Charles McNair v. Synapse Grp Inc , 672 F.3d 213 ( 2012 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 11-1743
_____________
CHARLES MCNAIR; THEODORE AUSTIN; DANIELLE
DEMETRIOU;
USHMA DESAI; JULIE DYNKO,
Appellants
v.
SYNAPSE GROUP INC.
_______________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 06-cv-5072)
District Judge: Hon. Jose L. Linares
_______________
Argued
January 10, 2012
Before: FUENTES, JORDAN, and NYGAARD, Circuit
Judges.
(Filed: March 6, 2012)
_______________
Paul Diamond
1605 John Street - #102
Fort Lee, NJ 07024
Gary S. Graifman [ARGUED]
Kantrowitz, Goldhamer & Graifman
747 Chestnut Ridge Road - #200
Chestnut Ridge, NY 10977
Michael S. Green
Green & Associates
522 Route 18 - #5
P.O. Box 428
East Brunswick, NJ 08816
Counsel for Appellants
Geoffrey W. Castello, III
Lauri A. Mazzuchetti
Vincent P. Rao, II
Kelley, Drye & Warren
200 Kimball Drive
Parsippany, NJ 07054
Thomas E. Gilbertsen [ARGUED]
Veneble
575 7th Street, N.W.
Washington, DC 20004
Counsel for Appellee
_______________
2
OPINION OF THE COURT
_______________
JORDAN, Circuit Judge.
A group of former customers (collectively,
“Appellants” or “the named plaintiffs”) of Synapse Group
Inc. (“Synapse”) successfully petitioned under Federal Rule
of Civil Procedure 23(f)1 for interlocutory review of an order
denying class certification. More specifically, Appellants
challenge the decision of the United States District Court for
the District of New Jersey to deny certification of a Rule
23(b)(2) injunctive relief class consisting of Synapse
customers who received automatic renewal notifications in
connection with magazine subscriptions obtained through
Synapse. Because we conclude that Appellants, none of
whom are current Synapse customers, lack standing to seek
the remedy they are pursuing on behalf of the class, we will
affirm the District Court’s order denying class certification. 2
1
That rule provides that “[a] court of appeals may
permit an appeal from an order granting or denying class-
action certification … if a petition for permission to appeal is
filed with the circuit clerk within 14 days after the order is
entered.” Fed. R. Civ. P. 23(f). We will hereafter refer to the
Federal Rules of Civil Procedure simply as “Rules.”
2
Appellants have moved to file Volume IV of the
appendix and their reply brief under seal because some of the
materials therein were produced under a confidentiality order
and filed under seal in the District Court. Appellants,
however, have failed to limit the scope of their request by
asking us to seal only those materials that are actually the
subject of the confidentiality order, and we will therefore
3
I. Background
A. Synapse’s Magazine Sales
Synapse, a wholly-owned subsidiary of Time Inc.
(“Time”), is the largest marketer of magazine subscriptions in
the United States. It conducts its business operations under
several other names, including Magazine Direct, New Sub
Magazine Services, SynapseConnect, Synapse Solutions, and
CAP Systems. Aiming to “bring magazine publishers and
potential subscribers together by promoting trial offers that
might evolve into long-term subscriptions,” Synapse markets
over 800 magazines to consumers through “credit card
issuers, catalogers, retailers, airlines, and internet companies.”
(App. at 643.)
deny their request, without prejudice to their submitting an
appropriately limited motion. See L.A.R. 30.3(b) (2008)
(“Records sealed in the district court … must … not be
included in the paper appendix.”); see also Couch v. Bd. of
Trs. of Mem’l Hosp. of Carbon Cnty., 587 F.3d 1223, 1245
n.25 (10th Cir. 2009) (denying “the parties’ motions to seal
both the record on appeal and their briefs” because “[t]he
court’s business is public business”); Pansy v. Borough of
Stroudsburg, 23 F.3d 772, 785 (3d Cir. 1994) (“Disturbingly,
some courts routinely sign orders which contain
confidentiality clauses without considering the propriety of
such orders, or the countervailing public interests which are
sacrificed by the orders.”). To the extent we have not already
relied on the materials filed under seal in setting forth the
facts of this case, we will delay the effective date of this
denial for two weeks, to allow Appellants an opportunity to
prepare a properly redacted filing.
4
The majority of Synapse’s magazine subscriptions are
offered under what is known as a “continuous service plan”
whereby a customer’s subscription does not expire unless and
until the customer opts to cancel it. To secure subscribers to
those plans, Synapse offers introductory promotional offers
under which customers can receive magazine subscriptions
for free or at greatly reduced rates. Although the offers are
varied, all customers provide a credit or debit card number
upon signing up and are informed that, once the promotional
rate expires, their card will be charged at the regular
subscription rate, unless the subscription is cancelled.
