JORDAN, Circuit Judge.
A group of former customers (collectively, "Appellants" or "the named plaintiffs") of Synapse Group Inc. ("Synapse") successfully petitioned under Federal Rule of Civil Procedure 23(f)
Synapse, a wholly-owned subsidiary of Time Inc. ("Time"), is the largest marketer
The majority of Synapse's magazine subscriptions are offered under what is known as a "continuous service plan" whereby a customer's subscription does not expire unless and until the customer opts to cancel it. To secure subscribers to those plans, Synapse offers introductory promotional offers under which customers can receive magazine subscriptions for free or at greatly reduced rates. Although the offers are varied, all customers provide a credit or debit card number upon signing up and are informed that, once the promotional rate expires, their card will be charged at the regular subscription rate, unless the subscription is cancelled.
Prior to processing charges for the promised rate increase, however, Synapse provides its customers with advance notice. That notice, made in accordance with the terms of Synapse's initial offer, explains the impending charge for continued services and provides a toll-free telephone number for the customer to call to cancel his or her magazine subscriptions. Before 2009, Synapse provided the majority of those notifications by sending its customers a sealed double postcard with a visible exterior and a concealed interior (the "Standard Postcard"). The front of the Standard Postcard's exterior was addressed to the customer and contained no other text besides a return address. The back of the Standard Postcard's exterior appeared as follows:
(App. at 507.) The Standard Postcard's interior, which, again, was only visible if opened, stated the names of the magazines subscribed to, the number of issues ordered, the cost of the automatic renewal, and a toll-free number for customers to call to cancel their magazine subscriptions, if they so desired.
Synapse's market testing demonstrated that an explicit statement on the exterior of the Standard Postcard that it was an "automatic renewal notice" or an "automatic magazine renewal" would increase the number of pre-billing cancellations. For example, adding the words "Your Automatic Magazine Renewal Notice" to the front of the Standard Postcard's exterior resulted in an increase of several percentage points in pre-billing cancellations. An expert retained by Appellants took that into account in opining that the Standard Postcard was "intentionally designed to avoid giving customers notice of renewal." (App. at 1098.)
Beginning in February 2009, Synapse voluntarily began using a new, non-folded, postcard to provide its advance notifications to customers (the "Single Postcard"). Unlike the Standard Postcard, the Single Postcard contains no interior. The back of the Single Postcard has a picture of magazines in a mailbox and states that magazine subscriptions are available for up to 40% off newsstand prices. The front of the Single Postcard contains two panels. On the left side, it states in large print: "The low rate for your next year of issues is guaranteed!" (App. at 1483.) And then, in smaller print, it says:
(Id.) On the right side, the following appears:
(Id.)
Appellants' expert reviewed Synapse's Single Postcard and concluded that it, like the Standard Postcard, is "an exercise in deception" inasmuch as it provides scant information and is designed to appear like a direct mail offer for a new subscription rather than an automatic renewal notice for an existing subscription.
As detailed above, while the effectiveness of the message may be open to dispute, both the Standard Postcard and the Single Postcard state that a customer will be automatically charged a renewal rate if the customer does not cancel his subscription before a certain date. If a customer's subscription is not timely cancelled, however,
While the toll-free number that appears on a customer's billing statement differs from the phone number that appears on Synapse's advance renewal notices, both lead customers to Synapse's Interactive Voice Recognition ("IVR") telephone system. That system is meant to be entirely automated, so that a caller will not ordinarily interact with a human being, but the IVR usually does permit customers to reach a live operator by pressing zero or failing to respond to the IVR's prompts. When a customer attempts to cancel his magazine subscriptions using the IVR system, the IVR attempts to retain that business by presenting so-called "save offers." On average, approximately 30% of callers accept a save offer. The remaining 70% of Synapse customers who call to cancel end up doing so, and most are, in fact, able to accomplish that without speaking with a live operator.
Appellants, who are "residents"
On June 29, 2009, Appellants moved for class certification based on a prior iteration of their complaint, which pleaded consumer fraud claims for monetary and injunctive relief under New Jersey, New York, and District of Columbia law. McNair v. Synapse Grp., Inc., No. 06-cv-5072, 2009 WL 1873582, at *8, *12 (D.N.J. June 29, 2009). Specifically, Appellants asked the District Court to certify the following class under Rules 23(b)(2) and (b)(3):
Id. at *6 (quoting Appellants' Reply Mem. of Law in Support of Class Cert.).
