While the U.S. Court of Appeals for the Fourth Circuit’s recent class action decision in Trauernicht v. Genworth Financial Inc., No. 24-1880, – F.4th –, 2026 WL 667917 (4th Cir. Mar. 10, 2026), involves an ERISA retirement plan, the decision is useful well beyond that context. The decision highlights that: (1) mandatory (no opt-out) classes are improper for individualized monetary claims; and (2) the commonality requirement is not satisfied by broad labels or generalized theories, particularly where the proposed class includes people who were not harmed.

In Trauernicht, two former employees sued Genworth Financial as sponsor of a defined contribution retirement plan, commonly called a 401(k) plan. The plaintiffs alleged fiduciary breaches in selecting and retaining BlackRock LifePath Index Funds as part of the plan, claiming they were imprudent investment options. The district court certified a mandatory class under Federal Rule of Civil Procedure 23(b)(1) comprised of plan participants and beneficiaries whose accounts were invested in the BlackRock funds during the class period. The district court focused on the nature of the claim under section 502(a)(2) of the Employee Retirement Income Security Act (ERISA), concluding that, because the claim was “derivative” on behalf of the plan and recovery would go to the plan as a whole, the claim inherently presented common issues.

On appeal, the Fourth Circuit reversed, holding that (1) the damages claims were “individualized monetary claims” and therefore could not be forced into a mandatory Rule 23(b)(1) class, particularly given the lack of opt-out and notice requirements, and (2) the district court erred in treating ERISA fiduciary-duty claims as “inherently” satisfying commonality.

Takeaway 1: If it’s really about money, mandatory classes cannot be certified

Rule 23(b)(1) classes are “mandatory”: class members generally have no opt-out right, and the rule does not require notice, which is required for a damages class under Rule 23(b)(3). The Fourth Circuit focused on the Supreme Court’s guidance in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) that “individualized monetary claims belong in Rule 23(b)(3),” precisely because (b)(3) includes required procedural safeguards of notice and opt-out rights. The court also emphasized the constitutional due process problem when absent class members’ monetary rights are resolved without notice and opt-out.

Takeaway 2: “Representative” labels don’t eliminate individualized injury and remedy questions

ERISA allows a plan participant to sue derivatively on behalf of the plan for a breach of fiduciary that causes losses to the plan. The district court relied heavily on the “derivative” nature of these claims to justify mandatory certification, reasoning that damages “flow to the class in bulk” rather than to individuals.

The Fourth Circuit disagreed, focusing on remedy mechanics in a defined contribution plan: plan assets are allocated to individual accounts, and recovery for a fiduciary breach that impaired a participant’s account would be allocated to the participant’s account based on that account’s losses. That makes the claim functionally an individualized monetary claim in this context. The court distinguished defined contribution plans from defined benefit plans in this respect.

Outside ERISA, the same type of issue can also be decisive. Under this decision, courts need to look past how the cause of action is labeled and consider what has to be proven and how relief would actually be calculated and distributed. If liability or damages turn on individualized circumstances (such as timing, reliance, exposure, mitigation, and offsets), mandatory aggregation becomes much harder to justify.

Takeaway 3: Overinclusive classes with uninjured members are an important certification vulnerability

Genworth Financial argued that many class members suffered no injury. The Fourth Circuit’s opinion suggests that as much as 42% of class members may have fared better in the challenged funds than in other passively managed comparator funds, although this would depend on when they bought and sold particular funds. The Fourth Circuit cited authority recognizing that overinclusive classes can fail commonality because those members do not share the “same injury.”

The district court postponed deciding the parties’ dispute about the appropriate comparator funds “at this juncture,” relying instead on its view that ERISA § 502(a)(2) claims are inherently common in nature. The Fourth Circuit found that to be error, concluding that the district court must do the rigorous commonality analysis and resolve the dispute at certification.

These points matter far beyond retirement plans. Defendants often need to focus on:

  • whether the class definition sweeps in uninjured people;
  • whether the plaintiffs’ theory has a reliable classwide method to separate injured from uninjured class members without mini-trials; and
  • whether injury is truly “the same,” not just a shared allegation that a statute was violated.