1. Synapse’s Advance Notification of
Future Charges
Prior to processing charges for the promised rate
increase, however, Synapse provides its customers with
advance notice. That notice, made in accordance with the
terms of Synapse’s initial offer, explains the impending
charge for continued services and provides a toll-free
telephone number for the customer to call to cancel his or her
magazine subscriptions. Before 2009, Synapse provided the
majority of those notifications by sending its customers a
sealed double postcard with a visible exterior and a concealed
interior (the “Standard Postcard”). The front of the Standard
Postcard’s exterior was addressed to the customer and
contained no other text besides a return address. The back of
the Standard Postcard’s exterior appeared as follows:
5
(App. at 507.) The Standard Postcard’s interior, which,
again, was only visible if opened, stated the names of the
magazines subscribed to, the number of issues ordered, the
cost of the automatic renewal, and a toll-free number for
customers to call to cancel their magazine subscriptions, if
they so desired.
Synapse’s market testing demonstrated that an explicit
statement on the exterior of the Standard Postcard that it was
an “automatic renewal notice” or an “automatic magazine
renewal” would increase the number of pre-billing
cancellations. For example, adding the words “Your
Automatic Magazine Renewal Notice” to the front of the
6
Standard Postcard’s exterior resulted in an increase of several
percentage points in pre-billing cancellations. An expert
retained by Appellants took that into account in opining that
the Standard Postcard was “intentionally designed to avoid
giving customers notice of renewal.” (App. at 1098.)
Beginning in February 2009, Synapse voluntarily
began using a new, non-folded, postcard to provide its
advance notifications to customers (the “Single Postcard”).
Unlike the Standard Postcard, the Single Postcard contains no
interior. The back of the Single Postcard has a picture of
magazines in a mailbox and states that magazine
subscriptions are available for up to 40% off newsstand
prices. The front of the Single Postcard contains two panels.
On the left side, it states in large print: “The low rate for your
next year of issues is guaranteed!” (App. at 1483.) And then,
in smaller print, it says:
We guarantee a hassle-free subscription.
You’ll never miss an issue. No bills, reminders,
publisher renewal notices and no telemarketing
calls. We do the work for you by automatically
extending your subscription each year for as
long as you want your selections.
Your service includes convenient home
delivery and huge savings off the
newsstand price.
We guarantee to send you advance notice
every year about your next subscription
period and rates. We will send you notice that
spells out: your guaranteed low rate, your
7
number of issues and when your credit card will
be charged. If you don’t wish to continue, you
can simply cancel before your new term begins.
We guarantee you outstanding savings. As a
Valued Subscriber, enjoy substantial savings off
cover price. For more great deals, visit
www.magazineoutlet.com.
(Id.) On the right side, the following appears:
Thank you for being a valued customer. We
hope you have been enjoying your service, as
your complete satisfaction is our ultimate goal.
For your convenience, we will continue to
ensure that you don’t receive extra unwanted
mail – the multiple renewal notices and bills
that normally come with a subscription. For the
next term of issues the credit card you
previously provided for your selections and will
be charged for [magazine title], at $[price] … .
If you do not wish to continue, call 800 927
9351 by [date] and no charge will appear. As
long as you are satisfied, your selections will
continue through our open-ended, customer-
friendly subscription method – continuous
service. Of course, we will always send you a
courtesy reminder before you are ever billed to
ensure your satisfaction. Remember, you can
always look for the expiration date on your
magazine label. You may cancel anytime and
receive a refund of unserved issues. If a title
ceases, it will be replaced with one of equal or
8
greater value. We hope you enjoy your
selections and look forward to serving you in
the future. Please keep this notice for your
records.
(Id.)
Appellants’ expert reviewed Synapse’s Single Postcard
and concluded that it, like the Standard Postcard, is “an
exercise in deception” inasmuch as it provides scant
information and is designed to appear like a direct mail offer
for a new subscription rather than an automatic renewal
notice for an existing subscription. 3 (App. at 1495.)
3
Appellants believe that Synapse’s use of the Standard
Postcard and Single Postcard violates accepted standards in
the publishing industry, as evidenced by an agreement
between Synapse’s parent company, Time, and 23 states’
Attorneys General. That agreement, known as the Assurance
of Voluntary Compliance or Discontinuance (the
“Assurance”), provides that Time and its wholly-owned
subsidiaries must send continuous-service-plan customers
advance notification reminders that clearly and conspicuously
identify the relevant terms concerning automatic renewals.
Although Appellants acknowledge that Synapse is not bound
by the Assurance because it did not become a wholly-owned
subsidiary of Time until after the Assurance was signed, they
contend that the Assurance demonstrates that there are
governing industry standards which Synapse is knowingly
violating by using deceptive advance notification reminder
mailings.
9
2. Synapse’s Cancellation Process
As detailed above, while the effectiveness of the
message may be open to dispute, both the Standard Postcard
and the Single Postcard state that a customer will be
automatically charged a renewal rate if the customer does not
cancel his subscription before a certain date. If a customer’s
subscription is not timely cancelled, however, the customer
can still seek a complete or pro rata refund. There are at least
two ways to reach Synapse to request cancellation or seek
reimbursement of an unwanted automatic renewal charge.
The customer may either call the number listed on the
advance notification mailing, or he may call a toll-free
number that is automatically listed on his credit or debit card
statement when a charge is submitted by Synapse.
