X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Linda S. Mullenix holds the Morris and Rita Atlas Chair in Advocacy at the University of Texas School of Law. She is the author of State Class Actions: Practice and Procedure (CCH 2000). She can be reached at [email protected]. Courts agree that there are at least three implicit requirements for class certification in addition to the requirements set forth in rules 23(a) and 23(b). These include: (1) that the plaintiff pleads an appropriate class definition; (2) that the class representative be a member of the class; and (3) that the proposed class satisfies jurisdictional and justiciability requirements. Some courts view the second implicit requirement as a question of standing, while other courts view standing as a question of jurisdiction or justiciability. Some courts view standing as a question of the adequacy of the class representative, because a representative who lacks standing cannot adequately represent the class. However viewed, standing is one of the most established principles of federal class action jurisprudence. Pre-’Ortiz,’ standing was a threshold for class action Prior to the Supreme Court’s decision in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), many courts viewed the standing issue as a threshold issue for class certification. Hence, a plaintiff’s lack of standing at the time the class action was filed deprived the court of subject matter jurisdiction over the plaintiff’s individual claims and over the plaintiff’s claims on behalf of the class. Challenges to standing could be raised prior to class certification, at class certification or at any other time. In addition, courts could raise the standing issue sua sponte. In the strategic jockeying that accompanies class certification, class counsel unexpectedly were handed a strategic boon in the court’s 1999 Ortiz decision. In Ortiz, the court indicated that: “the class certification issues are . . . logically antecedent to Article III concerns, and themselves pertain to statutory standing, which may be treated before Article III standing. Thus the issue about Rule 23 certification should be treated first.” Ortiz, 527 U.S. at 831. This single sentence in Ortiz has caused a great deal of mischief. Strategically, it has always been to the defendant’s advantage to challenge the plaintiff’s standing prior to certification. If the defendant prevailed, the class action would be dismissed. Cf. Jackson v. Resolution GGF Oy, 136 F.3d 1130 (7th Cir. 1998). If class counsel wished to pursue the class action, counsel would need to find a class representative with proper standing. Consequently, class counsel seek to deflect, defer or prevent a court’s consideration of standing until after class certification, because counsel gain a strategic advantage merely by having the court certify the action. Thus, after the Ortiz decision, class counsel now routinely invoke the court’s “logically antecedent” language to argue that courts should not consider standing challenges prior to determining class certification. The plaintiff’s invocation of Ortiz has correlatively caused defendants a great deal of frustration if courts agree to postpone consideration of standing, to evaluate class certification and actually to certify a class. Did the Supreme Court in Ortiz intend courts to defer consideration of standing issues until after class certification? The Ortiz language has inspired some muddled and confused applications. See, e.g., Lopez-Flores v. Resolution Trust Corp., 93 F. Supp. 2d 834, 838 n.12 (E.D. Mich. 2000). Moreover, lower federal courts have not consistently construed or applied the Ortiz language. Nonetheless, some courts have applied Ortiz to prevent consideration of standing challenges prior to class certification, while other courts have repudiated this approach. At least one federal circuit-the 5th U.S. Circuit Court of Appeals-has characterized the Ortiz language as creating an exception to be applied in limited circumstances. See Rivera v. Wyeth-Ayerst Laboratories, 283 F.3d 315, 319 n.6 (5th Cir. 2002). Some lower federal courts have agreed with contentions that the Ortiz “logically antecedent” language prevents review of standing challenges prior to the class certification decision. See, e.g., In re Pharmaceutical Industry Average Wholesale Price Litig., 2003 WL 21108371, 18 (D. Mass. May 13, 2003); In re Busiprone Patent Litig., 185 F. Supp. 2d 363, 377 (S.D.N.Y. 2002); Salsitz v. Peltz, 210 F.R.D. 95, 97 (S.D.N.Y. 2002). In the Pharmaceutical Industry litigation, the defendants challenged the standing of the class representative, who had purchased one drug from a specific defendant company, to represent a class of other claimants who had purchased different drugs from the same company. Invoking the Ortiz “logically antecedent” language, the Massachusetts district court declined to consider the defendants’ standing challenge, concluding that “those allegations fit better into the juridical linkage claim, and the issue will be decided at a later stage in the litigation.” Pharmaceutical Industry, id. Similarly, in the Busiprone Patent litigation, a New York district court declined to consider a standing challenge, on the defendant’s motion to dismiss prior to class certification, based on Ortiz. The defendant, Bristol-Myers Squibb