Bottom line

Trauernicht is a reminder that class certification requires a rigorous, case-specific showing—and cannot be assumed based on the type of claim. Defendants are likely to rely on this case for (1) why mandatory classes cannot be certified for individualized money claims, (2) why commonality cannot be presumed based on the cause of action alleged or how it is pled, (3) why uninjured class members matter, and (4) why courts must confront key disputes at the certification stage rather than deferring them.

A recent Ninth Circuit decision held that both named and unnamed class members in a class seeking monetary damages must come forward with sufficient evidence of Article III standing at the summary judgment stage—not merely at a later claims or distribution process. This gives defendants a powerful tool in defending class actions after they are certified and before trial.

In Healy v. Milliman, Inc., – F.4th –, 2026 WL 71863 (9th Cir. Jan. 9, 2026), the case arose from alleged inaccuracies in Milliman’s consumer reports used by life insurers in underwriting. The named plaintiff, for example, alleged that he was denied life insurance based on a report that erroneously advised the life insurer that he had serious medical conditions. He brought a putative class action under the federal Fair Credit Reporting Act. The district court initially certified an “inaccuracy class,” defined (in part) by reports showing a mismatch between the applicant’s SSN and the SSN on a data source. Milliman then moved for partial summary judgment, arguing that this SSN-mismatch methodology could not establish classwide standing because it did not prove that the file contained mismatched health information.

The Ninth Circuit had previously held that prior to class certification, only a named plaintiff has to demonstrate Article III standing (an issue that the Supreme Court has declined to address). In Healy, the Ninth Circuit held that the logic of the Supreme Court’s decision in TransUnion LLC v. Ramirez, 594 U.S. 413 (2021) requires unnamed members of a certified class seeking money damages to demonstrate standing at summary judgment. In TransUnion, the Court analyzed the trial record and determined that certain class members had standing and others did not, demonstrating that class member standing is a requirement at least at trial in a damages class action. Given this holding, the Ninth Circuit concluded that in responding to a summary judgment motion, the plaintiffs must demonstrate on behalf of unnamed class members at least a genuine dispute of material fact as to the requirements for standing. While the district court concluded that there was no direct, classwide evidence that the unnamed class members were injured, the Ninth Circuit concluded that standing potentially could be proven with circumstantial evidence, and remanded for the district court to decide whether the evidence was sufficient.

Following this decision, defendants faced with certified class actions in circuits that do not require a showing of class member standing at the class certification stage are likely to raise this issue at summary judgment. Many class actions include class members who are uninjured or not likely to be able to establish an injury-in-fact. A successful challenge to standing at the summary judgment stage of the case can potentially substantially narrow the defendant’s exposure or lead to decertification of the class.

If,  like me, you grew up during (or otherwise lived through) the 1980s, you’ll recall the ever-present jingle “The best part of wakin’ up is Folgers in your cup” (and perhaps some creative modifications thereof by the children and teens of that era). My grandmother preferred Folgers, clipping coupons for it when available, and her kitchen usually smelled of coffee. Sometimes she made a full pot and on other occasions an individual cup. Had she lived to 104, I could have told her about this recent decision of the U.S. Court of Appeals for the Eighth Circuit involving allegations that Folgers misrepresented how many cups of coffee could be made per can. While the allegations here would not have passed my grandmother’s smell test, this case made it all the way to certification of a class that was reversed by the court of appeals.

Allegations and the Certified Class

The plaintiffs in In re Folgers Coffee Marketing, – F.4th –, 2025 WL 3292613 (8th Cir. Nov. 26, 2025), alleged that containers of Folgers coffee misleadingly stated the number of six-ounce cups that could be brewed, asserting that in practice consumers received fewer servings than advertised—allegedly 70% of the cups “promised” when using exclusively the “Single-Serving Method” as opposed to the “Pot Method” and following the instructions on the can precisely (without adjusting for your preferred strength). While that might have been a fourth-grade word problem in the 1980s, today you can probably take a picture of the can, upload it to your favorite AI app, and find the answer in the aisle of the grocery store. The district court certified a class of purchasers in Missouri which alleged violations of the Missouri Merchandising Practices Act (MMPA) and sought damages for unjust enrichment.

