Under Article III of the Constitution, federal courts may only adjudicate actual “Cases” or “Controversies.” Plaintiffs must therefore establish standing to invoke a court’s jurisdiction.1 This requirement applies with equal force to class actions,2 where defendants challenging class certification have increasingly argued that plaintiffs lack standing to bring suit.3 Courts address these standing challenges in two ways. Some consider only the named plaintiffs in standing analysis.4 Others mandate that a class must be defined such that all class members — including those not before the court — could have individual standing to bring the suit.5
Recently, in In re Deepwater Horizon,6 the Fifth Circuit faced the question of which standing test to adopt. Rather than choosing which method “articulate[s] the correct test,”7 the Fifth Circuit avoided the question altogether by applying both approaches and reaching the same result. In so doing, the decision demonstrates that the practical difference between the two standing analyses is much narrower than their theoretical dichotomy. As it turns out, the seemingly conflicting tests rarely lead to divergent outcomes in class certification decisions.
In April 2010, oil giant British Petroleum’s (BP) drilling vessel Deepwater Horizon exploded, spilling millions of barrels of oil into the Gulf of Mexico.8 Businesses and individuals brought a class action against BP for the resulting damages.9 By April 2012, BP agreed to an amended class action complaint and proposed settlement, which the district court preliminarily approved.10 Pursuant to the terms of the agreement, the court appointed a Claims Administrator to oversee the settlement program.11 While the Administrator began reviewing initial claims, BP and the plaintiffs moved for final approval and certification of the class.12 Despite objections from some class members,13 the district court certified the class and approved the settlement agreement on December 21, 2012.14 The objectors appealed.15
Although BP had originally supported the settlement approval, on appeal it joined the objectors in opposing the settlement.16 BP reversed its position after the Claims Administrator issued unfavorable interpretations of the settlement agreement following the district court’s final approval. BP argued that the settlement agreement as interpreted by the Claims Administrator allowed class members who had not in fact been injured by the spill to claim against the company.17
On first hearing the case, the Fifth Circuit reached no agreement on the issue of standing, instead remanding the case on contractual interpretation grounds.18 Judge Clement, writing only for herself on this point, maintained that standing concerns precluded certification: because the class included absent members who had not been harmed by BP, it violated Article III.19 Judge Southwick concurred with the result, but did not join Judge Clement’s discussion of standing doctrine, in part because there was “no briefing on the constitutional issues” implicated.20 Judge Dennis concurred in part and dissented in part,21 arguing that only named plaintiffs need be considered when assessing standing in the Rule 23 context.22 On remand, the district court issued a new ruling in accordance with the Fifth Circuit’s instructions, but still certified the class and approved the settlement agreement as interpreted by the Claims Administrator.23 BP once again appealed.24
On this appeal, a different panel of the Fifth Circuit affirmed the class and settlement approval outright. Writing for the majority, Judge Davis25 “resolve[d] the Article III question as a threshold matter of jurisdiction” before turning to whether the class could be certified under Rule 23.26 Emphasizing that standing was indeed a critical inquiry,27 Judge Davis explained that courts were split between two approaches to “evaluat[ing] standing for the purposes of class certification and settlement approval.”28 The first approach — supported by three U.S. Supreme Court Justices concurring in Lewis v. Casey,29 several circuits,30 and a leading treatise31 — looks only to the named plaintiffs: so long as the named plaintiffs have standing, so too does the class.32 Judge Davis dubbed this “named plaintiffs only” method the Kohen test after the case most widely cited for that approach.33
He then described the alternative approach, the Denney test.34 Under this analysis, though absent class members need not submit evidence of personal standing, “[t]he class must . . . be defined in such a way that anyone within it would have standing.”35 By Judge Davis’s count, four circuits have applied Denney.36
After describing the two approaches, Judge Davis opined that choosing between Kohen and Denney would be no “simple task . . . based on th[e] roughly even split of circuit authority.”37 He discussed Fifth Circuit precedent that seemed to adopt Kohen,38 and he acknowledged Judge Clement’s opinion in Deepwater Horizon I, which “applied the Denney test.”39 But, because “[w]hichever test [was] applied,” BP’s standing argument failed,40 Judge Davis ruled that the case was “not a vehicle” for choosing between Kohen and Denney.41
To prove that both tests reached the same result, Judge Davis first applied Kohen and found that certification was appropriate because the named plaintiffs indisputably had standing based on their alleged injuries caused by BP.42 He then turned to Denney, where he came to “the same conclusion.”43 Because the class was defined such that claimants must have experienced “[l]oss of income, earnings or profits . . . as a result of the DEEPWATER HORIZON INCIDENT,”44 the standing inquiry ended: all those who had claims might have been injured by the oil spill. Though a “stricter evidentiary standard might reveal persons or entities” who received payment without injury caused by BP,45 Denney in itself did not preclude certification.
