standing. Here, it made sense to consider standing first, the court reasoned, because the number of claims asserted on behalf of unnamed plaintiffs from these 35 states was vast compared to the number of claims asserted by named plaintiffs from 13 states. Given this disparity, the court expressed “reservations [with] subjecting the Device Manufacturers to the expense and burden of nationwide discovery without Plaintiffs first securing actual plaintiffs who clearly have standing and are willing and able to assert claims under these state laws.” Id. The court also found a “meaningful risk” that class certification requirements would not be met, at least not without sub-classes, given the number of state law claims asserted. Id.

Turning next to the issue of standing, the court swiftly concluded, in a single sentence, that “the named Plaintiffs do not have standing to assert claims from states in which they do not reside or did not purchase their mobile device.” Id. at 1075.

What’s curious about the court’s analysis is that the reasons it gave for addressing standing before class certification had very little (and perhaps nothing) to do with traditional standing considerations—such as whether named plaintiffs had a sufficient personal stake in the case at the outset of the litigation to assert claims on behalf of unnamed plaintiffs from other states, who could then be identified after class certification. Instead, the reasons the court gave for deciding standing before class certification had much to do with class certification considerations, such as adequacy, efficiency, and manageability. See id. at 1074.

Despite In re Carrier IQ’s unwillingness to decide class certification before addressing standing, the court’s opinion suggests that it might have decided class certification first if the named plaintiffs had asserted far fewer state-law claims arising under the laws of states in which no named plaintiff resided. This is evident from the court’s comparison of In re Target Corporation Data Security Breach Litigation, 2014 WL 7192478 (D. Minn. Dec. 18, 2014), which considered class certification first because named plaintiffs from 46 states had asserted claims under the laws of all 50 states and the District of Columbia, with Insulate SB, Inc. v. Advanced Finishing Systems, Inc., No. 13–2664 ADM/ SER, 2014 WL 943224 (D. Minn. Mar. 11, 2014), which addressed standing first because a single named plaintiff had asserted claims arising under the laws of 22 states and Puerto Rico. See In re Carrier IQ, 78 F. Supp. 3d at 1074.