The Eighth Circuit’s Reversal: Individual Issues Predominate              

The Eighth Circuit reversed the class certification order, holding that the class was improperly certified because individual issues relating to causation and harm would overwhelm common questions. Under Rule 23(b)(3) of the Federal Rules of Civil Procedure, the predominance requirement ensures that common legal or factual issues must “predominate over any questions affecting only individual members.” The court explained that fraud-based and deception-based claims are generally ill-suited for class treatment when individual reliance or causation is in question.

The court drew a critical distinction—even under the MMPA, which does not require traditional reliance (as some unfair trade practices statutes do), plaintiffs must still show a causal connection between the alleged deception and an ascertainable loss. Determining who was actually deceived would require consumer-by-consumer analysis. This was because many class members did not read or care about the cups-per-can statements, and others who read it would understand that “the promised number of cups could be achieved only some of the time under certain conditions,” and, of course, “some consumers prefer relatively weak cups of coffee.” As the Eighth Circuit explained, “[w]hat matters is that many class members weren’t deceived, and figuring out who was and who wasn’t will require consumer-by-consumer inquiries into each class member’s individual tastes, interpretations, and circumstances.” As one class member admitted when asked why she was still buying Folgers, “I like my coffee.”

Rejecting the “Price Inflation” Theory

In cases like this, plaintiffs’ lawyers often try to get around the need for demonstrating individualized reliance or causation by alleging an “overcharge” theory, asserting that all purchasers paid an artificially inflated price due to the representations—regardless of whether they personally relied on. or even noticed, them. The Eighth Circuit rejected this approach, finding it inconsistent with the statutory requirement of an “ascertainable loss” resulting directly from the alleged misconduct. The court warned that accepting this theory would improperly allow consumers who suffered no personal deception or loss to recover—a position contrary to recent appellate precedent and analogous rulings in other states, including New Jersey.

Unjust Enrichment: Individual Circumstances Foreclose Class Treatment

The court also refused to allow class certification for the unjust enrichment claims. Because “[w]hether a particular transaction might be considered inequitable or unjust turns on the specific circumstances of each transaction,” class treatment was inappropriate. This aligned with a general consensus that unjust enrichment claims are “generally inappropriate for class treatment.”

Takeaways for Defending Similar Cases

Many putative class actions allege misrepresentations in marketing products or services. While the applicable substantive law varies, the In re Folgers decision will be helpful to defendants when applicable law does not require reliance, or when a price-inflation (also called price premium) theory is alleged. It also illustrates how powerful individual testimony of class members can be, even if it just confirms what a court might accept as a matter of common sense.

When a class action is removed to federal court under the Class Action Fairness Act (CAFA), plaintiffs sometimes amend their pleadings to try to defeat federal jurisdiction. The recent U.S. Court of Appeals for the Ninth Circuit decision in Faulk v. JELD-WEN, Inc., 2025 WL 3183012 (9th Cir. Nov. 14, 2025), addresses how post-removal amendments affect federal jurisdiction, concluding that the Supreme Court’s decision in Royal Canin U.S.A., Inc. v. Wullschleger, 604 U.S. 22 (2025), required changing prior Ninth Circuit precedent. Under this new decision, if the complaint is amended to remove all class action allegations, the case must be remanded to state court unless there is an alternative basis for federal jurisdiction.

The Case: Amending Away Federal Jurisdiction

David and Bonnie Faulk, Alaska citizens, brought a class action in state court against Spenard Builders Supply (an Alaska corporation) and JELD-WEN (a Delaware corporation), alleging that windows they purchased were defective. The defendants removed the case to federal court under CAFA, which generally allows removal based on “minimal diversity” when any class member is a citizen of a different state than any defendant and the amount in controversy exceeds $5 million.

After removal, the Faulks amended their complaint to remove all class action allegations, leaving only state-law claims. The district court, relying on prior Ninth Circuit precedent, denied their motion to remand, holding that jurisdiction is determined at the time of removal—even if the complaint is later amended to eliminate the class claims. The district court later addressed the merits and dismissed the complaint with prejudice.

Background: Royal Canin and Its Impact on Federal Jurisdiction

According to the Ninth Circuit, the Supreme Court’s decision in Royal Canin required altering prior Ninth Circuit precedent regarding which jurisdictional issues are evaluated based on time of removal and which issues can change when a complaint is amended.

