Unresolved in Tyson, uninjured plaintiffs issue back to SCOTUS on Friday

March 24, 2016

(Reuters) – With class action lawyers on both sides wondering exactly how the death of Justice Antonin Scalia will affect the U.S. Supreme Court’s appetite for class action issues, the justices will consider three notable class action certiorari petitions at their conference Friday.

In Procter & Gamble v. Rikos, the court has another chance to review the proper standard for ascertaining class membership, an issue it declined to hear a few weeks ago in Direct Digital v. Mullins. Odds are way against a cert grant in this one, considering that Direct Digital created the circuit split P&G relies upon and the court didn’t take that one; moreover, the lawyer who fended off the Direct Digital cert petition, New York University law professor Samuel Issacharoff, is also counsel of record to the class in the P&G case.

The justices will also consider two cert petitions that had been on hold until the court issued a ruling in Tyson Foods v. Bouaphakeo: Wal-Mart v. Braun and Wells Fargo v. Gutierrez. As my ever-sharp Reuters colleague Lawrence Hurley noticed, both Wal-Mart and Wells Fargo submitted post-Tyson briefs explaining why the Supreme Court should use their cases to refine their Tyson precedent. Gibson Dunn & Crutcher, which represents Wal-Mart in its bid for review of a $187 million wage-and-hour judgment in Pennsylvania, argued that the class action plaintiffs in its case could not have met the test for statistical evidence the Supreme Court laid out in its Tyson opinion. Perhaps, but it seems likelier the justices would remand the case for reconsideration in light of Tyson than grant cert to Wal-Mart.

Wells Fargo, however, claims in its new brief that its case poses exactly the question the Supreme Court did not reach in Tyson: Can a class be certified if it contains class members who haven’t been injured and do not have standing under Article III of the Constitution? As I wrote this week, the justices thought they’d be able to answer that question when they originally granted certiorari in the Tyson case but Tyson shifted its arguments in merits briefing. Even the six justices who sided with the plaintiffs in Tyson said the issue of uninjured class members remains one of “great importance.”

Wells Fargo’s counsel of record at Covington & Burling said the justices can clear up any remaining confusion by granting cert in this case, which involves a $203 million judgment for Californians who alleged the bank violated California state consumer laws by misrepresenting its overdraft fee policies. “Respondents never presented individual or class-wide evidence establishing that, as a result of the misrepresentations, absent class members incurred overdraft fees that they otherwise would have avoided,” the new brief said. “This case therefore presents the fundamental question that was not fairly presented in Tyson Foods: whether a person who would be entitled to no relief in an individual action can receive a monetary award as an absent member of a class action.”

The class that won the huge judgment against Wells Fargo is represented at the Supreme Court by NYU prof Issacharoff (yes, him again!), who told me via email that his side believes its previous briefs at the Supreme Court already show the fallacy of the bank’s argument about supposedly uninjured class members. (I should mention that Lieff Cabraser Heimann & Bernstein was class counsel in the lower courts.)

According to the class, the trial court and the 9th Circuit have already said every member of the class was, in fact, injured under the relevant California law, so the bank’s “uninjured plaintiff” argument is utterly unfounded.

“It is impossible to reconcile the repeated – and unfounded – premise of uninjured class members underscoring every point of the (Wells Fargo) petition with the trial evidence that the fraudulent statements at issue were directed to the entire class of Wells Fargo debit card customers,” the class cert opposition brief said. “Moreover, this is not a case where uninjured persons stand to recover money to which they are not entitled, as Wells Fargo disingenuously implies, or where the proof of harm relies on a statistical abstraction. Rather, plaintiffs were able to prove, account by account, using the individual transaction histories for each and every checking account, exactly which customers were harmed in the form of unexpected overdraft fees, and by how much.”

Wells Fargo has responded that the California consumer law at the heart of the case excused absent class members from proving their injury or their reliance on the bank’s supposed misstatements, putting at issue their constitutional standing to assert federal court claims.

We’ll soon find out if the justices consider that a red herring or shark bait.

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