After Wal-Mart v. Dukes, some commentators have suggested that plaintiffs’ attorneys are likely to file more class actions seeking exclusively declaratory or injunctive relief, on the theory that it might be easier to obtain certification of those cases.  Prof. Jack Coffee of Columbia Law School has suggested this, as I noted in my October 25, 2011 blog post.  The Third Circuit recently issued an opinion on certification of injunctive relief claims under Rule 23(b)(2) in McNair v. Synapse Group, Inc., No. 11-1743, 2012 U.S. App. LEXIS 4593 (3d Cir. Mar. 6, 2012).  Andrew Trask, who pens the Class Action Countermeasures blog, has a great blog post summarizing the facts and holding of McNair and providing his analysis.  I’ll focus here on what I see as the impact of this decision for insurance cases. 

As brief background, the defendant in this case, Synapse, sells magazine subscriptions.  Subscriptions are offered at low initial rates, with automatic renewal unless cancelled.  (I’m sure you’ve seen some of these offers, I certainly have.)  The plaintiffs’ theory of liability was that the renewal notices sent in the mail were so deceptive that people would throw them out and not call to cancel their subscription if they wanted to do so.  After an initial denial of class certification, the case was re-framed to seek only injunctive relief, and certification was again denied.  The Third Circuit granted review under Rule 23(f) and affirmed. 

The Third Circuit focused solely on whether the named plaintiffs had standing to seek injunctive relief, finding that they did not because they were no longer customers of Synapse, and thus could not establish a reasonable likelihood of future harm.  Given that the named plaintiffs are now familiar with the allegedly deceptive tactics of Synapse, the court rejected their argument that they could be misled again by those tactics, and thus they did not have standing to seek injunctive relief.  The court also rejected the plaintiffs’ argument that the “capable of repetition yet evading review” doctrine would apply where there was no reasonable expectation by the named plaintiffs of being subjected to the same conduct again. 

In insurance class actions, sometimes it is the case that the named plaintiff is no longer a policyholder of the defendant.  If the named plaintiff was sufficiently upset with their insurer to file a class action, often they take their business elsewhere before suit is filed, or before it reaches the class certification stage.  This case is certainly helpful in that context in defending a class action seeking injunctive or declaratory relief, or the portion of the case that seeks such relief.  But even where the named plaintiff is still a policyholder, where the case involves claim handling issues, it seems speculative, at best, that the plaintiff might have another claim involving a similar factual scenario in the future that might involve the same issue.  There may well be no reasonable likelihood of future harm, and thus no standing to seek injunctive relief as to future claims (and injunctive relief as to a prior claim would be nothing more than seeking damages in disguise).  In an underwriting case, once the named plaintiffs are aware of the allegedly improper practice, when their policies are renewed in the future it seems hard for them to contend that they can be “victimized” again.  These kinds of issues should present substantial obstacles to certification of injunctive-only insurance class actions.