In Royal Canin, the defendant removed the case to federal court based on the original complaint including federal statutory claims and asserted supplemental jurisdiction under 28 U.S.C. § 1367 over the state law claims. The plaintiff amended the complaint post-removal to eliminate all federal claims, leaving only state-law causes of action. The Supreme Court held that when the basis for federal jurisdiction is excised by amendment in this manner, the plaintiff is the “master of the complaint” and the federal court loses subject matter jurisdiction over the remaining claims. In Faulk, the Ninth Circuit held that this rule applies where a plaintiff removes the class allegations in an amended complaint. Faulk overruled prior circuit precedent that had maintained that federal jurisdiction was based on the complaint at the time of removal, regardless of subsequent amendments.

Important Exception: Amendments Do Not Affect Jurisdictional Facts

Most plaintiffs who bring class actions do not seek to remove the class allegations in order to return to state court. More commonly plaintiffs will try to use amendments that alter the basis for CAFA jurisdiction in other ways, such as narrowing the class definition or attempting to reduce the amount in controversy below $5 million. While Royal Canin allows some amendments to divest a court of federal jurisdiction, there are important exceptions. One of these is that jurisdictional facts such as the citizenship of the parties and the amount in controversy are generally determined based on the original complaint at the time of removal, not affected by later amendments.

This exception, discussed in footnotes in Faulk and Royal Canin, is rooted in the longstanding rule from St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283 (1938), which holds that an amendment reducing the amount in controversy below the statutory threshold will usually not destroy diversity jurisdiction. The Supreme Court in Royal Canin acknowledged this rule, stating that it was “inapposite” to the question presented, but reaffirmed its continued validity in cases where the amendment only affects the amount in controversy or the citizenship of the parties, rather than the substantive basis for federal jurisdiction.

Practical Implications

In most cases defendants would prefer that a plaintiff withdraw the class action allegations even if this results in a return to state court because there is no other ground for federal jurisdiction (such as if complete diversity is lacking or the named plaintiffs’ claims do not exceed $75,000). While under Faulk plaintiffs can amend their complaints to remove the class allegations and return to state court, under other rules that remain good law, plaintiffs cannot defeat federal jurisdiction by simply reducing the amount in controversy or altering party citizenship after removal. Whether, after Royal Canin, courts will allow amendments to class definitions to alter the CAFA jurisdictional analysis on issues other than citizenship or amount in controversy remains to be seen.

When a class action settlement is objected to and subsequently approved by the court, objectors sometimes appeal, which can substantially delay the settlement process including distribution of settlement funds to class members. To mitigate the risks and costs of such delays, parties to the settlement can ask the court to require objectors to post an appeal bond. This was successful in a recent case decided by the U.S. Court of Appeals for the Sixth Circuit.

In re East Palestine Train Derailment, – F.4th –, 2025 WL 3089606 (6th Cir. Nov. 5, 2025), involved a train derailment in Ohio resulting in the release of toxic chemicals. Property owners in the area brought a class action, and the railroad agreed to pay $600 million for a class settlement. Five class members objected, raising concerns about the notice and adequacy of evidence used to evaluate the settlement, and appealed the order approving the settlement. The settling parties requested, and the district court imposed, an appeal bond of $850,000 to cover anticipated administrative costs due to the delay caused by the appeal, along with taxable expenses.

The objectors failed to timely post any portion of the bond. Instead, they filed a motion in the Court of Appeals seeking to reduce or eliminate the bond, but without filing a motion for a stay or a timely notice of appeal from the order requiring the bond. The Sixth Circuit explained that the objectors would not have prevailed on a motion for stay because they were not likely to succeed on the merits and did not face irreparable harm where they could have appealed the bond order. The objectors also failed to file a timely motion in the district court to extend the time to appeal the bond order (they filed a motion that was late by one day). Neither the district court nor the Sixth Circuit could extend the time to appeal the bond order because the 30-day period had run.

