Most recent antitrust class actions are brought by a small number of named plaintiffs, who allege that a vast conspiracy or monopolistic scheme raised the prices of a given product bought by indirect purchasers across the country.
In many cases, the named plaintiffs purchased the relevant product in only a handful of states, yet bring claims under the laws of dozens of other states on behalf of putative class members who purchased that product in those states.
The lower courts have split on whether named plaintiffs have Article III standing to bring claims in states where they made no purchases, simply by seeking to represent a class asserting such claims.
This split is one of four emerging disputes1 over standing in antitrust class actions — including whether a plaintiff has alleged or proven concrete injury-in-fact, which we discussed in a previous article last month. The split also has significant ramifications on the scope of discovery, available defenses and the potential monetary damages at stake in a given suit.
While the U.S. Supreme Court stated as recently as TransUnion LLC v. Ramirez in 2021 that plaintiffs must "demonstrate standing for each claim that they press and for each form of relief that they seek," some courts have certified classes under the laws of states where named representatives made no purchases and thus facially lack standing to assert such claims.2
Despite their apparent lack of standing, some plaintiffs contend, and some courts have held, that once a plaintiff has standing to bring a claim under the laws of any state, a class action plaintiff may also bring claims under the laws of other states provided that there is "no substantive discrepancy between the various state antitrust laws" at issue.3
However, as we discuss below, and as a recent U.S. Court of Appeals for the Sixth Circuit decision found, this argument impermissibly grants class action plaintiffs different rights in a class proceeding than they have in an individual suit, and no considerations of litigation efficiency suffice to override the constitutional requirement that plaintiffs have standing for each claim they seek to press.
Article III Standing in the Class Certification Context
According to the 2011 Supreme Court Wal-Mart Stores Inc. v. Dukes decision, class actions are an "exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only."4
The Federal Rules of Civil Procedure, promulgated by the Supreme Court under the Rules Enabling Act, specify when a class action may be maintained, and list prerequisites for class representatives, including that "the claims or defenses of the representative parties are typical of the claims or defenses of the class."5
The act, however, forbids the Federal Rules of Civil Procedure from enlarging or modifying any substantive right,6 and the rules are necessarily subordinate to constitutional requirements.7
As the Supreme Court held in 2016 in Tyson Foods Inc. v. Bouaphakeo, these restrictions mean that Rule 23 cannot give plaintiffs "different rights in a class proceeding than they could have asserted in an individual action."8
For that reason, the Supreme Court has warned that whether a suit is a class action adds nothing to the question of standing,9 and Article III does not "allow standing as to one claim to suffice for all claims arising from the same 'nucleus of operative fact.'"10
Instead, according to TransUnion, "[e]very class member must have Article III standing in order to recover individual damages," and "plaintiffs must demonstrate standing for each claim that they press and for each form of relief that they seek."11
Nevertheless, some courts have held that once a plaintiff has standing to bring a claim against a defendant, whether it may bring claims under the laws of other states or against additional defendants depends on the factual similarities of the claims, citing Rule 23's prerequisites or supposed judicial efficiencies.
The Latest Circuit Court Weighs In
In late April, the Sixth Circuit rejected the arguments commonly relied upon by litigants who attempt to use Rule 23 or judicial efficiency to sidestep Article III's standing limitations.
