A Class Action Sleeper Issue Might Be Waking Up

The Sixth Circuit appears poised to become the fourth federal court of appeals to reject the use of the “juridical link” doctrine as a means to establish Article III standing in a class action. The doctrine, a seldom-used class action legal concept, recognizes an exception to the ordinary Article III standing requirements in instances in which “all defendants are juridically related in a manner that suggests a single resolution of the dispute would be expeditious.” Thompson v. Bd. of Educ. of Romeo Cmty, Sch., 709 F.2d 1200, 1204-05 (6th Cir. 1983).

A “juridical relationship” that would trigger the application of this doctrine is most often found where all members of the defendant class are officials of a single state charged with “enforcing or uniformly acting” in accordance with a state statute which is alleged to be unconstitutional. The Sixth Circuit recently granted the defendants’ petitions to appeal under Rule 23(f) in Fox v. County of Saginaw to determine whether a named plaintiff in a putative class action can rely on the juridical link doctrine to establish standing, even if some of the joined defendants did not injure him.

In Fox, the Eastern District of Michigan certified a class of Michigan property owners who allege that their respective county governments retained surplus proceeds from the tax foreclosure sale of their properties, a practice that Michigan’s General Property Tax Act authorized, but the Michigan Supreme Court later ruled unconstitutional. Fox v. County of Saginaw, No. 19-CV-11887, 2020 WL 6118487 (E.D. Mich. Oct. 16, 2020). One property owner, Thomas Fox, represents the class. Because only one county seized Mr. Fox’s property, the other county defendants argued that Mr. Fox did not have standing to sue them and could not acquire standing by virtue of bringing a class action.

The district court applied the juridical link doctrine to conclude that, as governmental entities operating under the same state law, the defendant counties had “become so juridically linked to one another” that there was no reason to “truncate potentially efficient uses of the class action device.” Therefore, the court held that Mr. Fox had standing against each defendant county, just as he had standing against his own county.

In so holding, the district court relied on the opinion of the Seventh Circuit in Payton v. County of Kane, 308 F.3d 673 (7th Cir. 2002). In Payton, the Seventh Circuit analyzed several cases applying the juridical link doctrine, interpreting those cases to indicate that it would “be appropriate to join as defendants even parties with whom the named class representatives did not have direct contact” so long as those defendants took part in a scheme that a uniform state rule mandated. The Payton court went on to construe the Supreme Court’s decision in Ortiz v. Fibreboard Corp. as a “directive to consider class certification prior to issues of standing,” and therefore reasoned that the trial court must assess Article III standing post-certification — and with reference to the class as a whole — rather than with reference to only the named plaintiffs. See id. (analyzing Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999)).

The Seventh Circuit is the only federal court of appeals to apply the juridical link doctrine to find Article III standing in a class action. In Mahon v. Ticor Title Insurance, the Second Circuit concluded that it was “flawed” to use the juridical-link doctrine to either (1) merge the question of standing with a Rule 23 analysis, or (2) decide class certification first, and then determine standing based upon the entire class. Ultimately, the Second Circuit rejected the plaintiff’s attempt, based on the juridical link doctrine, to “bring a class action against non-injurious defendants.” 683 F.3d 59, 63-64 (2d. Cir. 2012). The Eighth and Ninth Circuits have concluded similarly. See Wong v. Wells Fargo Bank N.A., 789 F.3d 889, 896 (8th Cir. 2015) (rejecting plaintiff’s argument that, under the juridical link doctrine, the court must assess standing requirements with reference to the class as a whole); Bahamas Surgery Ctr., LLC, v. Kimberly-Clark Corp., 820 Fed. Appx. 563, 566 n.4 (9th Cir. 2020) (finding that the juridical link doctrine was “irrelevant” to the question of standing where the named plaintiff lacked standing to pursue his claim against the defendant).

These cases form the basis of the county defendants’ appeal to the Sixth Circuit in Thomas Fox v. Saginaw. At oral argument, the Sixth Circuit panel appeared skeptical of the district court’s certification decision. Judge Eric Murphy, looking to historic practice, struggled to find “any case that would suggest that a plaintiff can sue a defendant that hasn’t harmed the plaintiff.” Judge Raymond Kethledge asked why a putative class action would not be considered an individual action for Article III purposes. Counsel for Thomas Fox and the proposed class replied that putative class actions should be treated differently from individual actions because they are maintained as class actions “until the Rule 23 elements are adjudicated.” The judges noted that, if the panel decertifies the class, the plaintiffs can repeat their run at certification after amending the complaint to add plaintiffs for each of the additional counties, thereby avoiding the standing issues.

If its reception at oral argument indicates the ruling to come, use of the juridical link doctrine may become impermissible to achieve Article III standing in class actions before the Sixth Circuit. Such a holding would join the Sixth Circuit with the Second, Eighth, and Ninth Circuits on this issue and would set the Seventh Circuit further apart. The question arises whether plaintiffs’ counsel in Fox would rely on this split among these circuit courts to seek certiorari from the Supreme Court.