The Eighth Circuit recently vacated a district court's final approval of a proposed class action settlement agreement because it did not assess the plaintiff's standing before approval. Schumacher v. SC Data Center, Inc., 912 F.3d 1104 (8th Cir. 2019).
In Schumacher v. SC Data Center, Inc., the plaintiff filed a purported class action in Mississippi state court, alleging that a defendant data company violated the Fair Credit Reporting Act (FCRA). Id. at 1105. The defendant removed the case to federal court, and a few months later the parties reached a tentative settlement agreement. Id. But four days after reaching their agreement, the Supreme Court released its decision in Spokeo v. Robins, where it held that the Ninth Circuit failed to analyze Article III standing in assessing a claim brought under the FCRA. Id.; 136 S. Ct 1540 (2016).
The defendant moved to dismiss for lack of Article III standing. Id. But the district court denied the defendant's motion and ordered the parties to submit their settlement agreement for review. Id. Ultimately, the district court approved the agreement without evaluating any standing issues. Id. The defendant appealed, arguing that the district court erred in approving the settlement agreement. Id.
The plaintiff argued that the district court did not have to reassess standing issues post-Spokeo because "a party cannot escape a settlement 'simply because a change in the law confers upon it a benefit that could have altered the settlement calculus.'" Id. (quoting Ehrheart v. Verizon Wireless, 609 F.3d 590, 596 [3d Cir. 2010]).
The Eighth Circuit, however, was not persuaded. It noted that although Spokeo may have sparked the defendant's motion to dismiss, the case was not a change in the substantive law that would have "altered the settlement calculus." Id. at 1106. Instead, Spokeo "merely reiterated that an Article III injury must be both particular and concrete." Id. (quoting Robertson v. Allied Sols., LLC, 902 F.3d 690, 698 [7th Cir. 2018]).
Moreover, the court highlighted that the "obligation to ensure that standing exist continues throughout [a] case" and applies to settlements of class actions. Id. (quoting Arizonans for Official English v. Arizona, 520 U.S. 43, 67 [1997]).
Thus, finding the record silent on whether the plaintiff had standing to pursue her claims, the Eighth Circuit vacated the district court's approval of the settlement agreement and remanded the case. Id.
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