Your phone buzzes and lights up. Glancing down, you see a text: “One time only sale, 20% off. Reply STOP to stop messages.” You reply “STOP” and receive no more texts. Later, a class action is filed against the company that sent that text for violating a federal telecommunications law, and the parties agree to a settlement. You receive notice that you may be a class member entitled to a part of the settlement. But your ability to benefit may depend on the standing law of the circuit court where the case was filed. Recently, in Drazen v. Pinto,1 the Eleventh Circuit held that it would certify a class for settlement only if all class members — named and unnamed — could establish Article III standing in the Eleventh Circuit.2 In doing so, the court built on Spokeo, Inc. v. Robins3 and TransUnion LLC v. Ramirez,4 which together require absent class members to have standing before receiving post-trial damages.5 Extending this trend, the Eleventh Circuit was the first circuit to hold that absent class members need standing to participate in settlement.6 At best, this holding will produce piecemeal litigation, forum shopping, and uncertainty about how to define a class. At worst, this holding could threaten the future of nationwide class actions.
GoDaddy.com “is one of the world’s largest domain registrars.”7 To market its services, GoDaddy collected cell phone numbers from customers and used third-party software to send marketing texts and phone calls to approximately 1.2 million customers between 2014 and 2016.8 In August 2019, one of these customers — Susan Drazen — filed a class action against GoDaddy in the Southern District of Alabama, alleging the company had violated the Telephone Consumer Protection Act9 (TCPA) by calling or texting class members using an automatic telephone dialing system (ATDS).10 Drazen’s case was consolidated with two similar cases.11
The three named plaintiffs defined the class as: “All persons within the United States who received a call or text message to his or her cellular telephone from Defendant . . . .”12 The plaintiffs negotiated with GoDaddy and agreed to a proposed $35 million class settlement with two compensation options for each class member: $35 in cash or a $150 GoDaddy voucher.13 They submitted this settlement to district court Judge DuBose for approval.14 Judge DuBose counseled the parties to narrow the class definition,15 and the parties complied, specifying that class members must have received texts or calls from an ATDS.16 Meanwhile, the Eleventh Circuit decided Salcedo v. Hanna,17 which held that receiving a single text was not a concrete injury and did not establish standing.18 Combining Salcedo with Cordoba v. DIRECTV, LLC,19 which held that named plaintiffs must establish standing,20 Judge DuBose ordered one of the named plaintiffs to be removed because he had received only one text.21 Judge DuBose then approved the revised class definition.22 She acknowledged that about seven percent of (or ninety-one thousand) of absent class members had received only a single text,23 but reasoned that other circuits considered even one text message enough to establish standing.24 Quoting from the Fifth Circuit decision In re Deepwater Horizon,25 Judge DuBose concluded that GoDaddy was “entitled” to settle these related but (in the Eleventh Circuit) meritless claims because Drazen was a nationwide settlement.26 Judge DuBose certified the class and preliminarily approved the settlement.27 Class counsel moved for thirty percent of the settlement as attorneys’ fees,28 and Judge DuBose granted twenty-five percent fees.29 Class member Juan Pinto objected that the court awarded fees too early and that the settlement failed to calculate fees in accordance with coupon requirements in the Class Action Fairness Act of 200530 (CAFA).31 Judge DuBose approved the settlement, reducing attorneys’ fees to twenty percent of the common fund and concluding that CAFA coupon requirements did not apply.32 Pinto timely appealed.33
The Eleventh Circuit vacated and remanded.34 Writing for a unanimous panel, Judge Tjoflat35 sua sponte held that the class did not have standing and remanded to allow revision of the class definition.36 The panel began by quoting Spokeo, which held that a plaintiff does not have standing simply because “a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.”37 Citing Frank v. Gaos,38 Judge Tjoflat noted the distinction between non-class litigation and class actions — because Rule 23(e) of the Federal Rules of Civil Procedure requires a court to approve a class action settlement, all named plaintiffs must have standing.39
The panel then reached another “lodestar principle that guide[d] [its] analysis,” which consisted of two takeaways from TransUnion: (1) a plaintiff “must demonstrate that history and the judgment of Congress support a conclusion that there is Article III standing,”40 and (2) “[e]very class member must have Article III standing in order to recover individual damages.”41 Judge Tjoflat concluded that the logic of TransUnion — a class action that went to trial — should also apply to Drazen — a settlement-only class action.42 To support this conclusion, Judge Tjoflat highlighted that the district court had breezed over Cordoba’s holding that absent class members must have standing to receive relief.43 Judge Tjoflat next discussed how this reasoning merged with TransUnion, driving the panel’s conclusion that all class members in a settlement-only class action must have standing.44 Judge Tjoflat rounded off this point by criticizing the District Court’s contention that In re Deepwater Horizon would allow absent class members with no Eleventh Circuit standing to have standing in a settlement-only class action because they might have standing in another circuit as part of a “nationwide class.”45 Judge Tjoflat emphasized that In re Deepwater Horizon merely held that before settlement, absent class members did not need to prove the merits of their claims — a concept distinct from standing.46
Judge Tjoflat concluded that the absent class members who had received a single text had not established a concrete injury required for standing in the Eleventh Circuit.47 The panel added that the “more difficult question” was whether a single cell phone call would confer standing.48 The panel remanded for a new class definition and briefing on the “common-law analogue” for the injury of a cell phone call.49
While the Eleventh Circuit logically extended precedent in reaching this result, this holding presents yet another hurdle for nationwide class actions. Drazen is consistent with the Supreme Court’s reasoning in Spokeo and TransUnion, continuing the trend of tightening standing constraints for class actions. However, Drazen will likely produce negative results for nationwide class actions, including piecemeal litigation, forum shopping, and uncertainty about how to define a class.
