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A Sign of Things to Come in TCPA Lawsuits?: Plaintiffs Use Lack of Article III Standing as a Sword to Avoid Federal Jurisdiction

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We reported last month on a case where a defendant had moved to dismiss a plaintiff’s TCPA claim based on lack of Article III standing, only to end up back in the state court from which the case was removed.  And just as Jay Edleson predicted when he joined us on the Ramble, plaintiffs are now starting to use Article III as a sword to avoid federal jurisdiction.

Blanchard v. Fluent Llc, No. 17-cv-04497-MMC, 2018 U.S. Dist. LEXIS 156546 (N.D. Cal. Sep. 13, 2018) was not a TCPA claim, but may be a harbinger of things to come.  In that case, the plaintiffs had sued the defendant in a class action for false e-mail advertising under California’s Unfair Competition Law (“UCL”).  Notably, that law – similar to the TCPA – provides for recovery of either “actual damages”, or statutory (termed under the statute as “liquidated”) damages in the amount of $1,000 per offending e-mail.  Cal. Bus. & Prof. Code § 17529.5(b)(1)(B)(ii).

The case was originally filed in California state court, but defendant removed it to the Northern District of California.  Plaintiffs, obviously wanting to keep the case in state court, moved to remand the case on the basis that the defendant could not establish that plaintiffs had Article III standing to sue in federal court.  Way to flip the script.

The defendant argued in response based upon the Ninth Circuit’s opinion in Van Patten v. Vertical Fitness Group, 847 F.3d 1037 (9th Cir. 2017) – where it held that TCPA plaintiffs have Article III standing based upon the “nuisance” and “invasion of privacy” caused by unsolicited calls – that plaintiffs’ allegation they had received an e-mail sent in violation of California’s UCL was in and of itself enough to establish standing.  However, the court distinguished Van Patten on the basis that the false advertising law Plaintiffs had sued under was concerned with “harm caused by the content of commercial speech,” and “not the willingness with which it is received.”  And the court found that plaintiffs had not otherwise alleged any facts “to support a finding that they have incurred an injury from their receipt of the challenged e-mails,” and defendant itself had not “shown such an injury was incurred.”  Thus, the plaintiffs lacked standing under Article III and – consequently – the court ruled it did not have subject matter jurisdiction over plaintiffs’ state law claims and remanded them back to state court.

So let’s pause for a moment here.  The court’s ruling suggests that defendant might have presented something other than just the allegations of plaintiffs’ complaint to establish standing.  Say, maybe discovery responses, or a deposition showing that the plaintiffs had been tangibly harmed by the e-mails in question.  But what an awkward position to be in as a defendant – having to prove up that its actions harmed the plaintiff just to keep the case in federal court.  Having said that, harm or injury isn’t an element of a claim under statutes like California’s false e-mail advertising law (or the TCPA for that matter) which provide for statutory damages.  In that sense, there might not be much harm in a defendant establishing harm for purposes of the Article III analysis.

In any event it seems that, for now, this phenomenon may just be isolated to cases originally filed in state court, then removed to federal court.  But if this trend starts bleeding into cases originally filed in federal court, we might see dismissals based on lack of Article III standing doing more harm than good for defendants.  This is some bizarro world stuff right here.

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