While the toll-free number that appears on a
customer’s billing statement differs from the phone number
that appears on Synapse’s advance renewal notices, both lead
customers to Synapse’s Interactive Voice Recognition
(“IVR”) telephone system. That system is meant to be
entirely automated, so that a caller will not ordinarily interact
with a human being, but the IVR usually does permit
customers to reach a live operator by pressing zero or failing
to respond to the IVR’s prompts. When a customer attempts
to cancel his magazine subscriptions using the IVR system,
the IVR attempts to retain that business by presenting so-
called “save offers.” On average, approximately 30% of
callers accept a save offer. The remaining 70% of Synapse
customers who call to cancel end up doing so, and most are,
in fact, able to accomplish that without speaking with a live
operator.
10
B. Procedural History
Appellants, who are “residents” 4 of New Jersey, New
York, or the District of Columbia, received the Standard
Postcard when they were Synapse customers and brought suit
against Synapse after allegedly suffering monetary injury as a
result of Synapse’s deceptive business practices. 5
4
In their second amended complaint, the operative
pleading in this case, Appellants refer to themselves as
“residents” of their respective states, not as “citizens” or
“domiciliaries” of those states. (See, e.g., App. at 293
(“McNair is a resident of … New Jersey … having a place of
residence in … New Jersey.”).) Although those averments
need not, and do not, serve as a basis for our disposition, they
are jurisdictionally inadequate in this diversity of citizenship
case. See Krasnov v. Dinan, 465 F.2d 1298, 1300 (3d Cir.
1972) (“[M]ere residency in a state is insufficient for
purposes of diversity [of citizenship].”). So too is Appellants’
allegation of Synapse’s citizenship, which, instead of
identifying Synapse’s principal place of business and state of
incorporation, refers only to “a” principal place of business.
(App. at 294); see 28 U.S.C. § 1332(c)(1) (“[A] corporation
shall be deemed to be a citizen of every State … by which it
has been incorporated and of the State … where it has its
principal place of business … .”); J & R Ice Cream Corp. v.
Cal. Smoothie Licensing Corp., 31 F.3d 1259, 1265 n.3 (3d
Cir. 1994) (alleging that a corporation has “‘a’ principal place
of business” in a given state is insufficient to establish
domicile so as to “properly plead diversity jurisdiction”).
This lack of care in invoking the District Court’s jurisdiction
is regrettable.
5
Appellants do not allege that they received Synapse’s
11
1. Appellants’ Initial Motion for Class
Certification
On June 29, 2009, Appellants moved for class
certification based on a prior iteration of their complaint,
which pleaded consumer fraud claims for monetary and
injunctive relief under New Jersey, New York, and District of
Columbia law. McNair v. Synapse Grp., Inc., No. 06-cv-5072,
2009 WL 1873582, at *8, *12 (D.N.J. June 29, 2009).
Specifically, Appellants asked the District Court to certify the
following class under Rules 23(b)(2) and (b)(3):
From October 23, 2000 to the date of the order
certifying the class, all persons residing in New
Jersey, New York and the District of Columbia
who accepted an initial magazine subscription,
or subscriptions, offered by Synapse, were sent
[the Standard Postcard] notification with the
“standard exterior” in advance of an automatic
charge for an additional term or renewal of their
subscription(s), and either before or after being
charged for the additional term or renewal of
their subscription(s):
(1) called the Synapse “IVR,” and responded
affirmatively to the recorded question asking
whether they were calling to cancel a magazine
or selected an option to cancel a magazine from
the list of options presented, and rejected all
“save attempts” that may have been offered; or,
new Single Postcard.
12
(2) fully cancelled the subscription(s) by
speaking with a Synapse live operator; and,
were not refunded all charges for the additional
term or renewal of the magazine subscription(s)
and/or were not reimbursed upon request to
Synapse all bank overdraft charges, on their
debit or credit card(s). Excluded from the class
are defendant, its agents and affiliates, and any
government entities.
Id. at *6 (quoting Appellants’ Reply Mem. of Law in Support
of Class Cert.).
The District Court denied the motion. Observing that
Appellants’ various consumer fraud claims required a causal
link between the plaintiffs’ alleged injuries and the
defendant’s alleged deception, the District Court concluded
that predominance was lacking because it could not be
presumed that all of the class members were deceived by
Synapse’s marketing techniques. Id. at *12. In fact, the
Court noted that two of the five named plaintiffs were not
deceived by the Standard Postcard, as they “read … and acted
on it.” Id. Accordingly, as the District Court held, a Rule
23(b)(3) damages class could not be certified. The District
Court also rejected Appellants’ request for certification as an
injunctive relief class under Rule 23(b)(2), reasoning that “the
predominant relief sought … [was] money damages,” and
“certification under Rule 23(b)(2) [was therefore] not
appropriate.” Id. at *7. The Court stated, however, that “[a]
differently defined class or one that does not predominantly
seek money damages may pass muster.” Id. at *14.
13
2. Appellants’ Motion to File an Amended
Complaint
Appellants did not challenge the District Court’s
decision denying their initial motion for class certification.