Spokeo and TransUnion raise the bar for standing in class actions, and Drazen follows as a logical extension of these cases.50 In analyzing a violation of the Fair Credit Reporting Act51 (FCRA), the Spokeo Court concluded that a statutory right to sue does not create automatic standing.52 TransUnion added that plaintiffs should identify “a close historical or common-law analogue for their asserted injury”53 and required every class member to have standing.54 By adding these constraints, TransUnion has the potential to declaw federal statutory rights that do not match a close historical or common law analogue.55
Drazen continues this trend as a logical extension of Spokeo and TransUnion.56 Like the Court in Spokeo, the Eleventh Circuit in Drazen concluded that a violation of a statute (the TCPA) did not create an automatic injury.57 And although TransUnion involved litigation (unlike Drazen’s settlement-only class action), both cases involved an Article III court reaching a binding determination. Just as the award of damages was a binding determination in TransUnion, the district court’s approval of the settlement in Drazen was a binding determination because it barred absent class members from negotiating outside of the court-approved settlement.58 Article III imposes standing limits whenever courts employ their judicial authority to resolve “Cases” and “Controversies,”59 which logically includes these kinds of binding determinations. The panel also correctly rejected the district court’s reasoning that In re Deepwater Horizon would allow absent class members standing by virtue of more lenient standing law in other circuits.60
Although consistent with precedent, the panel’s holding will produce piecemeal litigation, forum shopping, and uncertainty about how to define a class. First, this ruling will incentivize piecemeal litigation. In Drazen, GoDaddy and the district court estimated that ninety-one thousand absent class members would not have standing in the Eleventh Circuit but might have standing in the Ninth or Second Circuits, which could result in at least one near-identical class action.61 Further, the panel focused on the TCPA circuit split, but it is worth emphasizing that no other circuit has yet held that absent class members need standing to participate in settlement.62 This means named plaintiffs could choose to file in other circuits either because of a lenient definition of injury or a lenient requirement for standing. Additionally, there could be multiple circuit splits affecting a single class action.63 Piecemeal litigation hurts plaintiffs — particularly small claims plaintiffs — because it erases the central benefit of the class action: pooling resources to allow small claims plaintiffs to recover where recovery would not otherwise be feasible.64 Piecemeal litigation also hurts defendants, as it prevents a party from achieving global resolution from a single settlement.65
Second, forum shopping will probably increase after this ruling. Class action plaintiffs’ lawyers will file in favorable circuits whenever a circuit split impacts the standing of absent class members. These splits occur often,66 and the Supreme Court rarely resolves them.67 Cases that tighten requirements for class certification may increase forum shopping more than the mere existence of a circuit split.68 Drazen (especially if extended to other circuits) could also lead to irregular class action filing patterns, with circuits like the Ninth managing a flood of TCPA litigation due to their more lax standing definitions.69 Another possibility is that parties to these class actions will consent to file in state courts given pared-down standing requirements.70 State courts, however, are ill-equipped to handle a nationwide class action, as Congress recognized in passing CAFA.71
Third, this ruling will exacerbate uncertainty about how to define a class. Standing is a notoriously unclear doctrine.72 While class actions were created to minimize transaction costs,73 TransUnion increased transaction costs by requiring plaintiffs to plead standing for the whole class before awarding damages.74 Drazen went further, concluding that even when two parties agree to a settlement, they must decipher standing doctrine before they can seal the deal.75 Drazen itself illustrates how its heightened standing requirements increase transaction costs by adding uncertainty. For example, the Eleventh Circuit never indicated how many text messages or calls to a cell phone were enough to establish standing, and only vaguely asserted that “a single unwanted text message is not sufficient.”76 The Eleventh Circuit’s closing direction that plaintiffs “redefine the class with the benefit of TransUnion and its common-law analogue analysis” did little to offer further clarity.77 On remand, parties must internalize this transaction cost of uncertainty as they rework the class definition to fit standing requirements.
In addition to these three probable consequences of Drazen, this holding could threaten nationwide class actions more generally if extended to other circuits.78 Drazen is law only in the Eleventh Circuit, but it could portend a body of post-TransUnion standing law that further constricts the ability of class members to find relief and of defen-dants to settle global claims once and for all. In any event, Drazen reflects the reality that nationwide class actions face an uncertain future.