In Fox v. Saginaw County, Michigan, the plaintiff failed to pay around $3,000 in property taxes and, as allowed under Michigan's foreclosure law, Saginaw County obtained ownership of the plaintiff's property.12
Saginaw County then sold the property for over $25,000, but did not return to the plaintiff the surplus over the amount he owed in property taxes.13 The plaintiff believed that this conduct violated the U.S. Constitution's takings clause and filed a class action against Saginaw County, as well as 26 other counties that allegedly followed a procedure similar to Saginaw County but did nothing to injure the plaintiff.14
Despite this apparent standing defect, the U.S. District Court for the Eastern District of Michigan certified the class under the juridical link doctrine,15 which it held should allow a plaintiff to sue defendants that never injured him where "all defendants are juridically related in a manner that suggests a single resolution of the dispute would be expeditious."16
The Sixth Circuit, however, disagreed that the doctrine superseded Article III's standing requirements and vacated the certification decision.17
First, the court reasoned that because the plaintiff lacked standing to file an individual suit against 26 of the counties — none of which had injured him — he could not gain standing to bring claims against these counties simply by invoking Rule 23 and filing a class action, because Article III "adds nothing to the question of standing."18
Second, efficiency arguments could not justify departing from Article III's limitations, just as efficiency has never warranted departing from Article I's limits on Congress's lawmaking process.19 Third, the doctrine conflicted with Supreme Court precedent and was not supported by any historical source the court reviewed dating back to English equity law in the 1600s.20
The Split in the Lower Courts
Many lower court decisions align with Fox. For example, in In re: Sensipar Antitrust Litigation, the U.S. District Court for the District of Delaware last year relied in part on the U.S. Court of Appeals for the Third Circuit's 2015 holding in Neale v. Volvo Cars of North America LLC that Article III standing "must be satisfied by at least one named plaintiff" in a class action to dismiss all claims under the laws of states beyond the 15 states in which the named plaintiffs allegedly suffered their injuries.21
The U.S. District Court for the District of New Jersey in 2018 similarly dismissed claims in In re: Effexor Antitrust Litigation in states where no representative made its purchases, finding that to permit standing in one state to create standing to bring class action claims in any other state "would effectively render the Article III inquiry obsolete."22
And in the Ninth Circuit, the lower courts that have addressed this issue are nearly unanimous in dismissing claims in states where no named plaintiff resided or purchased the relevant product due to a lack of Article III standing.23
As the U.S. District Court for the Northern District of California noted in In re: Glumetza Antitrust Litigation in 2018, "[c]laims for relief under the laws of the several states are separate claims for relief and, per DaimlerChrysler, require separate proof of standing."24
The U.S. Court of Appeals for the Ninth Circuit issued its own precedential decision in Hawkins v. Comparent-Cassani related to this issue, holding in 2001 that "a named plaintiff cannot represent a class alleging constitutional claims that the named plaintiff does not have standing to raise," regardless of whether "the class members share other claims in common."25
But others disagree.26 In In re: Asacol Antitrust Litigation, for instance, the U.S. Court of Appeals for the First Circuit in 2018 cited Supreme Court precedent requiring one class representative for each claim, but held there was no requirement that named plaintiffs' claims "be identical to the claims of each class member"; instead, it held that named plaintiffs need only have an incentive to adequately litigate the class members' claims.27
In Mayor v. Actelion Pharmaceuticals, the U.S. Court of Appeals for the Fourth Circuit similarly held in 2021 that the ability of a named plaintiff to bring claims on behalf of a class implicated statutory standing — not constitutional standing — and thus the only relevant question under Rule 23 is whether the named plaintiffs' claims raise "questions of law or fact common to the class," are typical, or raise predominance problems.28
And in Langan v. Johnson & Johnson Consumer Cos., the U.S. Court of Appeals for the Second Circuit held in 2018 that "as long as the named plaintiffs have standing to sue the named defendants, any concern about whether it is proper to include out-of-state, nonparty class members with claims subject to different state laws is a question of predominance under Rule 23(b)(3), not a question of 'adjudicatory competence' under Article III."29
The court argued that "it rarely happens that the circumstances surrounding one plaintiff's claim end up being identical to the claims of another putative class member let alone all of the others," and Rule 23 allows for efficiencies of cost, time and judicial resources.30
Our View
As the foregoing demonstrates, without more clarity from the Supreme Court, whether a challenge to named plaintiffs' standing for claims in states where they made no purchases succeeds will depend on the forum.
In the right jurisdiction, an antitrust defendant may be able to dismiss large swaths of a proposed class action and avoid potentially billions of dollars in damages liability at the start of the case; and in others, the defendant may be stuck facing claims that no named plaintiff could have asserted in its own suit.
Ultimately, no litigant should be comfortable with the outcome of a standing motion resting on happenstance. In our view, the fact that an antitrust plaintiff who paid for a price-fixed product in California would not have standing to file her own lawsuit under the laws of New York for purchases made in New York ought to be determinative.