The Sixth Circuit further concluded that it was appropriate to dismiss the objectors’ appeal from the settlement (which was timely) because the objectors failed to timely post the required bond. Dismissal of the appeal was appropriate because: (1) the delay in disbursement of the settlement funds substantially prejudiced the class; (2) the objectors had no valid justification for failing to pay at least a portion of the required amount even if they were unable to pay the entire bond; and (3) the objectors were unlikely to succeed on the merits of their appeal from the settlement because the settlement notice was adequate and the terms appeared to be reasonable.

Seeking an appeal bond may be a practical and effective strategy for parties to a class action settlement. It protects the interests of the class and settling defendant(s), deters meritless appeals, and ensures that objectors are serious and prepared to bear the costs of delay.

At a recent meeting, the Advisory Committee on Civil Rules of the Judicial Conference of the United States discussed, at an early stage, potential amendments to the federal class action rule, as well as a potential rule requiring disclosure of third-party litigation funding. No specific proposed amendments are before the committee at this stage (see the agenda packet for more details).

The potential amendments to Rule 23 include:

  • Superiority Requirement (Rule 23(b)(3)): The potential amendment would expressly state that courts can consider non-litigation remedies, such as voluntary  refunds, recalls, etc., in deciding whether a class action would be superior to other methods for resolving the dispute. While some courts have considered these under the existing rule, others have concluded that the current rule does not allow these to be considered because it refers to “adjudicating.” Defense bar organizations have supported this proposal.
  • Incentive Awards: The committee is considering whether to amend the rule to expressly permit incentive awards for class representatives, effectively resolving the circuit split created by an Eleventh Circuit decision (see my blog post) that disallowed them in that circuit. This proposal seems likely to draw some support from both sides of the class action bar, although some members of the committee may not view its role as including resolving a circuit split.
  • Pre-Certification Settlement Approval: The committee is considering a proposal that would require court approval of individual settlements between named plaintiffs and the defendant(s). Prior to 2003, some courts had interpreted the then-existing version of Rule 23 as requiring such approval. The 2003 amendment to Rule 23(e) made clear that approval was required only if a class had been certified (or was being proposed to be certified for settlement purposes, as a 2018 amendment clarified). The concern motivating this potential change appears to be plaintiffs including class allegations in complaints for purposes of settlement leverage and then pursuing early individual settlements. It is unclear what the standard would be for court approval of an individual settlement pre-class certification. This rule change could create an impediment and delay in resolving putative class actions that have little merit. It might dissuade plaintiffs’ lawyers from including class allegations in complaints where they have no serious intention of pursuing them, although the pre-2003 rule did not appear to have that effect.

As to third-party litigation funding, which is likely used in some class actions, while no specific proposal is before the committee, proponents of a new rule have suggested that it be modeled on the portion of Rule 26(a) that requires disclosure by defendants of insurance policies that may provide coverage for a judgment against the defendants. Concerns motivating these proposals include the potential for conflicts of interest or undue influence by the litigation funder. Any new rule may need to specify what types of arrangements need to be disclosed, in which types of cases (if not all cases), and what information needs to be disclosed. Congress is also considering potential legislation requiring disclosure. The defense bar generally supports disclosure of litigation funding arrangements.

Overall, these are all important proposals that have and will continue to generate strong views on both sides of them. I don’t think any of them, however, are likely to be game changers in class action litigation. The potential superiority rule change and third-party litigation funding disclosure likely would be most significant for lawyers defending class actions and their clients.

A recent Ninth Circuit decision reconciled other decisions within that circuit involving auto insurance total losses, concluding that individual questions predominated and therefore affirming the district court’s denial of class certification. The dissent, however, called for en banc review, suggesting that an intra-circuit split exists.

In Ambrosio v. Progressive Preferred Insurance Company, – F. 4th –, 2025 WL 2628179 (9th Cir. Sept. 12, 2025), the plaintiffs brought a putative class action against Progressive, alleging that it improperly used a “projected sold adjustment” (PSA) to calculate the actual cash value (ACV) of their totaled vehicles. The PSA was used to adjust list prices of comparable vehicles to reflect negotiations at the time of sale. The plaintiffs claimed this resulted in undervaluation and a breach of contract. The district court declined to certify the proposed class on the grounds that individualized issues would predominate, and the plaintiffs appealed.

