HUGE SHIFT: Third Circuit Court of Appeals Hands Down INCREDIBLE Standing Ruling That May End the Scourge Of TCPA Class Actions and it is WONDERFUL

I love being right.

Actually sometimes I hate it. Like when I am right 7 years ahead of everybody else and I have to sit around waiting for everyone to catch up. 😉

Here is an example.

As reported not long ago, a massive 66.2% of TCPA cases are filed as class actions.

In order to bring a class action a few things are required. First, the basic requirements of Rule 23 must be met. But, more germanely, the class must possess Article III standing…. maybe.

Most courts have allowed a class action to proceed–at least up until trial–so long as the named Plaintiff has standing without regard to whether unnamed class members have standing. I have always thought that was the incorrect analysis, and the Third Circuit appears to agree with me.

In Huber v. Simon’s Agency, 2023 WL 6629836 (3rd Cir. Oct. 12, 2023) the Third Circuit Court of Appeals recognized that unnamed class members may lack Article III standing even where a statutory violation created Article III standing for the named Plaintiff. And this is a MASSIVELY important ruling that may undercut the basis for TCPA class actions altogether–as I’ll explain.

But let’s start with Huber.

In Huber a debt collector sent a statement that contained an “amount” owed of $178.00 and a “account balance” of $517.50. The Plaintiff claimed to be confused by the statement and didn’t know what amount to pay. She sued alleging a violation of the FDCPA’s prohibition on the use of any “false, deceptive, or misleading” means of collecting a debt.

The district court determined the claim had merit and entered judgment in favor of the named Plaintiff and certified a class of individuals who had received the same notice.

Defendant appealed arguing that nobody had standing to sue–not the named plaintiff or the class.

The Third Circuit Court of Appeals disagreed that the named Plaintiff lacked standing. While the mere violation of the FDCPA alone was not sufficient–and as the informational standing doctrine did not apply–the Court found the errant disclosure was akin to a common law fraudulent misrepresentation. And since Plaintiff had suffered a real-world harm–she was confused and sought counseling about the statement–she possessed valid standing.


But here is where things get REALLY good.

When looking at whether the unnamed class members also possessed standing to sue the appellate Court rejected the premise finding that not every class member was in the same possession vis harm:

Some class members may not have been confused at all; some may have been confused but nonetheless paid the correct sum; and some may have cleared up their confusion with a glance at their prior notices. It is also true that some, like Huber, may have suffered sufficiently concrete harm, financial or otherwise, to satisfy Article III. But standing cannot be based on speculative injury. So while the District Court correctly recognized that mere “receipt of a misleading or deceptive collection letter,” without some “consequential action or inaction following [that] receipt,” would be insufficient to establish informational harm, App. 47, it was too quick to assume that financial harm was an “inevitable consequence[ ]” for each and every class member..


It gets better:

We part ways with our dissenting colleague to the extent she rejects the need for individualized inquiry and asserts that, because SAI’s letter violated the FDCPA, any and all recipients of the letter automatically have standing to bring suit. But that position misapprehends the fundamental distinction between “statutory standing” and Article III standing. According to the dissent, a plaintiff has standing to bring a claim based on a cause of action created by Congress whenever Congress has “impose[d] a statutory prohibition and grant[ed] a plaintiff a cause of action to sue over a ‘defendant’s violation of that statutory prohibition or obligation,’ ” Dissent at 1–2 (quoting TransUnion, 141 S. Ct. at 2204). Harm is “concrete[ ]” simply because “Congress has provided a remedy.” Id. at 14. And a plaintiff’s standing depends on “harm to the interest that [Congress sought] to be protected, not actual harm to the plaintiff.” Id. at 11; see also id. at 13 (stating that “what actually happened to Ms. Huber[ ] … and what happened to every plaintiff in the class,” is “irrelevant” because there is no requirement that we consider “the actual impact or consequences of the violation on a particular plaintiff”). From these premises, the dissent concludes that here, because Congress wanted “debtors to be protected from misleading information from collection agencies,” the receipt of misleading information —in and of itself—effects a concrete injury, without any need for individualized inquiry. Id. at 15.

