Non-injury class actions don’t belong in federal court

California often marches to the beat of a different drummer. This is certainly true of the state’s Unfair Competition Law (UCL), which stands as an open invitation to plaintiffs with trivial and even nonexistent injuries to bludgeon the last businesses remaining in the state with profitable “consumer protection” lawsuits. The state’s voters tried to check this legislative gift to trial lawyers by passing Proposition 64, which requires plaintiffs suing under the UCL to show they’ve actually suffered some injury. But in a 2009 case called The Tobacco II Cases, the state high court eviscerated that standing requirement by allowing noninjured members of a purported class to be represented by a single lead class member who can demonstrate some injury. (PLF’s brief in that case is here).

As we noted just a few days ago, these non-injury class action lawsuits are a growing trend in American courts, and California in particular is suffering from the pro-lawyer, anti-business consquences of these kinds of cases and the laws—like the UCL—that permit them. 

We argued in the Toyota case that Article III of the federal Constitution prevents California’s extremely broad standing doctrine from infecting the federal judiciary, but courts are divided as to whether a statute can generate Article III standing by itself. The Supreme Court is considering this question right now in First American Financial Corp. v. Edwards (PLF’s brief is here). But a new case out of the Ninth Circuit, Ticketmaster v. Stearns, presents the same question in the context of a state statute: California’s UCL.

The Ninth Circuit invoked Tobacco II to hold that the UCL does not require unnamed class members to show standing, and therefore neither should federal courts. That decision stands in total contrast to an Eighth Circuit decision, also considering the effect of Tobacco II on federal standing requirements, and only the U.S. Supreme Court can resolve that question.

PLF is now urging the justices to review this case, which would have the potentially devastating consequence of permitting noninjured plaintiffs to group themselves into a class as long as the single named plaintiff can demonstrate an injury.

Just as representative plaintiffs may not bootstrap their own standing from the alleged injuries to unnamed class members, so to the converse should be true: unnamed plaintiffs who lack standing may not act parasite off the standing that a representative plaintiff has. Certainly class certification cannot give people a right to relief in federal court that the Constitution would have denied to them if they had sued individually. The Ninth Circuit’s decision opens the door to the federal courts wide for this type of gross misuse of the justice system. And if allowed to stand, that decision could decimate the already ailing economy of California—and the nation.