Eleventh Circuit revisits the basics of Article III standing in vacating $8 million class-action settlement, including a $2.6 million attorneys’ fee award
Last month, in Williams v. Benckiser, the Eleventh Circuit vacated and remanded an $8 million class action settlement for lack of Article III standing. In the opinion, the appellate court revisited the principles of Article III, making important rulings regarding (1) the standing of class members to object to a settlement agreement, (2) the burden for named plaintiffs in a class action to establish standing for injunctive relief, and (3) the requirements of Federal Rule of Civil Procedure 23. The court’s analysis will have an important impact on injunctive relief in class action settlements, and Federal Rule 23 class certification and settlement approval, particularly in the Eleventh Circuit.
The case involves a consolidated putative class action brought by five named Plaintiffs who purchased one or more “brain performance supplements” manufactured and sold by Defendants Reckitt Benckiser LLC and RB Health (US) LLC (collectively “RB”) under the brand name “Neuriva.” The named Plaintiffs alleged that RB used false and misleading statements to give consumers the impression that Neuriva and its “active ingredients” had been clinically tested and proven to improve brain function, in violation of Florida, California, and New York consumer protection laws.
Before any formal discovery had been conducted, the parties filed a notice of settlement stating that they had agreed “in principle” to settle Plaintiffs’ claims on a class-wide basis. The district court approved the $8 million settlement and awarded $2.9 million in attorneys’ fees. One unnamed Class member and Theodore Frank, an attorney and frequent class-action objector, appealed the district court’s approval of the settlement. Frank argued that the court erred by overestimating the value of the Settlement’s monetary and injunctive relief to Class members, thereby approving an Agreement that awarded a disproportionately high amount in attorneys’ fees and costs at the expense of the class. Based largely on the named Plaintiffs’ lack of Article III standing, the Eleventh Circuit panel concluded that the district court’s assessment of whether the Settlement satisfied Rule 23(e)(2) was flawed.
Although the appellate court did not vacate the Settlement based on Frank’s objections, it nonetheless addressed his standing to object. The court determined that under Lujan v. Defs. of Wildlife, an objector’s status as a member of a class who is bound by a district court’s judgment is sufficient to provide the objector standing to appeal the approval of a class-wide settlement.
The $8 million Settlement Agreement provided injunctive relief to the Class by requiring changes to Neuriva’s labeling and marketing for a period of two years, starting six months after the Settlement was to become final. The Settlement Agreement also enjoined RB from using the terms “Clinically Proven,” “Science Proved,” “Clinically Tested and Shown,” “clinical studies have shown,” or similar “shown” claims on Neuriva’s labeling.
The magistrate judge’s Report and Recommendation (“R&R”) which approved the Agreement found that the Settlement constituted an “excellent” result for the Class and, therefore, that the Settlement was “fair, reasonable, and adequate” under Rule 23(e)(2). In reaching this conclusion, the R&R recognized that the injunctive relief the Agreement provided played an integral role in the Settlement, and that it had to be considered alongside the Settlement’s monetary relief to determine whether all parts of the Settlement Agreement together supported court approval. The appellate court made clear that this is where the district court went wrong in approving the Settlement.
The key to the Eleventh Circuit’s opinion is that injunctions regulate future conduct. The complaint only alleged past harm due to RB’s alleged misrepresentations. Under Article III of the Constitution, federal courts are limited to deciding cases and controversies, which requires plaintiffs to demonstrate standing to sue throughout all stages of litigation. Courts have established that the constitutional minimum of standing contains three elements. First, a plaintiff must have suffered an “injury in fact” – an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of. Third, it must be “likely,” as opposed to merely “speculative,” that the injury will be redressed by a favorable decision. The appellate court stressed that, “because inunctions regulate future conduct, a party has standing to seek injunctive relief” only if their injury in fact is “a real and immediate – as opposed to merely conjectural or hypothetical – threat of future injury.”
The circuit court panel also noted that these principles apply with no less force in the class-action context. Therefore, a district court must determine that at least one named class representative has Article III standing to raise each claim. To satisfy this burden the named Plaintiffs needed to allege some cognizable future injury they would suffer as a result of RB’s false and misleading representations – but they did not. They only alleged that they “would like to purchase Defendants’ products if they truly improved brain performance,” but were “unable to rely on Defendants’ representations regarding the effectiveness of Defendants’ products in deciding whether to purchase Defendants’ products in the future.” It was this “conditional” language, the appellate court said, that compels the conclusion that any alleged harm to the Named Plaintiffs is “conjectural and hypothetical,” not “actual or imminent as Article III demands.”
Not only did the Named Plaintiffs use conditional language when describing their likelihood of using the RB products in the future, the appellate court also focused heavily on the affirmative statements made in the complaint which suggested that they never intended to use the RB products again. For example, the complaint referred to the Neuriva Products as “worthless” and that scientific evidence showed “it is biochemically impossible for the ingredients to improve brain performance.” The named Plaintiffs’ allegations of RB’s false and misleading representations, and the economic injury that they suffered as a result, all related to past harm. According to the court, there was nothing in the complaint that suggested that the injury to the named Plaintiffs resulting from RB’s misrepresentations was “real and immediate.”
The court analogized this case to Lujan, where the Supreme Court similarly found a lack of Article III standing to seek injunctive relief. There, a group of environmental organizations challenged a Department of the Interior regulation that interpreted certain provisions of the Endangered Species Act. In response to a summary judgment motion the plaintiffs attempted to establish their standing to seek injunctive relief by submitting affidavits from their members stating that the agency’s rule would harm them prospectively because it would “increas[e] the rate of extinction of endangered and threatened species” that those members hoped to one day see. The Supreme Court held that the plaintiffs’ averments were insufficient to establish standing because they “contain[ed] no facts . . . showing how damage to the species will produce ‘imminent’ injury to [the plaintiffs].” Specifically, the Supreme Court stated in Lujan that “[p]ast exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief . . . if unaccompanied by any continuing, present adverse effects.”
