A recent Supreme Court decision, TransUnion v. Ramirez, that limits restitution in federal class action litigation also raises questions about how it may impact the nature of claims brought in state court.
The court relied on Spokeo, Inc. v. Robins and Lujan v. Defenders of Wildlife for two key decisions that have defined the limits of Article III standing in federal court, Joshua Davis, professor of law and director, Center for Law and Ethics, at University of San Francisco School of Law, told the Northern California Record.
“The Court's ruling sends a message that it is skeptical about private claims against businesses, especially involving the handling of information,” Davis said. “Plaintiffs who are relying on the Supreme Court to protect them from harms that are somewhat abstract, for example, are likely to be disappointed. As we move further and further into the information age, that may limit the ability of Congress to protect Americans' privacy and use of information about them.”
Davis noted the decision could make it more difficult to certify some class actions in federal court because plaintiffs may have to show that each class member has Article III standing.
“That said, such a showing should not require much,” Davis said. “Article III standing is a threshold issue to start court proceedings and does not entail an assessment of who should ultimately win. All plaintiffs should have to do to show standing is establish that class members allege they were exposed to the relevant kind of harm. The Court said that plaintiffs in Ramirez had stipulated that thousands of class members had not been exposed to harm because information about them was not shared with third parties. Presumably, if plaintiffs had alleged that information about those absent class members had been shared, they would have had standing. In the vast majority of class actions, plaintiffs can meet that standard.”
One consequence of the decision is that some classes may be easier to get certified, Davis said.
“The reason is that state courts can hear claims that lack Article III standing in federal court and many state courts are less resistant to certifying classes than some federal courts have been in recent years,” Davis said. “Normally, it is relatively easy for defendants to remove proposed class actions to federal court under a statute, CAFA. But defendants cannot remove a case to federal court if plaintiffs lack Article III standing.”
The high court’s ruling has raised questions about its effect on California Consumer Privacy Act [CCPA] lawsuits, and whether it could result in more class actions in the California state court system.
“For many CCPA claims, the ruling may have no impact,” Davis said. “But for those involving claims for which plaintiffs now lack standing, they may be litigated in state court – likely in California – rather than in federal court.
“Many plaintiffs may see that as a strategic advantage,” Davis said. “Not only may California courts be less resistant to class certification than federal courts, but they also may be more open to enforcing the CCPA than federal courts would be. So we may see a greater number of class actions cases in California state court and they may be more apt to enforce the CCPA as was intended by the legislature than would be federal courts.”
The high court’s 5-4 ruling was issued on June 25.
“People should know that the current Supreme Court seems willing to impose its political views in interpreting the law,” Davis said. “Justice Thomas' and Justice Kagan's dissents make a powerful case that the Court has used a doctrine – Article III standing – that is designed to prevent the courts from encroaching on legislative authority to deprive the legislature of the power to protect Americans.
“The Court took this step because it apparently disagreed with Congress about how false information can cause harm. Ironically, however, the Court's ruling in this case may shift power to the states. That could enable states to protect people from the new sorts of harms that will otherwise occur more and more frequently in the information age.”