October 18, 2021

Volume XI, Number 291

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October 18, 2021

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Murky Depths: When The Issues of Merits and Standing Merge in TCPA Class Actions

As readers of this blog know, I like to keep things nice and segmented.

Rigid. Black and white.

After all, there is always truth on the one hand, and madness or folly on the other.

When it comes to Article III issues, therefore, I have made no secret of my disdain for defendants using a motion to dismiss for lack of standing as a vehicle to raise substantive merits defenses.

Yes, I know that it can sometimes allow a Defendant to preview a critical substantive defense at the pleadings stage–before evidence is generally permitted to be submitted to the court–but it is simply intellectually unpure. The issue in such cases is not whether the Plaintiff has standing to sue–he or she claims o have a valid claim–the issue is that the Plaintiff actually does not have a winning case.

But losing cases are brought in court all the time–see every case ever filed against any of my clients. Kidding. Sort of.

Anyway the point is, just because the Plaintiff lacks a meritorious claim does not mean that the Plaintiff lacks the ability to have that claim heard in court. Indeed, having a bad claim resolved on the merits is actually in the Defendant’s favor–it assures res judicata effect (i.e. that the Defendant cannot be sued again on the same claims.)

While the divide between merits and standing issues is wide and obvious–in my mind at least–when it comes to individual claims, I will confess things get murky in the depths of class litigation where the claims of unnamed class members are under consideration, as the new decision in Lackawanna Chiropractic P.C. v. Tivity Health Support, LLC, 18-CV-649-LJV-JJM2021 U.S. Dist. LEXIS 162860 (W.D.N.Y.  August 27, 2021) highlights.

There the Magistrate Judge had denied preliminary approval to a settlement class concluding that the class included individuals who did not actually receive the faxes at issue and, therefore, lacked standing to sue. Since the parties presented no plan to sort out the class members with standing from those without standing the Magistrate Judge reasoned the settlement must be rejected and denied certification.

The district court, however, disagreed concluding that actual receipt of the fax was  a merits issue. It was enough to establish standing that the class members were claiming to have received a fax–whether or not they did was a separate issue to be determined based upon evidence at trial.

Now I want to agree with this ruling, but admittedly the concepts here boggle even my pristinely-analytic mind. And the real issue is the fiction right at the heart of all class litigation–that the unnamed class member (who likely has no idea they are involved in the suit) is somehow pursuing a claim that the class representative wants to be pursued.

So imagine you are in the class of people that the Plaintiff claims received a fax without consent. But in reality you didn’t receive the fax. Or you did consent. No matter. The unreality (i.e. fiction) is that you are suing the Defendant–even though you’re not–claiming that you did receive a fax–even though you didn’t–and that you didn’t consent–even though you did.

Hence, even though you’re not suing, you are. And on a claim you don’t actually have.

And because you are claiming to have received a fax you didn’t receive–and didn’t really claim you had received it– you have standing to sue, even though you didn’t want to sue and–in reality–aren’t suing. And the fact that you lack a valid claim is irrelevant from a standing perspective– sure you’d have lost your dog of a case at trial, but that won’t stop a class action lawyer from bringing the claim anyway and then settling it and pocketing a bunch of money in fees on the claim you never brought.

And this is why I have dedicated my career to defeating class actions. (Indeed, once I kill the TCPA outright I think I’m going to move on to taking out Rule 23 in its entirety. But that’s a different story.)

So again–the divide between merits and standing is still pure and real and sensical (yes, that’s a word) if you accept the central fiction of class litigation in the first instance–that someone who isn’t suing or claiming to have a claim they don’t have is actually doing both of those things.

Of course I reject that entire premise. But the courts are fine with it. As the Lackawanna Chiropractic P.C. decision perfectly demonstrates.

© Copyright 2021 Squire Patton Boggs (US) LLPNational Law Review, Volume XI, Number 251
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About this Author

Eric Troutman Class Action Attorney
Of Counsel

Eric Troutman is one of the country’s prominent class action defense lawyers and is nationally recognized in Telephone Consumer Protection Act (TCPA) litigation and compliance. He has served as lead defense counsel in more than 70 national TCPA class actions and has litigated nearly a thousand individual TCPA cases in his role as national strategic litigation counsel for major banks and finance companies. He also helps industry participants build TCPA-compliant processes, policies, and systems.

Eric has built a national litigation practice based upon deep experience, rigorous...

213-689-6510
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