Affirming the district court, the Ninth Circuit found that the PSA was not facially unlawful under the policies defining ACV based on market value because each insured would need to compare the allegedly flawed “market value” with a correct one to win on the merits. The court noted that the PSA was designed to reflect consumer purchasing behavior and was not unlawful under Arizona law, distinguishing another similar Ninth Circuit case involving a Washington statute. The plaintiffs argued that the PSA always resulted in an undervaluation, but the court disagreed. It explained that “[w]e cannot now read an unwritten requirement into the contract of how to calculate ‘market value,’” and “[i]f the appraisal from [Progressive’s vendor] resulted in a fair ‘market value’ assessment, even while using the PSA, then the ACV would be accurate, and there would be no injury.” Moreover, “[t]his is not a dispute over the amount of any individual’s damages … but over an essential element of each individual [putative class member’s] claim,” i.e., injury.  Progressive had demonstrated that it, if a factfinder accepted its evidence from “blue book” type sources, it could prove that, for at least two putative class members, the vehicle’s market value was higher than the amount paid. The majority noted that “denying Progressive this defense altogether would seem to violate due process.”

Judge Wallach of the Federal Circuit, sitting by designation, dissented. The dissent concluded that the PSA was a one-sided deduction that did not fit the contract’s requirement to determine ACV. The dissent criticized Progressive’s evidence of market value as inconsistent with how the claims were adjusted. It concluded that the district court should have certified the class and then interpreted the policy at the summary judgment stage or trial. The dissent acknowledged, however, that the majority opinion was consistent with recent decisions by the Third, Fourth and Seventh Circuits, all in similar cases involving Progressive’s use of PSAs. The dissent also suggested that en banc review may be appropriate.

The majority opinion highlighted a couple of defense strategies that I have often mentioned on this blog, and which were successful here. First, demonstrate how individual putative class members’ cases would be tried if they were individual cases, with specific evidence showing a lack of injury. Second, stress that the defendant cannot be deprived of presenting those defenses merely because of the plaintiff’s desire for class treatment. The class action mechanism is not supposed to alter the parties’ substantive rights.

The Supreme Court’s recent decision in Trump v. CASA, Inc., –– S. Ct. ––, 2025 WL 1773631 (U.S. June 27, 2025), restricting the use of “universal injunctions” by federal district courts, is receiving extensive attention regarding how it may affect the litigation challenging various executive orders and actions of President Trump. From the perspective of a class action defense lawyer, I wonder how this opinion may drive changes in class action law. It undoubtedly creates pressure for parties challenging executive actions to seek expedited class certification and for lower courts flooded with litigation to grant certification. This could drive courts to lighten the burden to establish class certification and expedite the consideration of it. Such decisions on class certification issues, certainly at the appellate level, potentially would apply not only to government action but also to corporate action.

Justice Barrett’s majority opinion only briefly touches on class actions. The opinion explains how a “bill of peace” in English chancery courts was a predecessor to the modern class action but would bind only members of a small, cohesive group. Justice Barrett concluded that “universal injunctions circumvent Rule 23’s procedural protections and allow courts to ‘create de facto class actions at will,” in other words, “universal injunctions are a class-action workaround.”

Justice Alito’s concurrence, joined by Justice Thomas, highlighted how class certification might be used as a means of enabling universal injunctions. Justice Alito wrote that “today’s decision will have very little value if district courts award relief to broadly defined classes without following ‘Rule 23’s procedural protections’ for class certification.” He expressed a concern that “a hasty application of Rule 23 … can have drastic consequences, creating ‘potential unfairness’ for absent class members and confusion (and pressure to settle) for defendants.” While the Government rarely faces “pressure to settle” in cases like Trump v. CASA, corporate defendants certainly do.  Justice Alito was concerned that if class certification requirements are not rigorously followed, “today’s decision will be of little more than minor academic interest” and “class certification would create a potentially significant loophole.”

Justice Kavanaugh’s concurrence only briefly mentioned class actions but seemed more optimistic about the use of Rule 23(b)(2) class actions to enable broad classwide injunctive relief. Rule 23(b)(2) allows class certification where the Rule 23(a) requirements are met, and “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” Justice Kavanaugh noted that “[i]f there is no classwide or set-aside relief in [these] kind of nationally significant matters, then one would expect a flood of decisions from lower courts” that “will probably inundate this Court with applications for stays or injunctions.”

