It appears that courts have found a way to try to keep class actions alive even where traditional damages claims do not satisfy the stringent standard for class certification. Specifically, recent California federal court decisions in class action litigation reflect a seeming willingness to certify classes for purposes of injunctive relief when damages claims do not qualify for class treatment. While it used to be that a defendant could escape financial exposure by showing that damages determinations involved individual issues, class action plaintiffs’ lawyers are now including injunctive relief claims and seeking to certify those classes under a purportedly much lower standard. The decisions to certify injunctive relief classes force the defendants to continue to defend a class action even where damages cannot be pursued on a class basis. The increased certification of injunctive relief classes highlights the importance to defendants of developing strategies to attack injunctive relief claims at the class certification stage and on the merits.
Just last week in Adkins v. Facebook, the Northern District of California certified an injunctive relief class in a putative class action arising out of a data breach where the plaintiff sought injunctive relief on behalf of a “worldwide” class of as many as 29 million Facebook users. Meanwhile, the Court denied class certification on the plaintiff’s proposed damages theory of credit monitoring costs because the plaintiff had never paid any money as a result of the data breach. The Court further rejected the plaintiff’s proposed theory of damages based on the diminished value of personal information as overly speculative. The fact that the case remains as a class action even though no damages can be pursued on a class basis is a lifeline to the plaintiffs and especially their lawyers.
The recent divergence reflected in Adkins between injunctive relief and damages decisions at the class certification stage results from the higher standard that Federal Rule of Civil Procedure 23 imposes for certifying damages classes compared to classes for injunctive relief. Plaintiffs seeking injunctive relief on a class-wide basis must meet the requirements of numerosity, commonality, typicality and adequacy but, unlike plaintiffs seeking to certify damages classes, they need not show that common questions of law and fact predominate over individual issues.
In another Northern District of California case decided in March, Buckeye Tree Lodge v. Expedia, the court certified a Rule 23(b)(2) injunctive relief class based on a narrowed version of the plaintiffs’ proposed class definition but denied class certification on damages based on this distinction. The plaintiffs in that case alleged that Expedia engaged in false advertising under the Lanham Act by falsely suggesting that hotels were “sold out” when in reality those hotels were not Expedia partners and could not be booked through that platform at all. The court rejected the plaintiffs’ damages theory seeking disgorgement of the profits Expedia made through the alleged false advertising, finding that the hotels failed to offer a theory of how those damages would be estimated such that they could not establish the predominance necessary for certification of a damages class.
However, the court found that the plaintiffs had established common questions of fact and law that would generate common answers as to those properties that could not be booked with Expedia but were listed on its website as sold out. The court reasoned that, if it ultimately found Expedia’s messaging to be misleading, injunctive relief such as an order requiring Expedia to communicate more clearly when it did not have the power to book rooms at a given hotel would uniformly benefit the members of the class.
Another court in the Northern District reached a similar conclusion in August 2019 in a putative antitrust class action, Sidibe v. Sutter Health. That court denied without prejudice the plaintiffs’ motion to certify a damages class because the plaintiffs had not shown that “issues of antitrust injury and damages are subject to common proof such that certification of a damages class under Rule 23(b)(3)” was appropriate. In doing so, the Court found that the plaintiffs met the requirements for Rule 23(b)(2) certification of an injunctive and declaratory relief class, noting that injunctive relief may still be available on a class-wide basis even where some class members suffered no injury or different injuries than other class members. While this seems to fly in the face of the stated purpose of a class action, because the plaintiffs sought a single injunction barring the alleged anticompetitive behavior, the Court found that they met the requirement for certifying a Rule 23(b)(2) class, notwithstanding the individualized issues.
Yet another Northern District case cited in Sidibe -- Ang v. Bimbo Bakeries USA -- similarly denied class certification of damages claims in a food labeling class action but certified an injunctive relief class. The Ang court found that class certification of damages claims under Rule 23(b)(3) would be improper because the plaintiffs’ alleged damages could not be calculated on a class-wide basis. However, the court found that the individual damages issues did not preclude certification of a class seeking injunctive relief, even though the labeling claims and products were different, as were the ways in which consumers regarded those claims.
These decisions reflect a trend of successes for companies defending against class actions involving individual issues of damages. However, they also demonstrate the importance of developing strategies to address the certification of putative injunctive relief classes. In particular, these cases raise the question of whether voluntary changes to conduct can moot requested class-wide injunctive relief, with the potential result of resolving an entire case when only a Rule 23(b)(2) class is certified. The Adkins court rejected Facebook’s argument that it had fixed the bug causing the data breach so that injunctive relief was improper, finding that “repetitive losses of users’ privacy” created a risk of future harm. By contrast, the Ang court acknowledged that changes had been made to the allegedly misleading labels at issue and recognized that “a showing of irrefutable and total cessation of the challenged conduct . . . may be grounds for a decertification motion.” Companies defending against injunctive relief class claims should consider mootness arguments in challenging class certification or the merits of any injunctive relief sought. Otherwise, defendants can count on the plaintiffs lawyers to use the certification of an injunctive relief class to serve as the basis for a significant attorneys’ fee award.