Key Takeaways:
- In many contexts, Rule 23’s predominance requirement will not be satisfied if individualized inquiries are required to determine which putative class members suffered an “injury” stemming from a defendant’s allegedly wrongful conduct.
- A recent Fourth Circuit case expands this reasoning to the realm of Article III standing. If individualized inquiries are required to determine which class members do or do not have Article III standing, that may also preclude class certification.
For many causes of action, a plaintiff is required to establish an actual “injury” caused by the alleged violation of law. That requirement can be a powerful barrier to class certification if individualized factual inquiries are required to determine which class members were or were not injured by the allegedly unlawful conduct – and thus, which class members do or do not have a viable cause of action. A recent Fourth Circuit case expands this reasoning to the realm of Article III standing, too. If individualized issues are required to determine which class members do or do not have Article III standing, that, too, can defeat class certification. See Alig v. Rocket Mortg., LLC, No. 22-2289, --- F.4th ----, 2025 WL 271563, at *1 (4th Cir. Jan. 23, 2025).
In the traditional context, individualized issues as to the existence of an injury can defeat Rule 23(b)(3)’s predominance requirement if the existence of an injury is an element of the plaintiff’s claim. For example, in the insurance space, proof of underpayment is often required because “[i]nsurance entails a promise to pay covered losses, not a covenant to use a particular standard for evaluating property damage.” Kartman v. State Farm Mut. Auto. Ins., 634 F.3d 883, 890 (7th Cir. 2011). So, even where a plaintiff challenges an insurer’s particular valuation or payment method, predominance should not be satisfied if an individualized inquiry is required to determine who was paid more or less than they were owed. See, e.g., Sampson v. United Servs. Auto. Ass’n, 83 F.4th 414, 422 (5th Cir. 2023); Lara v. First Nat’l Ins., 25 F.4th 1134 (9th Cir. Feb. 11, 2022); Baker v. State Farm Mut. Auto. Ins., No. 21-14197, 2022 WL 3452469, at *1 (11th Cir. Aug. 18, 2022).
The same is true in the antitrust context. Civil liability under the Clayton Act requires a plaintiff to prove that the plaintiff has been “injured in his business or property by reason of anything forbidden in the antitrust laws.” 15 U.S.C. § 15. That requirement often poses a powerful barrier to class certification because antitrust injury (also called antitrust impact) “is an element of the claim that may call for individual, as opposed to common, proof.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 311 (3rd Cir. 2008). While individual inquiries about the amount of damage are not always a barrier to class certification, if a cause of action requires a plaintiff to establish the “fact of damage,” individualized inquiries as to that element can defeat predominance. See Bell Atl. Corp. v. AT&T Corp., 339 F.3d 294, 302 (5th Cir. 2003); see also Lucas v. Breg, Inc., 212 F. Supp. 3d 950, 970 (S.D. Cal. 2016) (“[T]here is a distinction between the ‘fact of damages,’ which is essentially a threshold question of causation and injury in fact, and the ‘amount of damages,’ which involves an assessment of damages due after resolution of common questions of liability.”)
However, not every claim or cause of action necessarily requires proof of “underpayment” or injury. So, in some contexts, courts have certified classes even if the plaintiff could not prove that each class member was harmed by the allegedly unlawful conduct. See Hicks v. State Farm Fire & Cas. Co., 965 F.3d 452, 463 (6th Cir. 2020) (certifying a class based on a common “legal injury—breach of contract” regardless of whether the defendant’s payment “was more than, less than, or exactly the same as” required).
But every claim in federal court does require proof of an injury in fact for Article III standing. And because class actions do not change the requirements for standing, “[e]very class member must have Article III standing in order to recover individual damages.” TransUnion LLC v. Ramirez, 594 U.S. 413, 431 (2021). That raises the question, Can individualized inquiries as to which class members have Article III standing also defeat predominance?
The Supreme Court declined to address the question directly in TransUnion. See id. at 208 n.4 (“We do not here address the distinct question whether every class member must demonstrate standing before a court certifies a class.”). But since TransUnion, federal circuit courts have started to recognize that individualized issues as to which class members suffered an injury in fact might also implicate Rule 23’s predominance requirement. In Van v. LLR, Inc., for example, the Ninth Circuit vacated a district court’s class certification order so that the district court could assess whether individualized inquiries were required to determine which class members suffered an “ascertainable loss” under Alaska’s Unfair Trade Practices and Consumer Protection Act. 61 F.4th 1053, 1068-69 (9th Cir. 2023). In a footnote, the Court recognized that “this issue also takes on a constitutional dimension: If these class members have not suffered any loss or injury, they also lack Article III standing.” Id. at 1068 n.12. Similarly, in Huber v. Simon’s Agency, Inc., the Third Circuit remanded a class certification order to the district court so that the court could assess the “evidence in the record indicating how many members of [the plaintiff’s] class are likely to have standing and how burdensome that showing will be for both the District Court and the parties.” 84 F.4th 132, 157 (3rd Cir. 2023).
A new Fourth Circuit case has now addressed the issue directly. In Alig v. Rocket Mortg., LLC, the district court certified a class of West Virginia citizens who refinanced mortgage loans with the defendant and obtained appraisals through an appraisal request form that included an estimate of value of the subject property. 2025 WL 271563, at *1. The Fourth Circuit had previously affirmed the district court’s summary judgment order on the merits of the plaintiffs’ statutory claim, holding that the defendant’s practice of including estimates on the appraisal request form was unconscionable. Id. at *5. But after TransUnion was decided, the Fourth Circuit reconsidered whether class certification was still appropriate and held that it was not.
The Fourth Circuit explained that TransUnion requires “a factual showing for each class member to claim damages” and that the “mere risk of harm” was not enough. Id. at *7-8. But the evidence in the case did not establish that each class member was actually injured by the appraisals that they received. Id. While each class member “paid a fee” for an appraisal that the district court believed to be “tainted,” the Fourth Circuit held that the evidence did not actually show that these allegedly tainted appraisals were “worthless.” Id. at *8. And without such evidence, “the plaintiffs’ class-wide showing in this case is simply ‘too speculative to support Article III standing.’” Id. (quoting TransUnion, 594 U.S. at 438). Class certification was therefore inappropriate, even though the claims of the named plaintiffs survived.
Alig follows a growing trend in the federal courts recognizing that individualized issues as to who suffered an injury in fact under Article III can defeat class certification. Following the path set by TransUnion and Alig, more and more courts are likely to recognize that Article III questions directly implicate a plaintiff’s ability to establish Rule 23(b)(3) predominance, too.
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