In Drazen v. Pinto, the Eleventh Circuit vacated a class settlement and held that in order to receive individual damages (whether through a settlement or otherwise), all class members must have Article III standing under Circuit precedent. 2022 WL 2963470, at *6 (11th Cir. July 27, 2022). The decision gives defendants another tool to defeat class certification, while at the same time makes it more difficult to include class members that lack standing in classwide settlements.
The procedural history in Drazen is long and somewhat complicated. The plaintiffs accused the defendant of calling and texting them in violation of the Telephone Consumer Protection Act. The parties eventually entered into a settlement which defined the class to include anyone who received at least one call or text message. While the settlement was awaiting approval, the Eleventh Circuit held in Salcedo v. Hanna, 936 F.3d 1162, 1168 (11th Cir. 2019) that a single unwanted text message was not sufficient to give rise to Article III standing. Notwithstanding Salcedo, the district court held that only the named plaintiffs needed to have standing, and even though some absent class members would not have standing under Salcedo because they received only one unwanted text message, those class members would have standing in their respective Circuits. Drazen, 2022 WL 2963470, at *2. Accordingly, the district granted preliminary approval to the settlement with the class definition that included those without standing under Eleventh Circuit law. A class member (Pinto) objected; the district court mostly overruled the objection and granted the settlement final approval; and Pinto appealed.
The objector did not raise the issue of standing, but the Eleventh Circuit did so sua sponte. Relying on the Supreme Court’s decisions in Frank v. Gaos, 139 S. Ct. 1041 (2019), and TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), the Eleventh Circuit held that all individuals within the class definition, not just the named plaintiffs, must have standing, and standing must be determined under Eleventh Circuit law, even when the class is national and some out-of-Circuit class members would have standing under the governing law in their Circuits. Drazen, 2022 WL 2963470, at *5–6. Because the class definition in the settlement included individuals who received just one unwanted text message (in other words, individuals who would not have standing under Eleventh Circuit law), the Eleventh Circuit vacated class certification and the approval of the settlement and remanded to give the parties the opportunity to redefine the class. Id. at *6–7.
Drazen has implications beyond the settlement context. The Court’s holding—that “[a]ny class definition that includes members who would never have standing under our precedent is a class definition that cannot stand”—builds on Ramirez, and gives defendants the opportunity to resist a class certification motion by showing that the class definition includes individuals that lack Article III standing. At the same time, if defendants look to settle a class action, they must be mindful of the class definition in the proposed settlement and ensure that the definition does not encompass any individuals who do not have Article III standing. This creates its own set of issues: in the Eleventh Circuit a defendant might be unable to settle the claims of class members who lack Article III standing, only to face a follow-on lawsuit from those class members in another jurisdiction where they do have standing.