Recall that Article III standing requires proving concrete and particularized injury in fact to the plaintiff, that was caused by the defendant's alleged violation, and that would be redressed if the plaintiff prevails on that claim.31
The California plaintiff in this scenario lacks statutory standing to bring the New York claim in her own suit, because she was not injured in New York. But she also lacks Article III standing to bring the New York claim, because prevailing on that claim would not redress any of her alleged injuries in California.
Thus, the Fourth Circuit's distinction in Actelion between statutory standing and constitutional standing is beside the point, and the Asacol and Langan decisions are unpersuasive because they both assume that Rule 23 authorizes plaintiffs to bring statutory claims in class actions that they could never bring in individual suits, provided that they involve similar factual bases.
None of these decisions comport with the Supreme Court's holdings that:
- "Standing as to one claim" does not "suffice for all claims arising from the same 'nucleus of operative fact'";
- "A plaintiff must demonstrate standing for each claim he seeks to press";32 and
- Rule 23 cannot give plaintiffs "different rights in a class proceeding than they could have asserted in an individual action."33
Moreover, litigation efficiency has never been a good reason for eliding Article III's case or controversy requirement, both because efficiency considerations cannot obviate constitutional requirements, and because allowing plaintiffs to bring claims they lack standing to assert is, in fact, inefficient.
Indeed, in any given suit, whatever time could be saved upfront by eliminating standing challenges would simply lead to other problems. After all, standing challenges may resolve dozens or hundreds of antitrust, consumer protection and unjust enrichment claims at the outset of a class action.
Without this sorting mechanism, all of these claims would otherwise need to be addressed through Rule 12(b)(6) or Rule 56 motions, fights at the class-certification stage over typicality, predominance, and manageability or superiority issues involving the differences among these claims, and extensive jury instructions and verdict forms for any claims that survive.
Efficiency seems best served by requiring that courts only hear claims once named plaintiffs with standing to bring those claims elect to do so.
Disclosure: White & Case LLP was counsel for Allergan Inc. in In re: Asacol Antitrust Litigation.
1 Other common issues include: (1) whether the issue of Article III standing to bring claims on behalf of a class should be decided before ruling on class certification; and (2) whether a class that includes members who lack standing may be certified and, if so, whether the number of such members must be de minimis.
2 141 S. Ct. 2190, 2208 (2021). In TransUnion, the plaintiff brought a class action against TransUnion for three violations of the Fair Credit Reporting Act when TransUnion erroneously placed an alert on his credit report that indicated he was a potential match to a name on the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC") list of "specially designated nationals" who threaten America's national security. He asserted that TransUnion (1) failed to ensure the accuracy of the information in his credit file pursuant to § 1681e(b) of the FCRA; (2) failed to provide him with all information in his credit report upon request pursuant to § 1681g(a)(1); and (3) violated its obligation to provide him a summary of his rights under § 1681g(c)(2). The Supreme Court assessed standing for each claim, concluding that while the plaintiff had standing for all three, only certain class members suffered concrete harm for the first claim and no class member was injured under the theories offered to support the second and third claims. 141 S. Ct. at 2201-03, 2014.
3 See, e.g., In re Namenda Indirect Purchaser Antitrust Litig. , 338 F.R.D. 527, 573 (S.D.N.Y. Feb. 11, 2021).
4 Wal-Mart Stores, Inc. v. Dukes , 564 U.S. 338, 349 (2011).
5 Fed. R. Civ. P. 23(a)(3).
6 28 U.S.C. § 2072(b) (2018).
7 See U.S. Const. Art. VI, Cl. 2.
8 Tyson Foods, Inc. v. Bouaphakeo , 577 U.S. 442, 458 (2016).
9 E. Ky. Welfare Rights Org., 426 U.S. 26, 40 n.20 (1976).
10 DaimlerChrysler Corp. v. Cuno , 547 U.S. 332, 352 (2006).
11 TransUnion, 141 S. Ct. at 2207-08.
12 Fox v. Saginaw Cnty, _ F.4th _, 2023 U.S. App. LEXIS 10405, at *2 (6th Cir. 2023).
13 Id.
14 Id. at *3.
15 Fox v. Saginaw Cnty., 2020 U.S. Dist. LEXIS 191922, at *14-15 (E.D. Mich. Oct. 16, 2020).
16 Id. (citing Thompson v. Bd. of Educ. Of Romeo Cmty. Sch. , 709 F.2d 1200 (6th Cir. 1983).
17 The court clarified that while the permitted parameters of the doctrine are narrow, the court left open the possibility that the doctrine could still apply to plaintiff, as it was still an open question "whether plaintiffs could sue many state defendants (including those who did not harm them) if the defendants acted within their local jurisdictions pursuant to a state statute or uniform policy that applied across the state." Id. at *16.
