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Article III Standing for Class Actions in the Eighth Circuit

August 23, 2017

 

The Eighth Circuit Court of Appeals, in Kuhns v. Scottrade, Inc., No. 16-3426 (8th Cir. Aug. 21, 2017), just issued a decision, addressing an issue that is being raised more and more frequently by defendants in class actions in federal court, Article III standing or lack thereof. Citing Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016), the Eighth Circuit explained:

 

Constitutional standing (as opposed to statutory standing) is a threshold question that determines whether a federal court has jurisdiction over a plaintiff’s claims. Article III extends judicial power only to “cases” and “controversies.” This limitation imposes as an “irreducible constitutional minimum” the burden on plaintiff Kuhns to establish that he personally “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.”

 

In other words, even if Congress passes a statute prohibiting certain conduct and providing an individual with a cause of action to seek redress, Article III of the United States Constitution limits the availability of federal courts to real disputes. An “injury in fact” is “an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical.”

 

Kuhns was a class action brought against Scottrade after hackers accessed the internal database of Scottrade, a securities brokerage firm based in St. Louis, Missouri, and acquired identifying information of over 4.6 million Scottrade customers. The district court concluded the plaintiffs lacked Article III standing because they had not suffered injury in fact and dismissed the complaint for lack of subject matter jurisdiction.

 

The Eighth Circuit disagreed, concluding that the that plaintiffs had Article III standing, at least for their contract-related claims, but the plaintiffs still lost because the Eighth Circuit affirmed the dismissal with prejudice because, turning the allegations pleaded, the complaint did not state claims upon which relief can be granted.

 

Sometimes you lose, then win an issue on appeal, but at the end of the day you still lose.

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