The District Court denied the motion. Observing that Appellants' various consumer fraud claims required a causal link between the plaintiffs' alleged injuries and the defendant's alleged deception, the District Court concluded that predominance was lacking because it could not be presumed that all of the class members were deceived by Synapse's marketing techniques. Id. at *12. In fact, the Court noted that two of the five named plaintiffs were not deceived by the Standard Postcard, as they "read ... and acted on it." Id. Accordingly, as the District Court held, a Rule 23(b)(3) damages class could not be certified. The District Court also rejected Appellants' request for certification as an injunctive relief class under Rule 23(b)(2), reasoning that "the predominant relief sought ... [was] money damages," and "certification under Rule 23(b)(2) [was therefore] not appropriate." Id. at *7. The Court stated, however, that "[a] differently defined class or one that does not predominantly seek money damages may pass muster." Id. at *14.
Appellants did not challenge the District Court's decision denying their initial motion for class certification. Instead, on August 10, 2009, they filed a motion proposing a revised complaint that sought injunctive relief only. See McNair v. Synapse Grp., Inc., No. 06-cv-5072, 2009 WL 3754183, at *1 (D.N.J. Nov. 5, 2009). Synapse opposed the new complaint on several grounds, arguing that, under Article III of the United States Constitution, Appellants lacked standing because they were no longer Synapse customers and therefore could not claim a likelihood of future injury. See id. at *3 (citing City of Los Angeles v. Lyons, 461 U.S. 95, 103, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983)). Synapse also argued that Appellants lacked statutory standing under New Jersey law because their amended complaint abandoned all claims for monetary relief.
Appellants responded that they have Article III standing to seek injunctive relief because they are likely to be Synapse customers in the future. The District Court agreed with that theory. Although it acknowledged that none of the named plaintiffs claimed to be current Synapse customers, the Court decided that they had made a "sufficient showing that they are likely to become Synapse customers in the future" because Synapse is the leading marketer of magazine subscriptions and offers compelling magazine deals in which it does not clearly identify itself as the distributor. Id. at *4. The District Court further concluded that the named plaintiffs were likely to suffer from the alleged deception again because "the whole point of" the advance notification renewal postcards is to fool consumers into discarding it. Id. However, because Appellants' complaint had abandoned claims for monetary relief, the District Court agreed with Synapse that Appellants lacked statutory standing to seek injunctive relief under New Jersey law. Id. at *5.
Appellants filed a timely motion for reconsideration on November 17, 2009, apprising the Court that they had, in fact, intended to seek monetary relief in their amended complaint—albeit only on behalf of themselves individually—and that they therefore had statutory standing to seek injunctive relief under New Jersey law. The District Court, over Synapse's objection, entered an order permitting Appellants to again amend their complaint for the purpose of clarifying their assertion of individual claims for monetary relief. Appellants did so on December 31, 2009, filing a second amended complaint (the "Complaint"),
On June 18, 2010, Appellants moved for class certification under Rule 23(b)(2), asking the District Court to certify the following class:
(App. at 485.) Appellants also sought to certify two subclasses:
(Id.)
The District Court denied Appellants' motion on November 15, 2010, holding that the putative class lacked the requisite cohesion for purposes of Rule 23(b)(2). See McNair v. Synapse Grp., Inc., No. 06-5072, 2010 WL 4777483, at *7-8 (D.N.J. Nov. 15, 2010). According to the Court, certification was inappropriate because the injunctive relief sought would not "benefit the entire class" since Synapse's conduct did not affect all class members in a similar way. Id. at *7; see id. at *6 ("Plaintiff McNair testified that he read the card and understood it.... For class members like Mr. McNair, the relief requested would have no benefit.").
Appellants were granted interlocutory appellate review pursuant to Rule 23(f), and this appeal followed.