The Supreme Court has repudiated each of those premises. In Spokeo, the Court expressly “rejected the proposition that ‘a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.’ ” TransUnion, 141 S. Ct. at 2205 (quoting Spokeo, 578 U.S. at 341). In TransUnion, it explained that Congress’s creation of a statutory remedy does not make harm “concrete”; what matters is whether the particular plaintiff has suffered “any physical, monetary, or cognizable intangible harm traditionally recognized” in common law. It also made clear that actual or imminent injury to the plaintiff herself is the sine qua non of standing—requiring that a plaintiff “seek[s] to remedy … harm to herself” and not “merely … to ensure a defendant’s ‘compliance with regulatory law.’ ” 

The dissent is therefore mistaken that Congress can create not just the right, but Article III standing to enforce it, simply by legislating an “interest to be protected … in not receiving false or misleading information,” Dissent at 12, or that Congress’s desire to protect that interest—in the absence of any detrimental consequence to the prospective plaintiff imbues that plaintiff with standing in “the same way as common law sought to protect people from fraudulent misrepresentations,” id. at 15. It is precisely because Congress “may not … us[e] its lawmaking power to transform something that is not remotely harmful into something that is,” TransUnion, 141 S. Ct. at 2205, that any plaintiff alleging intangible harm must show an actual or imminent injury “with a close relationship to harms traditionally recognized as providing a basis for lawsuits in American courts,” 8 id. at 2204.

And now the MOST IMPORTANT PART. After recognizing that not every class member possesses Article III Standing the appellate court sent the case back down to determine whether individualized inquiries related to standing defeat class certification!

The Eleventh Circuit was previously the ONLY appellate court to hold that Article III issues can defeat certification—but the Third Circuit just joined in:

No doubt, predominance concerns can arise when unnamed class members must submit individualized evidence to satisfy standing and recover damages. We have previously recognized as much, see Neale, 794 F.3d at 368 (explaining that differences between injuries suffered by class members can “affect … predominance analyses”), as did the Supreme Court in tacitly endorsing the Eleventh Circuit’s decision in Cordoba, see TransUnion, 141 S. Ct. at 2208 n.4 (citing Cordoba, 942 F.3d at 1277). Although the named plaintiff in Cordoba had Article III standing, 942 F.3d at 1271, the evidence in the record was inconclusive as to the proportion of unnamed class members who could make a similar showing, id. at 1275. To recover damages, the Eleventh Circuit explained, unnamed class members would have to submit individualized evidence of their standing. Id. at 1274. Depending on the number of class members able to satisfy that burden and the difficulty of identifying those class members, “individualized determinations might overwhelm issues common the class,” id. at 1275, so the district court needed “to address whether common issues predominate under Rule 23(b)(3) when this [standing] issue is baked into the analysis,”id. at 1277. Accordingly, the Eleventh Circuit vacated the class certification order and remanded.

Like the Eleventh Circuit in Cordoba, we conclude that remand is necessary here owing to the lack of evidence in the record indicating how many members of Huber’s class are likely to have standing and how burdensome that showing will be for both the District Court and the parties. Because the District Court decided that Huber and the unnamed members of her class suffered informational injuries, the Court had no occasion to consider how individualized evidence of unnamed class members’ standing would affect the balance of common versus individual issues for purposes of predominance, or what proportion of the class could be expected to establish standing. Thus, the District Court must assess the implications of those individualized showings for the predominance requirement of Federal Rule of Civil Procedure 23(b)(3). 11 See Neale, 794 F.3d at 368.


So this means in a suit where a statute was violated but not real world harm necessarily follows the Plaintiff must prove each class member actually did suffer harm as a result of the violation–not just that a statute was violated.

Now this is hardly surprising– in my view this has been the law since 2016 when I wrote that INCREDIBLE article that foresaw ALL of this. Of course it has only taken 7.5 years for the rest of the legal profession to catch up to me. hahahha

Better late than never, I guess.

So what does this mean for TCPAWorld?

It means a class should NEVER be certified in federal court unless the Plaintiff can prove each class member actually suffered a real word harm from the call at issue. And that means, as I wrote back in 2016: “by definition, an individualized and concrete harm cannot be shown across a class, except in the narrowest circumstances. And that is a very big deal. A monstrous, Great-Wall-of-China-sort barrier to no-damage class action practitioners.”

And yes, in addition to always being right the Czar has also always a great writer. 😉

So this is really good news for folks defending TCPA class actions in federal court. Reach out to the Czar if you have questions about how to use this new decision in your cases.

Chat soon! And happy Friday!


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