Instead, on August 10, 2009, they filed a motion proposing a
revised complaint that sought injunctive relief only. See
McNair v. Synapse Grp., Inc., No. 06-cv-5072, 2009 WL
3754183, at *1 (D.N.J. Nov. 5, 2009). Synapse opposed the
new complaint on several grounds, arguing that, under Article
III of the United States Constitution, Appellants lacked
standing because they were no longer Synapse customers and
therefore could not claim a likelihood of future injury. See id.at *3 (citing City of Los Angeles v. Lyons, 461 U.S. 95, 103
(1983)). Synapse also argued that Appellants lacked statutory
standing under New Jersey law because their amended
complaint abandoned all claims for monetary relief. 6 See id.at *4-5 (citing Weinberg v. Sprint Corp., 801 A.2d 281, 291
(N.J. 2002), for the proposition that Appellants lacked
statutory standing because Appellants failed to plead “any
claim for ascertainable, money, loss”).
Appellants responded that they have Article III
standing to seek injunctive relief because they are likely to be
6
Synapse did not lodge a similar argument with
respect to Appellants’ claims under New York and District of
Columbia law. They did, however, argue that Appellants’
requested amendment would, as a whole, be futile because the
proposed class failed to meet the standards necessary for
certification. The District Court rejected that contention,
reasoning that “any ruling on whether class certification is
warranted is premature.” Synapse, 2009 WL 3754183, at *5.
14
Synapse customers in the future. The District Court agreed
with that theory. Although it acknowledged that none of the
named plaintiffs claimed to be current Synapse customers, the
Court decided that they had made a “sufficient showing that
they are likely to become Synapse customers in the future”
because Synapse is the leading marketer of magazine
subscriptions and offers compelling magazine deals in which
it does not clearly identify itself as the distributor. Id. at *4.
The District Court further concluded that the named plaintiffs
were likely to suffer from the alleged deception again because
“the whole point of” the advance notification renewal
postcards is to fool consumers into discarding it. Id.However, because Appellants’ complaint had abandoned
claims for monetary relief, the District Court agreed with
Synapse that Appellants lacked statutory standing to seek
injunctive relief under New Jersey law. Id. at *5.
3. Appellants’ Second Amended Complaint
and Motion for Class Certification
Appellants filed a timely motion for reconsideration on
November 17, 2009, apprising the Court that they had, in fact,
intended to seek monetary relief in their amended complaint –
albeit only on behalf of themselves individually – and that
they therefore had statutory standing to seek injunctive relief
under New Jersey law. The District Court, over Synapse’s
objection, entered an order permitting Appellants to again
amend their complaint for the purpose of clarifying their
assertion of individual claims for monetary relief. Appellants
did so on December 31, 2009, filing a second amended
complaint (the “Complaint”), 7 which is the operative pleading
7
Appellants second amended complaint is actually the
15
before us on this appeal and which asserts three separate
consumer fraud claims under New Jersey, New York, and
District of Columbia law. It seeks both monetary and
injunctive relief for the individual Appellants but only
injunctive relief for class members.
On June 18, 2010, Appellants moved for class
certification under Rule 23(b)(2), asking the District Court to
certify the following class:
All persons residing in New Jersey from
October 23, 2000 to the date of the order
certifying the class, and all persons residing in
New York and the District of Columbia from
fifth iteration of Appellants’ pleading filed on the District
Court’s docket over the course of this litigation. The first
complaint, filed on October 23, 2006, named only Charles
McNair as a plaintiff. The second, filed on August 2, 2007,
added Theodore Austin, Danielle Demetriou, Steven Novak,
Rod Bare, Ushma Desai, and Julie Dynko as named plaintiffs.
The third, submitted for the District Court’s review by way of
Appellants’ August 10, 2009 motion to file an amended
complaint, dropped Bare and Novak as plaintiffs. The fourth,
submitted by way of Appellants’ November 17, 2009 motion
for reconsideration, added requests for monetary relief on
behalf of the named plaintiffs remaining in Appellants’ third
complaint. The fifth and final complaint was filed on
December 31, 2009, after the District Court granted
Appellants’ November 17 motion to reconsider and afforded
them an opportunity to prepare another version of the
complaint.
16
October 23, 2003 to the date of the order
certifying the class, who as customers of
Synapse were mailed a postcard advance
notification of an automatic charge for an
additional term or renewal of their magazine
subscription(s) that failed to state that he or she
is an Automatic Renewal Customer or is subject
to an automatic charge, in type larger and more
prominent than the predominant type in the
notice. Excluded from the class are defendant,
its agents and affiliates, and any government
entities.
(App. at 485.) Appellants also sought to certify two
subclasses:
All members of the Class who were sent
Defendant’s [Standard Postcard] as the advance
notification of an automatic charge for an
additional term or renewal of their
subscription(s).
….
Members of the Class for whom the postcard
and/or billing descriptor on their credit card or
bank statement provided a telephone number to
an IVR that did not audibly state how to transfer
to a live operator.
(Id.)
The District Court denied Appellants’ motion on
November 15, 2010, holding that the putative class lacked the
17
requisite cohesion for purposes of Rule 23(b)(2). See McNair
v. Synapse Grp., Inc., No. 06-cv-5072, 2010 WL 4777483, at
*7-8 (D.N.J. Nov. 15, 2010). According to the Court,
certification was inappropriate because the injunctive relief
sought would not “benefit the entire class” since Synapse’s
conduct did not affect all class members in a similar way. Id.
at *7; see id. at *6 (“Plaintiff McNair testified that he read the
card and understood it … . For class members like Mr.