As it did before the District Court, Synapse argues that Appellants lack Article III standing to pursue injunctive relief. If Synapse is correct, Appellants are not entitled to represent the putative
In order to have Article III standing to sue, a plaintiff bears the burden of establishing "(1) [an] injury-in-fact... that is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) a causal connection between the injury and the conduct complained of; and (3) [a likelihood] ... that the injury will be redressed by a favorable decision." Danvers Motor Co., Inc. v. Ford Motor Co., 432 F.3d 286, 290-91 (3d Cir.2005); see N.J. Physicians, Inc. v. President of U.S., 653 F.3d 234, 241 (3d Cir.2011) (affirming dismissal for lack of standing because the plaintiffs failed to meet "their burden in pleading facts that establish the requisite injury in fact and therefore fail[ed] to demonstrate standing"). When, as in this case, prospective relief is sought, the plaintiff must show that he is "likely to suffer future injury" from the defendant's conduct. Lyons, 461 U.S. at 105, 103 S.Ct. 1660. In the class action context, that requirement must be satisfied by at least one named plaintiff. See Warth v. Seldin, 422 U.S. 490, 502, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) ("Petitioners must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent."); O'Shea v. Littleton, 414 U.S. 488, 494, 94 S.Ct. 669, 38 L.Ed.2d 674 (1974) ("[I]f none of the named plaintiffs purporting to represent a class establishes the requisite of a case or controversy with the defendants, none may seek relief on behalf of himself or any other member of the class."); see also Ellis v. Costco Wholesale Corp., 657 F.3d 970, 978 (9th Cir.2011) ("Standing exists if at least one named plaintiff meets the requirements."). The threat of injury must be "sufficiently real and immediate," Roe v. Operation Rescue, 919 F.2d 857, 864 (3d Cir.1990) (citation and internal quotation marks omitted), and, as a result of the immediacy requirement, "[p]ast exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief ... if unaccompanied by any continuing, present adverse effects," O'Shea, 414 U.S. at 495-96, 94 S.Ct. 669; see Summers v. Earth Island Inst., 555 U.S. 488, 493, 129 S.Ct. 1142, 173 L.Ed.2d 1 (2009) ("To seek injunctive relief, a plaintiff must show that he is under threat of suffering `injury in
Pointing to the fact that Appellants are no longer customers, Synapse argues that they have no cognizable interest in the prospective relief sought in the Complaint. Appellants, in response, press the same arguments for standing that they made to the District Court, namely, that they are subject to a sufficiently real and immediate threat of future harm because Synapse is the leading marketer of magazine subscriptions and bombards the public with its offers; because it offers compelling deals in which it does not clearly identify itself; and because it sends customers advance notifications that are, by design, meant to fool consumers into discarding the notification received. Appellants further respond that they have accepted magazine offers from Synapse on more than one occasion. The District Court accepted those arguments and also seemed to agree with Appellants that the "capable of repetition yet evading review" doctrine applies,
Appellants have effectively acknowledged that they, unlike the class members they seek to represent, are not Synapse customers and are thus not currently subject to Synapse's allegedly deceptive techniques for obtaining subscription renewals.
Perhaps they may accept a Synapse offer in the future, but, speaking generally, the law accords people the dignity of assuming that they act rationally, in light of the information they possess. Cf. Atl. Gypsum Co., Inc. v. Lloyds Int'l Corp., 753 F.Supp. 505, 514 (S.D.N.Y.1990) (rejecting the plaintiffs' contention that "defendants advanced money to [a] venture with the intention of driving it into the ground so that they could control the failed venture and then wait in line with other creditors in a bankruptcy proceeding" because that "view of the facts defies economic reason, and therefore does not yield a reasonable inference of fraudulent intent"); John N. Drobak, Cognitive Science, in The Elgar Companion to Law and Economics 453, 453 (Jürgen G. Backhaus ed., 2d ed.2005) ("Much of legal theory, like economics, assumes that people act rationally or at least can be induced to act rationally by the correct rules."). Whether they accept an offer or not will be their choice, and what that choice may be is a matter of pure speculation at this point.
Because Appellants have not established any reasonable likelihood of future injury
Nor is Appellants' position strengthened by the "capable of repetition yet evading review" doctrine. They argue that they "should not be required to allow themselves to be continually billed ... merely for standing purposes" since "the term of a subscription purveyed by Synapse is shorter than the course of a typical litigation." (App. at 317.) But the inescapable fact is—as Appellants' speculation about their future actions reflects—they cannot "make a reasonable showing that [they] will again be subjected to the alleged illegality." Lyons, 461 U.S. at 109, 103 S.Ct. 1660. That means they cannot successfully invoke the "capable of repetition yet evading review" doctrine. See Spencer v. Kemna, 523 U.S. 1, 17, 118 S.Ct. 978, 140 L.Ed.2d 43 (1998) (stating the "capable of repetition yet evading review" doctrine applies in exceptional situations only and requires "a reasonable expectation that the same complaining party [will] be subject to the same action again" (alteration in original) (internal quotation marks omitted) (quoting Lewis v. Cont'l Bank Corp., 494 U.S. 472, 481, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990))); Abdul-Akbar v. Watson, 4 F.3d 195, 207 (3d Cir.1993) ("[C]onjecture as to the likelihood of repetition has no place in the application of this exceptional and narrow grant of judicial power.").
Appellants' contention, moreover, is based on a false premise—namely, the alleged inequity in requiring them to maintain Synapse subscriptions throughout the duration of the class action litigation "merely for standing purposes." (App. at 317.) In reality, standing is determined at the outset of the litigation, Davis v. FEC, 554 U.S. 724, 734, 128 S.Ct. 2759, 171 L.Ed.2d 737 (2008), and Appellants would have been able to represent an injunctive relief class if they had maintained their subscriptions until after moving for class certification,
Because Appellants lack Article III standing to seek injunctive relief, the District Court was obliged to deny class certification under Rule 23(b)(2).
For the foregoing reasons, we will affirm the District Court's order denying class certification.
