The Eleventh Circuit, sitting en banc, has vacated a pre-Spokeo “beat the clock” class action settlement for lack of standing post-Spokeo. This decision is reflective of a developing trend in the Eleventh Circuit to undertake exacting reviews of class action settlements. The decision was issued less than six weeks after an Eleventh Circuit panel vacated a district court order in another case for failure to sufficiently explain the grounds for approving a class settlement in that matter, as we previously reported.
The new decision is Muransky v. Godiva Chocolatier, Inc., No. 16-16486 & 16-16783, 2020 WL 6305084 (11th Cir. Oct. 28, 2020). In Muransky, the parties had negotiated, executed and obtained preliminary approval of a $6.3 million settlement in January 2016, four months before the Supreme Court issued its seminal decision on Article III standing in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). During the parties’ settlement negotiations, each side was mindful that the impending decision in Spokeo would significantly change the parties’ respective bargaining positions. According to the Eleventh Circuit, the Spokeo decision did just that – setting a standard that conclusively established that the Muransky plaintiff lacked standing to pursue his case, or to settle the litigation. Even so, four months after Spokeo was decided, the parties sought and obtained final approval of their settlement. The parties’ moving papers contained references to Spokeo, principally relating to its import on the settlement negotiations, but without analysis of the decision’s application to the plaintiff’s allegations. The district court’s final approval order did not mention Spokeo at all.
A nonparty objector appealed the district court’s order granting final approval of the settlement to the Eleventh Circuit. Finding that the plaintiff had “shut his eyes and closed his ears to the requirements of Spokeo while his claims were still at the district court,” the Eleventh Circuit vacated the district court’s final approval of the class settlement, and directed the court to dismiss the Muransky lawsuit without prejudice.
This Eleventh Circuit decision is significant for two key reasons. First, the opinion makes clear that a class action settlement will not pass muster – even if negotiated in the type of uncertain environment common to most litigation, and even if preliminarily approved – if subsequent legal developments are deemed to bar a settlement prior to final approval. Second, as with its earlier decision this fall, the Eleventh Circuit has made absolutely clear that the appellate court will not simply defer to district court approvals of class action settlements as a matter of course. Instead, the Eleventh Circuit has signaled – in no uncertain terms – that the court will rigorously review each settlement when presented.
BackgroundThe Fair and Accurate Credit Transactions Act (“FACTA”) forbids merchants from printing more than the last five digits of credit card numbers on receipts offered to customers. After the named plaintiff in Muransky spent $19.26 at a Godiva store in Florida, he was given a receipt with the first six and the last four digits of his 16 digit credit card number. Less than a week later, the plaintiff filed a class action suit, alleging that defendant Godiva Chocolatier, Inc. had printed too many credit card digits on hundreds of thousands of receipts nationwide. The plaintiff alleged that such violations of FACTA exposed class members to “an elevated risk of identity theft.” The plaintiff disclaimed any recovery for actual damages, and...