Justice Sotomayor’s dissent, joined by Justices Kagan and Jackson, explicitly encouraged the use of class actions as a potential mechanism to enable universal injunctions where appropriate. She wrote that “the majority leaves untouched one important tool to provide broad relief to individuals subject to lawless Government conduct: Rule 23(b)(2) class actions for injunctive relief.” Justice Sotomayor suggested that “[f]or suits challenging policies as blatantly unlawful and harmful as the Citizenship Order, moreover, lower courts would be wise to act swiftly on such requests for relief and to adjudicate the cases as quickly as they can so as to enable this Court’s prompt review.”

The flood of litigation to come and the speed with which lower courts will be pressed to act may drive the development of class action law. Concerns about “drive through” class certification orders in some state trial courts motivated the enactment of the Class Action Fairness Act of 2005. Courts adjudicating the constitutionality of President Trump’s birthright citizenship executive order (and various other executive actions) will be understandably motivated to find a mechanism to reduce the burden on the court system and get the issue quickly back to the Supreme Court to decide the merits. But appellate decisions endorsing “quick and dirty” decisions on class certification could have broader impacts. Undoubtedly plaintiffs’ lawyers will cite them in seeking class certification and defense lawyers will be faced with distinguishing them. While some government actions may be universal in a way that is distinguishable from corporate actions that involve more individualized decisions being made across a widely disparate organization, some government actions may be less easy to distinguish from the corporate context. To the extent that class actions challenging government conduct will be brought under Rule 23(b)(2), that may be somewhat less problematic for corporate defendants that are more concerned with damages classes under Rule 23(b)(3). But corporate class actions are sometimes certified under Rule 23(b)(2) and can result in substantial settlement pressure.

*  *  *

On a separate note, in follow up to my blog post about Laboratory Corporation of America Holdings v. Davis, the Supreme Court dismissed the writ of certiorari as improvidently granted. Presumably this was based on arguments made by the plaintiffs and some amici that the case was moot due to the district court’s amendment to the class certification order. The question of whether a class may be certified if some proposed class members lack an Article III injury will have to wait for another case, perhaps as soon as the next Term. Only Justice Kavanaugh dissented and would have reached the merits. Laboratory Corp. of Am. Holdings v. Davis, 145 S. Ct. 1608 (2025) (Kavanaugh, J., dissenting). Justice Kavanaugh would have ruled that “[f]ederal courts may not certify a damages class under Rule 23 when, as here, the proposed class includes both injured and uninjured class members.” He reasoned that such a class would not satisfy the predominance requirement. He also noted that “[o]verbroad and incorrectly certified classes threaten massive liability” and through coerced settlements that raise the cost of doing business, “can ultimately harm consumers, retirees, and workers, among others.”

Some data breach class actions settle quickly, with one of two settlement structures: (1) a “claims made” structure, in which the total amount paid to class members who submit valid claims is not capped, and attorneys’ fees are awarded by the court and paid separately by the defendant; or (2) a “common fund” structure, in which the defendant pays a lump sum that is used to pay class member claims, administration costs and attorneys’ fees awarded by the court. A recent Ninth Circuit decision affirmed the district court’s approval of a “claims made” settlement but reversed and remanded the attorney’s fee award. The decision highlights how the approval of the settlement terms should be independent of the attorney’s fees although some courts seem to merge them.

In re California Pizza Kitchen Data Breach Litigation, – F.4th –, 2025 WL 583419 (9th Cir. Feb. 24, 2025) involved a ransomware attack that compromised data, including Social Security numbers, of the defendant’s current and former employees. After notification of the breach, five class action lawsuits were filed, four of which were consolidated and proceeded directly to mediation. A settlement was reached providing for reimbursement for expenses and lost time, actual identity theft, credit monitoring, and $100 statutory damages for a California subclass. The defendant agreed not to object to attorneys’ fees and costs for class counsel of up to $800,000. The plaintiffs estimated the total value of the settlement at $3.7 million.

