In Laboratory Corporation of America Holdings v. Davis (No. 24-304), the Supreme Court has the opportunity to decide whether a federal court may certify a class action under Federal Rule of Civil Procedure 23(b)(3) when some members of the proposed class lack any Article III injury. If the Court reaches the question presented, its ruling has the potential to send shockwaves through the high-stakes world of class action litigation, where defendants are often pressured to settle claims regardless of their merit when faced with potentially catastrophic damages awards. But a gleaming procedural infirmity appears likely to prevent the Court from doing so.
As background, laboratory service provider Labcorp introduced self-service check-in kiosks that blind patients were unable to use independently. Consequently, a group of such plaintiffs filed a putative class action against Labcorp alleging discrimination. The district court initially certified a class that excluded blind individuals who did not know about or did not want to use the kiosks, then later, certified the class based on a definition that included any blind individual who came into a clinic, regardless of whether they wanted to use the kiosk. Between the court's first and second certifications, Labcorp filed a Rule 23(f) petition with the Ninth Circuit Court of Appeals seeking to challenge only the first certification, and failed to amend its appeal to include the second. The Ninth Circuit affirmed the district court's first certification and declined to address Labcorp's arguments regarding the second, holding that issue was not properly before it. The Supreme Court agreed to hear the matter.
Labcorp argues that courts must address jurisdiction before addressing the merits in all cases, including class actions, that if any individual class member lacks Article III standing, then the class cannot be certified, and that the class definition in this case is overbroad because it potentially includes uninjured individuals who never intended to use the kiosks. It also argues there is no material difference between the first and second class definitions, so its failure to appeal the second class certification does not prevent a ruling on the merits. Respondents argue that only the named representative of a class must prove Article III standing at the outset, and the proper inquiry at the class certification stage is whether there will be an administratively feasible mechanism to weed out uninjured class members, which they contend there is in this case. They also argue that the Court should not reach the merits of Labcorp's argument because it only addresses the second class certification, which was never appealed, and is therefore not properly before the Court.
The Justices' questions during oral argument indicate that the procedural question raised by Respondents is seriously concerning and may ultimately prevent the Court from reaching the merits. Justice Thomas began by inquiring whether the Court had jurisdiction to hear Labcorp's challenge to the first inoperative order, but also raised concern that Respondents failed to raise that issue in their brief opposing the certiorari petition. Justice Sotomayor also inquired whether an opinion issued by the Court regarding the first certification order would be an advisory opinion because it was superseded by the second—a concern that Justice Barrett echoed. Justice Alito, however, expressed concerns about the Ninth Circuit's rule requiring a new notice of appeal or an amendment to a prior notice of appeal when a district court changes its class certification order, and whether its rule on material versus immaterial changes in class certification orders is jurisdictional or a claims-processing rule. But Justice Kagan expressed skepticism about Labcorp's claim that the two certification orders were materially identical, identifying differences she characterized as obvious.
As to the merits, Justice Kagan raised concerns about the inclusion of uninjured individuals in a class definition, questioning how this aligns with Article III, and discussed whether including individuals who may not have wanted to use the kiosks could lead to numerous mini-trials, complicating class certification. Justice Barrett also expressed that a class where individual determinations would need to be made through mini-trials likely would not meet the requirements of Rule 23. Justice Thomas questioned at what point having uninjured plaintiffs in the class presents a problem for Rule 23 or for Article III, and Justice Sotomayor commented that class definitions “get amended constantly” in the district courts and indicated that it was not necessary to separate the injured from uninjured plaintiffs until a judgment is entered. But Justice Kavanaugh recognized the pressure on defendants to settle when faced with an overly broad class, and Justice Jackson indicated that Rule 23 should preclude certification in cases where Article III injury is not adequately addressed.
Justices Sotomayor and Gorsuch also questioned the practicality of addressing jurisdiction, or separating the “wheat from the chaff” before adjudicating the merits of a claim. Chief Justice Roberts also questioned the margin of error in defining a class and the practicality of separating injured and uninjured members. Justice Gorsuch highlighted the issue of jurisdiction in cases involving overly broad class certifications, pointing out the potential problem of binding a class that includes individuals over whom the court lacks jurisdiction: “It basically means you're going to have to adopt a rule that either binds a class over whom you didn't have jurisdiction, obviously wrong, or, after the fact, you're going to have to go through each plaintiff and decide whether or not you had jurisdiction over them in the first place.” But he appeared to conclude that the class in this case is manageable. Justice Kagan also posited that a rule requiring every member of a class to share the same injury would upend the way classes have been certified for the last 70 years.
The Court's forthcoming ruling may clarify whether each class member in a defined class must have suffered a cognizable injury for the class to be certified, or at least clarify when a class may be certified if some of its class members may not have been injured consistent with Article III and Rule 23. It seems more likely, however, that the procedural issues in the case will prevent the Court from reaching the merits of that question.
Stay tuned for Dykema's decision alert after the Court issues its opinion, expected later this term.
