Ria Schumacher, Individually and on Behalf of All Others Plaintiff - Appellee
SC Data Center, Inc., doing business as Colony Brands, Inc. Defendant-Appellant
Submitted: November 14, 2018
from United States District Court for the Western District of
Missouri - Central Division
GRUENDER, KELLY, and GRASZ, Circuit Judges.
the parties reached a tentative settlement in this purported
class action, SC Data Center, Inc., moved to dismiss the case
on the ground that the class representative, Ria Schumacher,
lacked standing. However, the district court enforced the
settlement between the parties without deciding the standing
issue. SC Data Center appeals, arguing the district court
erred by not deciding standing first. We agree, vacate the
district court's approval of the settlement agreement,
and remand the case.
February 2016, Schumacher filed a purported class action in
the Circuit Court of Cole County, Missouri, alleging that SC
Data Center committed three violations of the Fair Credit
Reporting Act ("FCRA"), 15 U.S.C. §§
1681–1681x. SC Data Center removed the case to federal
court. In May 2016, the parties reached a tentative
settlement agreement during mediation. Four days later, the
Supreme Court released its opinion in Spokeo v.
Robins, 136 S. Ct. 1540 (2016), holding that the Ninth
Circuit failed to properly analyze Article III standing in
assessing a claim brought under the FCRA.
in July 2016, SC Data Center moved to dismiss this action for
lack of standing. The district court denied the motion,
concluding that "Schumacher's standing to bring the
FCRA claims underlying this settlement is irrelevant to
whether she has standing to enforce the parties'
district court ordered the parties to submit their settlement
agreement for approval under Fed. R. Civ. P. 23(e), and they
complied. The district court approved the settlement, and SC
Data Center timely appealed the decision.
agree with SC Data Center that the district court erred by
not assessing standing before enforcing the settlement
agreement. "Article III standing must be decided first
by the court and presents a question of justiciability; if it
is lacking, a federal court has no subject-matter
jurisdiction over the claim." Miller v. Redwood
Toxicology Lab., Inc., 688 F.3d 928, 934 (8th Cir.
2012). A district court's obligation to ensure that
standing exists continues throughout the case because
"[t]o qualify as a case fit for federal-court
adjudication, 'an actual controversy must be extant at
all stages of review, not merely at the time the complaint is
filed.'" Arizonans for Official English v.
Arizona, 520 U.S. 43, 67 (1997) (quoting Preiser v.
Newkirk, 422 U.S. 395, 401 (1975)). This rule applies to
settlements of class actions because "[a]n approved
settlement takes the form of a judgment of the court, and
without both Article III power and proper subject-matter
jurisdiction, the court cannot act." Robertson v.
Allied Sols., LLC, 902 F.3d 690, 698 (7th Cir. 2018).
Thus, because the district court's act in approving a
class settlement was a court judgment, it erred when it did
not first assess standing.
argues that the district court did not need to reassess
standing after Spokeo because SC Data Center cannot
escape the settlement agreement based on a change in the law.
Specifically, she relies on Ehrheart v. Verizon
Wireless, 609 F.3d 590, 596 (3d Cir. 2010), to argue
that 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."
argument is not persuasive here because Spokeo, even
if it was a catalyst for SC Data Center's motion to
dismiss, was not a change in the substantive law bearing on
Schumacher's claim that would have "altered the
settlement calculus." Id.; see also
Robertson, 902 F.3d at 698 (stating that "changes
in the legal background that do not affect Article III or
subject-matter jurisdiction are an entirely different
matter" from those that do affect jurisdiction). Other
circuits have similarly distinguished the Ehrheart
line of cases when addressing Spokeo because
"Spokeo did not change the law of standing and
thus was not a post-agreement change in the law. It merely
reiterated that an Article III injury must be both particular
and concrete." Robertson, 902 F.3d at 698.
Thus, Ehrheart provides no basis to avoid addressing
standing before enforcing a settlement agreement.
there is no finding in the record regarding whether
Schumacher had standing to pursue her claims, we vacate the
district court's approval of the settlement agreement and
remand the case for a decision on whether Schumacher has
standing. We express no view on whether the Seventh
Circuit's opinion on FCRA standing or one of the
competing approaches in other circuits is best applied to the
facts of this case. Compare Robertson, 902 F.3d at
694–98, with Dutta v. State Farm Mut. Auto. ...