Should a class action go forward when the company voluntarily has provided all the relief plaintiffs have sought? At least in some circumstances, the answer is “no,” according to the Tenth Circuit.
Here’s some background. Many product manufacturers—and especially auto makers—are targeted by the class action bar when they announce voluntary recalls. The lawsuits typically allege (among other things) that the manufacturer had fraudulently concealed the defect, and seek an injunction ordering the manufacturer to repair the defect. In other words, these suits seek precisely the same relief that the manufacturer is already providing. Sometimes the plaintiffs tack on requests for damages, even though practically—or literally—none of the members of the putative class have experienced any injury or harm, because the manufacturer announced the recall even though the defect has manifested only a handful of times. Thus, these lawsuits often represent little more than attempted shakedowns by plaintiffs’ lawyers, who hope to capitalize on a manufacturer’s perceived vulnerability and thereby get a quick settlement for attorneys’ fees. The consumers in whose names the suits are brought, however, get nothing at all, because the recall already has given them all of the relief for which they might have a legitimate claim.
Manufacturers who face these lawsuits often seek dismissal on the ground that the recall renders the claims moot. Winzler v. Toyota Motor Sales USA, Inc. (pdf), 681 F.3d 1208 (10th Cir. 2012), is a perfect illustration of a successful invocation of the mootness argument. In that case, the district court dismissed a lawsuit alleging a defect in certain Toyota vehicles for failure to state a claim. During the pendency of the plaintiff’s appeal, Toyota announced a voluntary recall of certain Toyota vehicles. The Tenth Circuit therefore affirmed the dismissal on the alternative ground that the lawsuit was now moot—a doctrine that the court said “describes a situation where events in the world have so overtaken a lawsuit that deciding it involves more energy than effect, a waste of effort on questions now more pedantic than practical.” Id. at 1209.
The court explained that “promises of reform or remedy aren’t often sufficient to render a case moot as a constitutional matter,” because of the “risk” that “as soon the court turns its back, the defendant might renounce his promise and ‘return to his old ways.’” Id. at 1210 (citation omitted). But the court added that that risk “isn’t necessarily enough to avoid the application of prudential mootness doctrine. That’s because any party invoking the equitable remedial powers of the federal courts must still ‘satisfy the court that [requested] relief is needed,’ and when it comes to assessing that question, a remedial promise always qualifies as ‘one of the factors to be considered.’” Id. at 1210-11 (citations omitted). The court then held that the plaintiff in that case couldn’t meet the burden of avoiding mootness because, by beginning the recall process, Toyota had undertaken the obligation to inform all affected owners and to conduct the recall under the supervision of NHTSA. Id. at 1212.
Businesses should remain alert for possible challenges to class actions that seek superfluous relief on mootness grounds. Alternatively, businesses could argue that such class actions flunk either Rule 23(b)(3)’s requirement that a class action be “superior” to other methods of resolving the dispute or Rule 23(a)(4)’s requirement that the class representative be adequate to protect the interests of the class. Other courts—such as the Seventh Circuit—have recognized that a plaintiff bringing a class action that would simply duplicate—at much expense—relief already available to the class cannot satisfy Rule 23(a)(4)’s “adequacy of representation” requirement. See, e.g., In re Aqua Dots Prod. Liab. Litig. (pdf), 654 F.3d 748 (7th Cir. 2011).