Third Circuit Holds That Absent Class Members Need Not Show Standing and Reiterates Comcast’s Reiteration of Basic Rule 23 Principles

In a precedential opinion in Neale v. Volvo Cars of North America, the U.S. Court of Appeals for the Third Circuit held that putative class members need not establish Article III standing, and emphasized that the Supreme Court’s decision in Comcast v. Behrend, 133 S. Ct. 1426 (2013) “was not breaking any new ground” because “the predominance analysis was specific to the antitrust claim at issue.”

The appeal concerned the District Court’s certification of six statewide classes of Volvo owners and lessees who alleged a design defect in their vehicles’ sunroof drainage systems. The Third Circuit first considered Volvo’s argument that all putative class members must have Article III standing. The Circuit Court recounted the long history of representative actions, dating back to medieval times, and concluded that “[r]equiring individual standing of all class members would eviscerate the representative nature of the class action.” The Third Circuit held that “a class action is permissible so long as at least one named plaintiff has standing.”

The Court observed that standing must be “satisfied by those who seek to invoke the power of federal courts” and that in the class action context the named plaintiffs fill that role. The Court further opined that requiring that absent class members possess standing would be “inconsistent with the nature of an action under Rule 23,” noting that all class members may not even be known until after discovery and that courts have long permitted individuals who suffered no legal injury to be members of Rule 23(b)(2) classes. Issues concerning whether and how absent class members have been injured should be addressed when deciding whether class certification is appropriate under Rule 23 and not as part of an Article III standing analysis.

In so holding, the Third Circuit rejected the view of the Second, Eight, Ninth, and D.C. Circuits that require, or appear to require, absent class members to have Article III standing. It appears that the circuit split will be resolved during the Supreme Court’s next term, since in early June 2015, the Supreme Court granted the petition for certiorari in Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146, which presented the question of “[w]hether a class action may be certified or maintained under Rule 23(b)(3), or a collective action certified or maintained under the Fair Labor Standards Act, when the class contains hundreds of members who were not injured and have no legal right to any damages.”

Despite rejecting Volvo’s standing argument, the Third Circuit ultimately reversed and remanded the District Court’s grant of class certification for failure to “provide a complete list of the class claims, defenses, and issues for each of the six statewide classes” and failure to conduct a rigorous predominance analysis. The Third Circuit declined to engage in guesswork to define the class claims. The Court also concluded that the District Court failed to conduct a rigorous analysis and instead lumped Plaintiff’s various state claims together for purposes of the predominance inquiry. The Third Circuit instructed the District Court to “rule on the predominance question in light of the claims asserted and the available evidence.”

Stay tuned to this blog for reporting on the Supreme Court’s decision in Tyson to resolve the circuit split regarding Article III standing for absent class members.

Jason R. Halpin is an Associate in the Gibbons Business & Commercial Litigation Department.
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