Having addressed standing, the court next turned to the Rule 23 arguments of BP and the objectors, which were “based on the same central premise discussed above in the context of Article III — that a class cannot be certified when it includes persons who have not actually been injured.”46 Judge Davis explained why Rule 23’s commonality and ascertainability requirements did not preclude certification47: assertions that the class contained uninjured plaintiffs spoke to the merits of class members’ individual claims rather than the class’s cohesiveness under Rule 23.48 Thus, Judge Davis proceeded to affirm the district court’s class certification and settlement approval.49
Judge Garza dissented. Highlighting that “Rule 23’s requirements must be interpreted in keeping with Article III,”50 Judge Garza would have applied the Denney test outright and reached a different conclusion.51 He disagreed with the majority’s understanding of how the settlement agreement operated: under Judge Garza’s view the Claims Administrator’s interpretation of the settlement agreement had rendered any causation requirement void.52 He also felt that the class fell short of Rule 23’s commonality requirements because not all absent class members had suffered the same injury at the hands of BP.53 Because the Claims Administrator had eliminated causation “for a broad swath of the class,” Judge Garza would have decertified the class.54
Deepwater Horizon presented the Fifth Circuit with a choice not uncommon in federal courts: whether Kohen or Denney provides the appropriate standing inquiry for class certification.55 According to several dissenting judges on the Fifth Circuit who voted in favor of rehearing the case en banc, “deep confusion” on the “essential, constitutional” issue of class standing requires intervention from the Supreme Court.56 The results of this “confusion” theoretically could be significant: if plaintiffs lack standing, a court lacks the jurisdiction to even entertain a suit.57 But by reaching the same result under both tests, Deepwater Horizon illustrates that any theoretical distinction between the tests makes little difference in terms of the substantive outcome. Indeed, the case exemplifies a broader pattern within class action standing litigation: even under Denney, the result of a certification in the case is almost invariably the same as under Kohen.58
For the courts that have considered class action standing, in fact, the standing inquiry has rarely proven singularly dispositive of the certification decision.59 Of the hundreds of cases that quote Denney or its progeny discussing absent class member standing,60 a full review reveals that fewer than five have actually refused to certify a proposed class on standing grounds alone.61 Thus, in practice Denney has almost never created a different substantive outcome than Kohen.
Denney rarely reaches a different substantive outcome than Kohen for two reasons. First, Denney sets a low evidentiary threshold: the class definition need only include those who may allege a colorable injury.62 Thus, to fail Denney’s standing inquiry, a class must by its definition include absent members who could not possibly have been injured by the defendant’s conduct.63 Denney itself exemplifies how forgiving that evidentiary standard is: the case actually upheld certification of the class at issue despite noting that some class members may only potentially have suffered injury.64 Given Denney’s low evidentiary bar, courts applying the test have consistently found the standing requirement satisfied despite the potential of uninjured class members.65
Second, concerns regarding cognizable injury manifest themselves regardless of whether the court addresses uninjured class members only via Rule 23 analysis (Kohen), or also under standing doctrine (Denney).66 Rule 23 includes at its core commonality, typicality, ascertainability, and predominance requirements to ensure that only definite classes with cohesive interests and injuries are certified.67 Many courts thus recognize explicitly that even if standing were not problematic, Rule 23 would preclude certification of a class including uninjured members: uninjured plaintiffs do not likely have interests sufficiently cohesive with those suffering cognizable injury as to merit class treatment.68 Other courts have recognized this overlap between Denney and Rule 23 implicitly, merging their standing discussion with their Rule 23 inquiry rather than treating standing as a truly jurisdictional issue.69
Although Denney and Kohen converge on the same substantive result, the choice between tests theoretically could have significant consequences in terms of procedure. Most notably, appellate courts review Rule 23 certification decisions for abuse of discretion but may address standing issues de novo.70 Further, while courts generally will consider only those certification issues brought by the parties on appeal, standing issues are jurisdictional and thus may be considered sua sponte.71 Thus, while Denney has not yet significantly impacted decisions, its increased adoption may inspire more aggressive application with consequences for appellate review of certification decisions.72
But despite these potential distinctions, Deepwater Horizon reveals that the practical difference between Denney and Kohen has not been as wide as may seem at first blush. Because Denney sets a low evidentiary threshold, and because Rule 23 is equipped to handle questions of class cohesion, the Denney test essentially merges a jurisdictional challenge with Rule 23 inquiries. In practice, Denney has merely given defendants another legal doctrine under which to make the same substantive claim. While many have called for clarification on the appropriate inquiry,73 for the time being lower courts may well consider the choice as largely academic.