McNair, the relief requested would have no benefit.”).
Appellants were granted interlocutory appellate review
pursuant to Rule 23(f), and this appeal followed. 8
8
Before seeking interlocutory appellate review,
Appellants asked the District Court to reconsider its order
denying class certification. The District Court denied that
motion. McNair v. Synapse Grp., Inc., No. 06-cv-5072, 2011
WL 666036 (D.N.J. Feb. 14, 2011). Appellants thereafter
filed their Rule 23(f) petition, which was timely as measured
from the order denying reconsideration, but untimely as
measured from the order denying class certification. We
granted Appellants’ petition, concluding – as our sister
circuits have – that the period for filing a Rule 23(f) petition
“does not start to run until the district judge rules on [a
timely] motion for reconsideration” of a class certification
order. Shin v. Cobb Cnty. Bd. of Educ., 248 F.3d 1061, 1064-
65 (11th Cir. 2001); see Blair v. Equifax Check Servs., Inc.,
181 F.3d 832, 837 (7th Cir. 1999) (holding that, although
Federal Rule of Appellate Procedure 4(a)(4) does not toll the
time to appeal an interlocutory order, a timely-filed motion
for reconsideration of a class certification order nevertheless
“defers the time for appeal until after the district judge has
disposed of the motion”).
18
II. Discussion 9
As it did before the District Court, Synapse argues that
Appellants lack Article III standing to pursue injunctive
relief. If Synapse is correct, Appellants are not entitled to
represent the putative Rule 23(b)(2) class they asked the
District Court to certify. See, e.g., Prado-Steiman ex rel.
Prado v. Bush, 221 F.3d 1266, 1279 (11th Cir. 2000) (“It
should be obvious that there cannot be adequate typicality
between a class and a named representative unless the named
representative has individual standing to raise the legal claims
9
The District Court had jurisdiction, if at all, pursuant
to 28 U.S.C. § 1332(d)(2)(A), which permits district courts to
exercise “original jurisdiction of any civil action in which the
matter in controversy exceeds the sum or value of
$5,000,000, exclusive of interest and costs, and is a class
action in which … any member of a class of plaintiffs is a
citizen of a State different from any defendant.” We have
appellate jurisdiction under 28 U.S.C. § 1292(e) and Rule
23(f), and review the District Court’s order denying
certification for an abuse of discretion. Behrend v. Comcast
Corp., 655 F.3d 182, 189 (3d Cir. 2011). Our review is
plenary, however, to the extent a threshold question of law,
such as Article III standing, bears on our review of that order.
See Gen. Instrument Corp. of Del. v. Nu-Tek Elecs. & Mfg.,
Inc., 197 F.3d 83, 86 (3d Cir. 1999) (“We exercise plenary
review of standing … .); see also Cole v. Gen. Motors Corp.,
484 F.3d 717, 721 (5th Cir. 2007) (reviewing a certification
order under Rule 23(f), and observing that the standing
inquiry “is a question of law that [is] review[ed] de novo”).
19
of the class.”). We thus consider whether Appellants have
standing to seek injunctive relief for the class. 10
In order to have Article III standing to sue, a plaintiff
bears the burden of establishing “(1) [an] injury-in-fact …
that is (a) concrete and particularized, and (b) actual or
imminent, not conjectural or hypothetical; (2) a causal
connection between the injury and the conduct complained
of; and (3) [a likelihood] … that the injury will be redressed
by a favorable decision.” Danvers Motor Co., Inc. v. Ford
Motor Co., 432 F.3d 286, 290-91 (3d Cir. 2005); see N.J.
10
Although the scope of our Rule 23(f) appellate
review is limited, see McKowan Lowe & Co., Ltd. v. Jasmine,
Ltd., 295 F.3d 380, 390 (3d Cir. 2002) (observing that “Rule
23(f) inquiries” are limited “to class certification issues”), we
join our sister circuits in considering Article III standing as a
necessary threshold issue to our review of an order denying
class certification. See Lindsay v. Gov’t Emps. Ins. Co., 448
F.3d 416, 420 (D.C. Cir. 2006) (stating that constitutional
standing may be considered in an appeal under Rule 23(f));
Olden v. LaFarge Corp., 383 F.3d 495, 498 (6th Cir. 2004)
(“The question of subject matter jurisdiction is a prerequisite
to class certification and is therefore properly raised in this
Rule 23(f) appeal.”); City of Hialeah, Fla. v. Rojas, 311 F.3d
1096, 1101 (11th Cir. 2002) (“[A] determination on standing
is a part of the class certification analysis, and thus, subject to
review under Rule 23(f).” (citation and internal quotation
marks omitted)); Bertulli v. Indep. Ass’n of Cont’l Pilots, 242
F.3d 290, 294 (5th Cir. 2001) (“Standing is an inherent
prerequisite to the class certification inquiry; thus, despite the
limited nature of a Rule 23(f) appeal, defendants can raise the
issue of standing … .”).