The plaintiffs who had brought the fifth (non-consolidated) case objected to the settlement. The district court held an unusually extensive preliminary approval hearing, at which the mediator testified. The court preliminarily approved the settlement, deferring its decision on attorneys’ fees until the information regarding claims submitted by class members was available. At that point, the district court, after estimating the total value of the class claims at $1.16 million (the claim rate was 1.8%), awarded the full $800,000 of attorneys’ fees and costs requested, which was 36% of the total class benefit of $2.1 million (including the $1.16 million plus settlement administration costs and attorneys’ fees and costs).

On appeal, the Ninth Circuit majority concluded that the district court did not abuse its discretion in approving the settlement. Based on the mediator’s testimony, the district court reasonably concluded that the settlement was not collusive. The Ninth Circuit explained that “the settlement offers real benefits to class members,” “the class’s standing rested on questionable footing—there is no evidence that any CPK employee’s compromised data was misused,” and “courts do not have a duty to maximize settlement value for class members.”

The attorneys’ fee award, however, was reversed and remanded. The Ninth Circuit explained that the class claims were properly valued at $950,000 (due to a miscalculation by the district court), and the fee award was 45% of the settlement value, “a significant departure from our 25% benchmark.” In remanding, the Ninth Circuit noted that a “downward adjustment” would likely be warranted on remand.

Judge Collins concurred in part and dissented in part. He would have reversed the approval of the settlement, concluding that the district court failed to adequately address the objections and the low claims rate, and citing “the disparity between the size of the settlement and the attorney’s fees.”

From a defendant’s perspective, this decision demonstrates how it can be important to convey to the court that the approval of the proposed settlement should be evaluated independently of the attorney’s fees application. If the court finds the proposed fee award too high, that should not warrant disapproval of the settlement if the proposed relief for the class members is fair and reasonable. This is true of both “claims made” and “common fund” settlement structures.

On Friday, the U.S. Supreme Court granted certiorari in Laboratory Corporation of America Holdings v. Davis, No. 24-304, to decide “[w]hether a federal court may certify a class action pursuant to Federal Rule of Civil Procedure 23(b)(3) when some members of the proposed class lack any Article III injury.” This has the potential to be one of the most significant developments in class action law in several years.

The plaintiffs, who are blind, sued Labcorp under the Americans With Disabilities Act and California Unrah Civil Rights Act (Act)  because its self-service kiosks were not accessible to the blind without assistance. They seek minimum statutory damages of $4,000 per violation under the Act—potentially $500 million per year. The proposed class was defined to include any legally blind person who walked into a facility that had a kiosk and was unable to use it, regardless of whether they were aware of it or desired to use it. The district court certified the class and the Ninth Circuit affirmed in an unpublished opinion with little analysis because prior Ninth Circuit decisions had held that only the named plaintiff must establish Article III standing. Here, a named plaintiff walked into the facility, inquired about a kiosk and then was assisted by an employee at the front desk. According to the petition for certiorari, many putative class members were not aware of the kiosks and used the front desk, and the plaintiffs did not identify anyone who was unable to receive services due to the kiosks.  

Circuits are split on whether or what extent class members must have standing (i.e., a “concrete and particularized” “invasion of a legally protected interest” that is “actual or imminent, not conjectural or hypothetical”) at the class certification stage, or at some other stage in the case. Under Ninth Circuit precedent, it was sufficient for the named plaintiff to have sustained an injury, even if many other putative class members did not. The Second and Eighth Circuits have articulated a relatively strict approach that all class members must have standing. The First and D.C. Circuits appear to have required that a class contain no more than a “de minimus” number of proposed class members who lack standing. The Seventh Circuit has found that a class may be certified unless a “great many” class members lack standing. Finally, the Eleventh Circuit appears to have agreed with the Ninth Circuit that only a named plaintiff must have standing. I say “appears to have” because there is some debate about how to properly interpret some of these circuits’ case law, and in some circuits the cases are not entirely consistent.

This is an issue the Supreme Court was expected to decide in Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442 (2016), but did not reach in that case.

Defendants will be hoping that the Court’s conservative majority will rein in this type of class action and require that all proposed class members have standing for a class to be certified, while the plaintiffs’ bar will be hoping the Court, if it does not affirm the Ninth Circuit, adopts more of a “middle ground” approach. Briefing is scheduled for March and April, to put the case in line for decision by the end of June. Stay tuned.