SDNY: Defer Standing Until Class Certification

Awhile back, we wrote about the practice of named plaintiffs asserting state-law claims arising under the laws of states in which no named plaintiff resides. Our last post looked at a decision out of the Northern District of California.  More recently, a decision from the Southern District of New York has addressed the issue.

In Kaatz v. Hyland’s, 2016 WL 3676697 (S.D.N.Y. July 6, 2016), the court addressed a defense argument that the plaintiffs lacked standing to bring a putative nationwide class action under any state’s laws except their own.  The court disagreed:

Although standing is generally a threshold issue for an Article III court to determine at the outset of the case, the Supreme Court created an exception for courts to address class certification prior to standing when certification issues are logically antecedent to Article III concerns.

There is a growing consensus among district courts that class certification is logically antecedent, where its outcome will affect the Article III standing determination, and the weight of authority holds that in general class certification should come first.  In other words, when class certification is the source of the potential standing problems, class certification should precede the standing inquiry.

(Quotations and citations omitted.)

The court also noted that plaintiffs in a “consumer protection class action may assert claims under laws of states where they do not reside to preserve those claims in anticipation of eventually being joined by class members who do reside in the states for which claims have been asserted.”
As a result, the court chose to defer a resolution of plaintiffs’ standing until the class certification stage.