The Eleventh Circuit panel stated that this case presented an even more remote and attenuated risk of future harm than in Lujan, because none of the named Plaintiffs alleged that they intended to buy the Neuriva Products again. The court admonished the district court for not “assur[ing] itself of the Named Plaintiffs’ standing to seek injunctive relief before approving the parties’ Settlement Agreement, a requirement that it is obliged to satisfy before finally signing off on the case.” It then concluded that “because the value of the Settlement’s injunctive relief formed an integral part of the district court’s calculus of its overall fairness, the court’s approval of the Settlement was premised on a legal error and, as a result, was necessarily an abuse of discretion.”
The Settlement Agreement covered a Rule 23(b)(2)-(3) class of “[a]ll persons who purchased for personal consumption and not for resale, one or more of the Neuriva Products . . . between the dates of January 1, 2019, and the date of Preliminary Approval of the Settlement by the Court.” Rule 23 sets forth several prerequisites to certify a class, and specifically provides the considerations district courts must take when certifying a class and approving a settlement. In particular, district courts must consider “the effectiveness of any proposed method of distributing relief to the class,” and “the terms of any proposed award of attorneys’ fees, including timing of payment,” when determining whether “the relief provided for the class is adequate.” The Settlement Agreement did not satisfy this burden because the value of the injunctive relief discussed above was “inextricably” tied up with the district court’s determination of the Settlement’s overall fairness. The circuit court reiterated that under Rule 23(e)(2), the decision to approve a class-action settlement is a holistic one. The settlement must stand or fall as a whole.
Because the named Plaintiffs lacked standing to seek injunctive relief, and because the district court’s determination that the Settlement satisfied Rule 23(e)(2) relied on the value of such relief, the decision was set aside by the Eleventh Circuit as an abuse of discretion. The panel also pointed out that the district court, in approving the Settlement Agreement, relied primarily on cases decided before Congress’s 2018 amendment to Rule 23. Later in the opinion, the court advised that on remand the district court should consider the impact of those amendments on its analysis of the fairness of the class-action settlement, including the effectiveness of the settlement’s method of distributing relief to the class, and whether the proposed attorneys’ fees are disproportionately large compared to the amount of relief reasonably expected to be provided to the class.
Recently, the Seventh Circuit in Eddlemon v. Bradley Univ., also vacated a district court’s class certification for failure to “rigorously analyze” the prerequisites to certify a class under Rule 23. The case involved the district court’s certification of two classes in a putative class action alleging breach of contract against Bradley University. The decision provides further guidance in class certification motions in two ways. First, it is important for a district court to ground its analysis of “commonality” under Rule 23 with specific references to the record that support commonality. Second, to establish the predominance factor under the Rule, each element needs to be separately analyzed. In Eddlemon, the district court failed on each test.
Overall, these recent appellate court decisions demonstrate the need for district courts to analyze class actions with rigor, including when determining whether settlement approval is appropriate. The Eleventh Circuit Williams decision reminds litigators to go back to the basics of Article III standing in pleadings to ensure that named plaintiffs in a class action have standing for each claim. The Seventh Circuit Eddlemon decision expands on that, reminding parties to break down the factors of Rule 23 and ensure that each requirement is met.
*Annabelle Emuze is an Associate in Washington, D.C.
 65 F.4th 1243, 1247 (11th Cir. 2023).
 Id. at 1248. (“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 individual 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.”)
 Id. at 1247.
 504 U.S. 555 (1992).
 Williams, 65 F. 4th at 1251 (citing Lujan, 504 U.S. at 555).
 Id. at 1249.
 Id. at 1250.
 Id. at 1254.
 U.S. Const. art. III, Section 2; Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016).
 Lujan, 504 U.S. at 560.
 Id. (internal quotation marks omitted).
 Shotz v. Cates, 256 F.3d 1077, 1081 (11th Cir. 2001) (emphasis in original) (alteration adopted) (citation omitted).
 Williams, 65 F. 4th at 1253. See also Lewis v. Casey, 518 U.S. 343, 357 (1996) (“That a suit may be a class action . . . adds nothing to the question of standing, for even named plaintiffs who represent a class must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent.” (quotation marks and citation omitted)).
 Prado-Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1279 (11th Cir. 2000).
 Williams, 65 F. 4th at 1254 (emphasis added).
 Id. at 1255.
 Id. at 1247 (“[T]o the contrary, the operative complaint provides every reason to doubt that the Named Plaintiffs will ever purchase the Neuriva Products again.”)
 Id. at 1254 (citing Shotz, 256 F.3d at 1081).
 Id. (citing Lujan, 504 U.S. at 558-59).
 Id. (citing Lujan, 504 U.S. at 562-63) (emphasis added).
 Lujan, 504 U.S. at 564.
 Williams, 65 F. 4th at 1255 (citing Lujan, 504 U.S. at 560 (emphasis added)). See also TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2210 (2021); City of Los Angeles v. Lyons, 461 U.S. 95, 102, 105 (1983).
 Id. at 1252.
 Id. at 1249 (citing Fed. R. Civ. P. 23(b)).
 Fed. R. Civ. P. 23(e)(2)(C)(ii)-(iii).
 Williams, 65 F. 4th at 1257 (citing Fed. R. Civ. P. 23(e)).
 Brooks v. Ga. State Bd. of Elections, 59 F.3d 1114, 1119-20 (11th Cir. 1995).
 Williams, 65 F. 4th at 1261.
 65 F.4th 335 (7th Cir. 2023).
 Id. at 340.
 Id. at 339.