18 Id. at *17 (quoting Simon v. E. Ky. Welfare Rights Org. , 426 U.S. 26, 40n.20 (1976)); id. at 20.
19 Id. at *22.
20 Id. at *28-31.
21 See, e.g., In re Sensipar (Cinacalcet Hydrochloride Tablets) Antitrust Litig. , 2022 U.S. Dist. LEXIS 43561, at *46-47 (D. Del. Mar. 11, 2022) (quoting Neale v. Volvo Cars of N. Am., LLC , 794 F.3d 353, 362 (3d Cir. 2015)); see also In re Wellbutrin XL Antitrust Litig. , 260 F.R.D. 143, 158 (E.D. Pa. 2009) (same).
22 In re Effexor Antitrust Litig. , 357 F. Supp. 3d 363, 390-91 (D.N.J. 2018).
23 See, e.g., Los Gatos Mercantile, Inc. v. E.I. Dupont de Nemours & Co. , 2014 U.S. Dist. LEXIS 133540, at *13-14 (N.D. Cal. Sep. 22, 2014) ("After careful consideration, this Court joins the majority of courts in the Northern District in concluding that dismissal is appropriate with respect to claims asserted under the laws of states in which no Plaintiff resides or has purchased products."); Stewart v. Kodiak Cakes, LLC, 537 F. Supp. 3d 1103, 1124 (S.D. Cal. 2021) ("Indeed, if a complaint includes multiple claims, at least one named class representative must have Article III standing to raise each claim."); In re Flash Memory Antitrust Litig. , 643 F. Supp. 2d 1133, 1164 (N.D. Cal. 2009) ("Where, as here, a representative plaintiff is lacking for a particular state, all claims based on that state's laws are subject to dismissal."); Schertzer v. Bank of Am. , 445 F. Supp. 3d 1058, 1072 (S.D. Cal. 2020) ("there is a growing trend among courts within the Northern, Eastern, and Southern Districts of California to address the issue of Article III standing at the pleading stage and dismiss claims asserted under the laws of states in which no plaintiff resides or has purchased products") (collecting cases); In re Capacitors Antitrust Litig. , 154 F. Supp. 3d 918, 926 (N.D. Cal. 2015) ("IPPs acknowledge that the strong trend in district and in other courts is to require an in-state purchase to establish Article III standing for state antitrust and related consumer protection claims like the ones alleged in this case.").
24 In re Glumetza Antitrust Litig. , 2020 U.S. Dist. LEXIS 39649, at *38 (N.D. Cal. Mar. 5, 2020).
25 Hawkins v. Comparent-Cassani , 251 F.3d 1230, 1238 (9th Cir. 2001).
26 See, e.g., La. Health Serv. & Indem. Co. v. Janssen Biotech, Inc. , 2021 U.S. Dist. LEXIS 207239 (D.N.J. Oct. 27, 2021) ("Having standing with respect to 'each claim' relates to the facts underlying the claim of injury and whether they rise to the Constitutional standing threshold, not the label of each cause of action."); In re Namenda Indirect Purchaser Antitrust Litig., 2021 U.S. Dist. LEXIS 110081 (S.D.N.Y. June 11, 2021) ("SBA's injuries are 'typical' of the class and there is nothing that indicates it would be unable to adequately represent all class members, including those who suffered the same 'typical' injury but under the law of a different state.").
27 In re Asacol Antitrust Litig. , 907 F.3d 42, 48-49 (1st Cir. 2018).
28 Mayor & City Council of Balt. v. Actelion Pharms. Ltd. , 995 F.3d 123, 133-34 (4th Cir. 2021).
29 Id. at 93.
30 Id. at 94.
31 TransUnion, 141 S. Ct. 2190, 2203.
32 DaimlerChrysler, 547 U.S. at 352.
33 Tyson Foods, 577 U.S. at 458.
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