20
Physicians, Inc. v. President of U.S., 653 F.3d 234, 241 (3d
Cir. 2011) (affirming dismissal for lack of standing because
the plaintiffs failed to meet “their burden in pleading facts
that establish the requisite injury in fact and therefore fail[ed]
to demonstrate standing”). When, as in this case, prospective
relief is sought, the plaintiff must show that he is “likely to
suffer future injury” from the defendant’s conduct. Lyons,
461 U.S. at 105. In the class action context, that requirement
must be satisfied by at least one named plaintiff. See Warth
v. Seldin, 422 U.S. 490, 502 (1975) (“Petitioners 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.”); O’Shea v. Littleton, 414 U.S. 488, 494 (1974)
(“[I]f none of the named plaintiffs purporting to represent a
class establishes the requisite of a case or controversy with
the defendants, none may seek relief on behalf of himself or
any other member of the class.”); see also Ellis v. Costco
Wholesale Corp., 657 F.3d 970, 978 (9th Cir. 2011)
(“Standing exists if at least one named plaintiff meets the
requirements.”). The threat of injury must be “sufficiently
real and immediate,” Roe v. Operation Rescue, 919 F.2d 857,
864 (3d Cir. 1990) (citation and internal quotation marks
omitted), and, as a result of the immediacy requirement,
“[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,”
O’Shea, 414 U.S. at 495-96; see Summers v. Earth Island
Inst., 555 U.S. 488, 493 (2009) (“To seek injunctive relief, a
plaintiff must show that he is under threat of suffering ‘injury
in fact’ … .” (emphasis added)); Lyons, 461 U.S. at 105(“Lyons’ standing to seek the injunction requested depended
on whether he was likely to suffer future injury … .”).
21
Pointing to the fact that Appellants are no longer
customers, Synapse argues that they have no cognizable
interest in the prospective relief sought in the Complaint.
Appellants, in response, press the same arguments for
standing that they made to the District Court, namely, that
they are subject to a sufficiently real and immediate threat of
future harm because Synapse is the leading marketer of
magazine subscriptions and bombards the public with its
offers; because it offers compelling deals in which it does not
clearly identify itself; and because it sends customers advance
notifications that are, by design, meant to fool consumers into
discarding the notification received. Appellants further
respond that they have accepted magazine offers from
Synapse on more than one occasion. The District Court
accepted those arguments and also seemed to agree with
Appellants that the “capable of repetition yet evading review”
doctrine applies, 11 because holding otherwise would unfairly
“require [Appellants] to allow themselves to be continually
billed for unwanted renewals either before or during the
course of the litigation merely for standing purposes.”
11
Although federal courts generally “lack jurisdiction
when ‘the issues presented are no longer live or the parties
lack a legally cognizable interest in the outcome,’” Merle v.
United States, 351 F.3d 92, 94 (3d Cir. 2003) (citation and
internal quotation marks omitted), the “capable of repetition
yet evading review” doctrine permits consideration of a case
that “would otherwise be deemed moot” when “‘(1) the
challenged action is, in its duration, too short to be fully
litigated prior to cessation or expiration, and (2) there is a
reasonable expectation that the same complaining party will
be subject to the same action again,’” id. (quoting Spencer v.
Kemna, 523 U.S. 1, 17 (1998)).
22
Synapse, 2009 WL 3754183, at *4 (internal quotation marks
omitted). We disagree, and conclude that Appellants have not
met their burden of establishing that they have standing to
seek injunctive relief.
Appellants have effectively acknowledged that they,
unlike the class members they seek to represent, are not
Synapse customers and are thus not currently subject to
Synapse’s allegedly deceptive techniques for obtaining
subscription renewals. 12 (See App. at 316 (alleging in the
Complaint that “[e]ach of the named [p]laintiffs has standing
to seek injunctive relief since they are likely to become
magazine customers of Defendant in the future”).) Unless
12
Although the Complaint does not expressly state that
Appellants are former Synapse customers, it – like
Appellants’ briefing and representations at oral argument –
implies as much. So does the appellate record. Indeed, with
the exception of one of the named plaintiffs, Dynko, who was
seemingly still a Synapse customer as of July 2008, the record
reflects that none of the other named plaintiffs in this case
were Synapse customers by that point. (See App. at 964
(Austin); 977 (Demetriou); 986 (Desai); 1005 (McNair).)
Because the Complaint and Appellants’ ensuing class
certification motion were filed over a year later, and in light
of the Complaint’s failure to aver that Dynko received the
Single Postcard that Synapse began using in 2009, see supra
note 5, the only conclusion we can logically reach is that the
one named class member who (perhaps) was a Synapse
customer in July 2008 terminated her Synapse service by the
time the Complaint was filed in December 2009. That, of
course, occurred well before Appellants’ June 2010 motion
for class certification.
23
they decide to subscribe again, then, there is no reasonable
likelihood that they will be injured by those techniques in the
future. They do not allege that they intend to subscribe again.
Instead, they say that they may, one day, become Synapse
customers once more because “Synapse’s offers are
compelling propositions as evidenced by [Appellants’] own
acceptance of these offers (even on more than one occasion)
… .” (App. at 317.)
