A recent decision by the Eighth Circuit in a Telephone Consumer Protection Act (TCPA) class action provides an important pointer for defendants and their counsel with respect to strategy in defending a putative class action. The key takeaway is to take into consideration whether the case was originally filed in federal court or removed from state court, and consider whether you want to raise lack of standing as an issue in federal court if a successful outcome in the applicable federal circuit is likely to result in a remand to state court.
In St. Louis Heart Center, Inc. v. Nomax, Inc., No. 17-1794, 2018 WL 3719694 (8th Cir. Aug. 6, 2018), the plaintiff brought suit alleging that the defendant violated the TCPA by transmitting faxes without a proper opt-out notice. The faxes had an opt-out notice on them, it just did not satisfy all of the requirements of regulations implementing the TCPA. The plaintiff conceded that consent was not an issue. The Eighth Circuit affirmed the district court’s conclusion that the plaintiff lacked Article III standing because the plaintiff could have opted out and simply chose not to, and “[a]ny technical violation in the opt-out notices thus did not cause actual harm or create a risk of real harm.” Id. at *4.
But the Eighth Circuit vacated the district court’s dismissal of the lawsuit and remanded with direction to remand the case to state court. It explained that “the lack of federal jurisdiction does not obviate the remand requirement of § 1447(c), because state courts are not bound by the limitations of an Article III case or controversy.” Id.
The lesson here for defendants is that in cases removed to state court, it might not be worth raising a standing issue in federal court if the outcome is likely to be a remand and state law on standing is not favorable. Courts can and do raise standing issues sua sponte, so you may want to keep that possibility in mind as well.