This blog has covered recent decisions from the Eleventh Circuit that have taken a hard look at class action settlements.  For example, we previously discussed the Eleventh Circuit’s per se prohibition on the inclusion of incentive awards for class action representatives in class action settlements.  See Johnson v. NPAS Sols., LLC, 975 F.3d 1244 (11th Cir. 2020) (vacating settlement in part because it included incentive awards).  Just recently, the Eleventh Circuit vacated the approval of another class action settlement because it “included relief that [the district court] had no jurisdiction to award.”  Smith v. Miorelli, 93 F.4th 1206, 1209 (11th Cir. 2024).

In Smith, three lawsuits alleged various warranty and unfair/deceptive practices claims against Costa Del Mar, Inc., a sunglasses manufacturer.  The three lawsuits were ultimately settled in a combined $32 million settlement that included non-monetary injunctive relief valued at $5 million.  Although each lawsuit sought injunctive relief, none of the complaints had alleged a risk of future injury.  The district court nonetheless approved the settlement, including the injunctive relief, under Rule 23(e).   Id. at 1210–11.  Three objectors appealed, arguing that the district court incorrectly determined that the settlement was not a coupon settlement under the Class Action Fairness Act and that the named plaintiffs lacked Article III standing to pursue injunctive relief.  Id.

The Eleventh Circuit agreed with the objectors on standing, and therefore did not reach the CAFA issue.  Because plaintiffs must demonstrate standing throughout “all stages of litigation,” and because plaintiffs must demonstrate standing “for each form of relief sought,” the court explained that the plaintiffs were required to demonstrate a threat of real and immediate future injury in order to satisfy Article III’s requirements for any injunctive relief included in the settlement.  Id. at 1212.  As none of the named plaintiffs alleged any risk of future injury, the appellate court held that none of them had standing to seek injunctive relief.  Id.  And because the district court considered the injunctive relief provided in the settlement in determining that the settlement was “fair, reasonable, and adequate” under Rule 23(e), that determination was necessarily flawed and an abuse of discretion.  See id. at 1213 (“[W]hen a district court lacks the power to grant the requested injunctive relief, its approval of a settlement is based on a legal error, and must be set aside as an abuse of discretion.” (cleaned up)). 

Smith is a reminder to parties seeking the approval of class action settlements to be sure that the named plaintiffs have standing as to all relief afforded in the settlement.