Court Nixes Class Settlement Approval for Lack of Representatives’ Standing to Seek Key Injunctive Relief

The Eleventh Circuit recently vacated approval of a class settlement which included, as an integral part, injunctive relief that no class representative had Article III standing to seek. Williams v. Reckitt Benckiser LLC, 2023 WL 2906311 (11th Cir. Apr. 12, 2023), was brought on behalf of a class of individuals who purchased “brain performance supplements” under the brand name Neuriva. The five named plaintiffs alleged that the defendants used false and misleading statements to give the impression that their products’ active ingredients had been clinically tested to improve brain function, in violation of Florida, California, and New York consumer protection laws.

Before any formal discovery or motion practice, the parties agreed to a class settlement. Ted Frank, a prominent objector to class action settlements, objected to the settlement, which was nonetheless approved. Frank argued that the stated $8 million settlement value was inflated by the parties, who knew that few claims would be filed. The settlement provided that class members who could provide proof of purchase would be able to recover up to $32.50 per claim, with a maximum of two claims, for a total potential recovery of $65.00. Without proof of purchase, class members could only recover $5.00 per claim, with a maximum of four claims, for a total potential recovery of $20.00. Frank also argued that the injunctive relief involving marketing practices provided for by the settlement was meaningless and provided no relief to past users of products, in any event. The attorneys’ fee award of $2.9 million also was disproportionate to the settlement value, according to Frank’s objection. Under the settlement agreement, if the award of attorneys’ fees by the court was less than $2.9 million, the difference would revert to the defendants.

On appeal, the opinion by Senior Judge Stanley Marcus did not reach the merits of Frank’s objections, at least not directly. The court concluded that the named plaintiffs lacked standing to seek injunctive relief, because they did not allege that they would purchase the product again, and that the district court abused its discretion in approving a settlement that included as a central feature injunctive relief that the plaintiffs had no standing to seek. The complaint’s allegations of past injuries did not suffice to establish standing to seek injunctive relief against future injuries. And vague claims that the plaintiffs would like to purchase products in the future if the products truly improve brain performance were insufficiently concrete.

The parties challenged Frank’s standing to object, even though he purchased the product and fell literally within the class definition. The court rejected that challenge, noting that, as a class member, Frank’s claims, would be released by the settlement if the approval stood, enough to confer standing.

The court decided that some coaching for the parties and district court was appropriate in advance of remand. First, the court pointed out that at least one named plaintiff must have standing to assert each claim made on behalf of the class prior to approving any class settlement or granting class certification.

Second, the district court must determine whether to certify a class and, if so, enter an appropriate certification order before deciding whether to approve class-wide relief. The district court previously had overlooked this step.

Third, the court pointed out that under the 2018 amendments to Rule 23, in considering the fairness of a proposed class-action settlement, the court must examine “the effectiveness” of the settlement’s “method of distributing relief to the class,” Fed. R. Civ. P. 23(e)(2)(C)(ii), and whether the proposed attorneys’ fees are disproportionately large compared to the amount of relief reasonably expected to be provided to the class.

Posted by Tom Byrne.

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