Perhaps they may accept a Synapse offer in the future,
but, speaking generally, the law accords people the dignity of
assuming that they act rationally, in light of the information
they possess. Cf. Atl. Gypsum Co., Inc. v. Lloyds Int’l Corp.,
753 F. Supp. 505, 514 (S.D.N.Y. 1990) (rejecting the
plaintiffs’ contention that “defendants advanced money to [a]
venture with the intention of driving it into the ground so that
they could control the failed venture and then wait in line
with other creditors in a bankruptcy proceeding” because that
“view of the facts defies economic reason, and therefore does
not yield a reasonable inference of fraudulent intent”); John
N. Drobak, Cognitive Science, in The Elgar Companion to
Law and Economics 453, 453 (Jürgen G. Backhaus ed., 2d ed.
2005) (“Much of legal theory, like economics, assumes that
people act rationally or at least can be induced to act
rationally by the correct rules.”). Whether they accept an
offer or not will be their choice, and what that choice may be
is a matter of pure speculation at this point. 13 Indeed, while
13
If Appellants’ suggestion is that they may not be
able to help themselves when confronted with a really good
subscription offer, they have still not provided a basis for
standing. Pleading a lack of self- restraint may elicit
24
the injuries Appellants allegedly suffered when they were
Synapse customers may suffice to confer individual standing
for monetary relief, 14 the wholly conjectural future injury
Appellants rely on does not, and cannot, satisfy the
constitutional requirement that a plaintiff seeking injunctive
relief must demonstrate a likelihood of future harm. 15 See
Lyons, 461 U.S. at 109 (observing that the plaintiff “ha[d] a
sympathy but it will not typically invoke the jurisdiction of a
federal court.
14
At least constitutional standing; we say nothing of
statutory requirements that may or may not be met.
15
Appellants also suggest, albeit obliquely, that they
might be tricked into becoming Synapse customers again
because Synapse does not prominently identify itself when
making its magazine offers. (See App. at 317 (“Synapse, if it
identifies itself at all in these offers, does so in the fine-
print.”).) However, Appellants are under no compulsion to
uncritically accept magazine subscription offers. Because
Appellants are familiar with Synapse’s practices as well as
the various names under which it operates, it is a speculative
stretch to say they will unwittingly accept a Synapse offer in
the future. But even if they did, they would only be harmed if
they were again misled by Synapse’s subscription renewal
techniques, which would require them to ignore their past
dealings with Synapse. In short, Appellants ask us to
presume they will be fooled again and again. While we
cannot definitively say they won’t get fooled again, it can
hardly be said that Appellants face a likelihood of future
injury when they might be fooled into inadvertently accepting
a magazine subscription with Synapse and might be fooled by
its renewal tactics once they accept that offer.
25
claim for damages … that appear[ed] to meet all Article III
requirements” but that he nevertheless could not “meet[] the
preconditions for asserting an injunctive claim in a federal
forum”); Tucker v. Phyfer, 819 F.2d 1030, 1034-35 (11th Cir.
1987) (noting, in rejecting class certification under Rule
23(b)(2), that “a plaintiff who has standing to bring a
damages claim does not automatically have standing to
litigate a claim for injunctive relief arising out of the same set
of operative facts” and that the plaintiff’s proposed injunctive
relief class was inappropriate notwithstanding his “live claim
for money damages”).
Because Appellants have not established any
reasonable likelihood of future injury in this case, they have
no basis for seeking injunctive relief against Synapse. See
Arguello v. Conoco, Inc., 330 F.3d 355, 361 (5th Cir. 2003)
(customers who were subject to past discrimination by a gas
station attendant lacked Article III standing to sue for
prospective relief); Frankle v. Best Buy Stores, L.P., 609 F.
Supp. 2d 841, 848 (D. Minn. 2009) (explaining that a former
customer had no “standing to seek an injunction … because
she [was] no more likely than anyone else to be impacted”);
Goldstein v. Home Depot U.S.A., Inc., 609 F. Supp. 2d 1340,
1348 (N.D. Ga. 2009) (former customer of the defendant’s
who did not allege “that he plans in the future to purchase a
Dryer from Defendant or that he plans in the future to have a
Dryer installed by Defendant” lacked standing to pursue
injunctive relief on behalf of a class of consumers who might
be subjected to the allegedly illegal practice); Smith v.
Chrysler Fin. Co., L.L.C., No. 00-cv-6003, 2004 WL
3201002, at *4 (D.N.J. Dec. 30, 2004) (“The injury which
Plaintiffs allege, that they may want to buy another Chrysler
26
in the future and may be discriminated against by Defendant,
is simply too speculative … .”).
Nor is Appellants’ position strengthened by the
“capable of repetition yet evading review” doctrine. They
argue that they “should not be required to allow themselves to
be continually billed … merely for standing purposes” since
“the term of a subscription purveyed by Synapse is shorter
than the course of a typical litigation.” (App. at 317.) But the
inescapable fact is – as Appellants’ speculation about their
future actions reflects – they cannot “make a reasonable
showing that [they] will again be subjected to the alleged
illegality.” Lyons, 461 U.S. at 109. That means they cannot
successfully invoke the “capable of repetition yet evading
review” doctrine. See Spencer v. Kemna, 523 U.S. 1, 17
(1998) (stating the “capable of repetition yet evading review”
doctrine applies in exceptional situations only and requires “a
reasonable expectation that the same complaining party [will]
be subject to the same action again” (alteration in original)
(internal quotation marks omitted) (quoting Lewis v. Cont’l
Bank Corp., 494 U.S. 472, 481 (1990))); Abdul-Akbar v.
