This Settlement Cannot Stand: Eleventh Circuit Rejects $35 Million Class Settlement Citing TransUnion and Article III Standing

February 1, 2023

In an opinion issued in July 2022, the Eleventh Circuit Court of Appeals vacated an order certifying a class and approving a class settlement after deciding, sua sponte, that the class lacked Article III standing. See Drazen v. Pinto, 41 F.4th 1354 (11th Cir. 2022).

The district court had approved a $35 million dollar class settlement between LLC and a putative nationwide class of consumers. GoDaddy sought to resolve allegations that it violated the Telephone Consumer Protection Act of 1991 by sending “robocalls”—automatic, unsolicited calls and texts—to market its services. The putative class was defined to include all persons in the United States who received a call or text message to their cell phone from GoDaddy from November 4, 2014 through December 31, 2016.

A relatively small number of absent class members—approximately 7%—fit within that definition but had received only one unsolicited text message during the class period. Under Eleventh Circuit precedent, however, receipt of a single unwanted text message was not a sufficiently concrete injury to give rise to Article III standing. See Salcedo v. Hanna, 936 F.3d 1162, 1168 (11th Cir. 2019). After ordering further briefing on this issue, the district court, relying on Cordoba v. DIRECTV, LLC, 942 F.3d 1259, 1273 (11th Cir. 2019), determined that only the named plaintiffs were required to have standing. The district court ruled that GoDaddy was, therefore, entitled to settle with the prospective plaintiffs, even if they lacked standing under Eleventh Circuit precedent, because they may have had viable claims under the law of their respective circuits (due to a circuit split). (In dicta, the Eleventh Circuit rejected this line of reasoning outright).

The Eleventh Circuit, citing TransUnion LLC v. Ramirez, __ U.S. __, 141 S. Ct. 2190 (2021), determined that it lacked jurisdiction because the class, as certified, was defined to include members who lacked Article III standing. Therefore, the court could not affirm the district court’s decision to certify the class or approve the proposed settlement. Acknowledging that Cordoba contemplates the possible certification of a class with putative class members who lack standing, the court pointed out that Cordoba also recognizes standing may, in some cases, be “exceedingly relevant” to the certification analysis and, in any event, must be established before relief is granted. Of course, in TransUnion, the Supreme Court ruled, inter alia, that class members must have Article III standing to recover individual damages. Reading those cases together, the Eleventh Circuit found that “[a]ny class definition that includes members who would never have standing under our precedent is a class definition that cannot stand.”

Drazen underscores the importance of analyzing whether the named plaintiffs and every absent class member has Article III standing at every stage of the litigation. This decision could have broad implications for not only TCPA class actions but any class action where Article III standing is in question.