Co., argued that certain “End-Payor” plaintiffs lacked standing to assert state law antitrust and unfair competition claims against the defendants on behalf of Buspar purchasers nationwide, because the plaintiffs only alleged to have purchased Buspar in 15 states. The defendant argued that these plaintiffs lacked standing to raise claims under the laws of the other states. The court declined to consider the standing challenge. Noting that the parties currently were briefing the class certification motions, the court indicated that “these alleged problems of standing will not arise unless class certification is granted.” Busiprone, id. After considering the possible consequences of the class certification process, the court further concluded: “In these circumstances, it is appropriate to decide class certification before resolving alleged Article III challenges of the present kind. See e.g., Ortiz v. Fibreboard.” Busiprone, id. A number of federal courts, however, have rejected the notion that Ortiz set forth a per se deferral rule for determining standing challenges. Both the 7th and 5th circuits have suggested a more nuanced approach to construing the court’s meaning in Ortiz concerning the appropriate timing of a standing challenge. The leading 7th Circuit case to consider the Ortiz language is Payton v. County of Kane, 308 F.3d 673 (7th Cir. 2002). In Payton, a lawsuit over county bond fees, the court was asked to determine if the plaintiff-ar-restees had standing to represent a class against 17 additional counties. The court “began its analysis with the question of class certification, mindful of the Supreme Court’s directive to consider issues of class certification prior to the issues of standing.” Payton, 308 F.3d at 680. The 7th Circuit nonetheless closed with a few observations on the Ortiz language. Thus, the court clarified that “[w]e understand Ortiz to rest on the long-standing rule that, once a class is properly certified, statutory and Article III standing requirements must be assessed with reference to the class as a whole, not simply with reference to the individual named plaintiffs.” Payton, id. The 7th Circuit’s distinction is important, because it distinguished between evaluation of the class representative’s individual standing (permissible before class certification) and evaluation of class standing (after class certification). The 5th Circuit has not construed the Ortiz “logically antecedent” language restrictively to prevent or defer consideration of standing challenges until after class certification. See Ford v. NYLCare Health Plans of the Gulf Coast, 301 F.3d 329, 333 (5th Cir. 2002); Rivera v. Wyeth-Ayerst Labs., supra; and James v. City of Dallas, 254 F.3d 551, 562 (5th Cir. 2001). Rather, the 5th Circuit also has distinguished between the class representative’s standing and the class’s standing. Thus, the 5th Circuit views the Ortiz language as creating a “limited exception.” The 5th Circuit has indicated that the crucial inquiry is whether the standing issue would exist whether the plaintiff filed the claim alone or as part of a class. If the standing issue would exist for the plaintiff filing the claim alone, then the class representative’s standing legitimately may be challenged prior to class certification. In other words, the crux of the problem is whether class certification itself raises the jurisdictional issue. See Rivera, 283 F.3d at 319 n.6. In both Rivera and Ford, the 5th Circuit found the Ortiz “exception” not to apply, and permitted consideration of standing challenges. 5th and 7th circuits agree on ‘Ortiz’ language Other federal courts, following the 5th and 7th circuits, have similarly concluded that the Ortiz language does not restrictively foreclose consideration of standing issues prior to class certification, but requires instead a careful analysis of standing issues. For example, a New Jersey district court recognized the Ortiz “exception,” and applied that exception to permit precertification evaluation of some class representatives, but to foreclose precertification challenge as to others. See Clark v. McDonald’s Corp., 213 F.R.D. 198, 204-05 (D.N.J. 2003). Yet other federal courts have permitted precertification consideration of standing challenges, notwithstanding the Ortiz language, based on other grounds. See, e.g., Dunden v. Firstplus Bank, 2002 WL 1155325, 2-3 (S.D. Ill. April 29, 2002). Thus, an Illinois district court permitted a precertification standing challenge where the issue involved the plaintiffs’ ability to state a claim on which relief could be granted against nonrelated defendants, much like an inquiry under Fed. R. Civ. P. 12(b)(6). Id. Finally, in a series of decisions, a Tennessee federal court has denied that the Ortiz language prevents it from considering standing issues prior to class certification. “[T]his court sees no reason why it should address class certification issues, which are not even [currently] before it, before addressing whether plaintiffs have standing against the defendants.” See Berry v. GMAC-Residential Funding Corp., 2002 WL 179779, 9 n. 11 (W.D. Tenn. July 31, 2002); accord, Brooks v. Terra Funding, 2002 WL 1797785, 19 n.10 (W.D. Tenn.); Street v. PBS Lending Corp., 2002 WL 1797773, 13 n. 12 (W.D. Tenn.).

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.