Watson, 4 F.3d 195, 207 (3d Cir. 1993) (“[C]onjecture as to
the likelihood of repetition has no place in the application of
this exceptional and narrow grant of judicial power.”).
Appellants’ contention, moreover, is based on a false
premise – namely, the alleged inequity in requiring them to
maintain Synapse subscriptions throughout the duration of the
class action litigation “merely for standing purposes.” (App.
at 317.) In reality, standing is determined at the outset of the
litigation, Davis v. FEC, 554 U.S. 724, 734 (2008), and
Appellants would have been able to represent an injunctive
relief class if they had maintained their subscriptions until
27
after moving for class certification, 16 see Holmes v. Pension
Plan of Bethlehem Steel Corp., 213 F.3d 124, 135 (3d Cir.
2000) (“So long as a class representative has a live claim at
the time he moves for class certification, neither a pending
motion nor a certified class action need be dismissed if his
individual claim subsequently becomes moot.”). 17 In
16
Moreover, it is not the case that the named plaintiffs’
standing to seek injunctive relief rises or falls solely with
their status as Synapse customers. Appellants only needed to
demonstrate that they were “likely to suffer future injury”
from the Synapse’s conduct. Lyons, 461 U.S. at 105. The
best way to do that, of course, would have been to show they
were Synapse customers, but that is not necessarily the only
way. The problem here is that Appellants provided no basis
for their assertion of future harm.
17
Although Appellants’ Complaint implies that
Appellants were no longer Synapse customers by December
2009, Appellants have not pleaded specific information
concerning when they actually terminated their subscriptions
with Synapse. See supra note 12 and accompanying text.
Nor have they made any effort to establish that they faced a
likelihood of future injury by Synapse at the time when their
various complaints were filed. Accordingly, we have treated
the justiciability question presented as one of standing,
although we recognize that Appellants’ Article III problem
might sound in mootness if Appellants initially had standing
to seek injunctive relief but lost it before moving for class
certification. See Davis, 554 U.S. at 734 (stating that “the
standing inquiry [is] focused on whether the party invoking
jurisdiction had the requisite stake in the outcome when the
suit was filed”); Altman v. Bedford Cent. Sch. Dist., 245 F.3d
49, 69 (2d Cir. 2001) (“[I]f the plaintiff loses standing …
28
addition, notwithstanding that they may prefer injunctive
relief as opposed to monetary relief now that a possible
injunction is their only route to class certification, the notion
that Appellants might have needed to maintain their
subscriptions to pursue their claims (as opposed to a specific
kind of relief) is misplaced, given that no one is contesting
their effort to pursue their individual claims for damages. See
Lyons, 461 U.S. at 109 (“Lyons’ claim that he was illegally
strangled remains to be litigated in his suit for damages; in no
sense does that claim ‘evade’ review.”).
during the pendency of the proceedings …, the matter
becomes moot, and the court loses jurisdiction.”). However,
because it is evident that none of the named plaintiffs were
Synapse customers when the Complaint was filed and they
did not seek or obtain class certification until after that, see
supra note 12, the difference between “standing” and
“mootness” is essentially a semantic one in this case, see
Holmes, 213 F.3d at 135 (“So long as a class representative
has a live claim at the time he moves for class certification,
neither a pending motion nor a certified class action need be
dismissed if his individual claim subsequently becomes
moot.”). Indeed, Appellants either lack standing because they
were not Synapse customers at the time they filed the relevant
complaint, or lost their standing for prospective relief when
they ceased being Synapse customers before seeking class
certification, which results in their “claims becom[ing] moot.”
PeTA, People for the Ethical Treatment of Animals v.
Rasmussen, 298 F.3d 1198, 1203 (10th Cir. 2002); see
Holmes, 213 F.3d at 135-36 (“If … the putative class
representative’s individual claim becomes moot before he
moves for class certification, then any subsequent motion
must be denied and the entire action dismissed.”).
29
Because Appellants lack Article III standing to seek
injunctive relief, the District Court was obliged to deny class
certification under Rule 23(b)(2).
III. Conclusion
For the foregoing reasons, we will affirm the District
Court’s order denying class certification. 18
18
Synapse argued before us that the District Court
lacked statutory subject matter jurisdiction under § 1332(d)
because Appellants’ averment that the value of the injunctive
relief sought exceeded $5,000,000 is wholly speculative. In
light of our conclusion that Appellants lack Article III
standing to seek injunctive relief, we decline to address that
argument. See generally Sinochem Int’l Co. v. Malaysia Int’l
Shipping Corp., 549 U.S. 422, 436 (2007) (recognizing that
courts may “choose among threshold grounds for denying
audience to a case on the merits” (citation and internal
quotation marks omitted)). Nor do we address, given the
limited nature of our review, how the District Court should
proceed on remand. See Prado-Steiman, 221 F.3d at 1277-78
(observing that, outside the “Rule 23(f) context, issues of
standing are normally not available for review on
interlocutory appeal”).
30