Laboratory Corporation of America Holdings v. Davis

LII note: The U.S Supreme Court has now decided Laboratory Corporation of America Holdings v. Davis

    Issues

    May a federal court certify a class action that includes members who lack Article III standing? 

    Oral argument:
    April 29, 2025
    Court below:
    United States Court of Appeals for the Ninth Circuit

    This case asks the Supreme Court to determine whether the Federal Rules of Civil Procedure allow courts to certify a class in a class action where some members lack Article III standing. The Federal Rules of Civil Procedure require commonality of questions and predominance of similar injuries to allow certification, and lower courts certified Davis and other blind plaintiffs as a class of all legally blind individuals unable to use Labcorp self-check-in kiosks due to their disability. Labcorp contends that was error because the class contains some members who never experienced any harm from Labcorp and therefore lack Article III standing. Davis counters that all class members within the certified class suffered an injury; but, even if they did not, Article III does not require an injury for all unnamed class members at the class-certification stage. The outcome of this case has implications for settlement frequency and cost and the accuracy of certified classes. 

    Questions as Framed for the Court by the Parties

    Whether a federal court may certify a class action pursuant to Federal Rule of Civil Procedure 23(b)(3) when some members of the proposed class lack any Article III injury.

    Facts

    Rule 23 of the Federal Rules of Civil Procedure provides a mechanism for class action lawsuits allowing plaintiffs to file a lawsuit on behalf of a larger group, who can also benefit from any judgment. To proceed with a class action, the plaintiff must satisfy Rule 23(a) by proving that the class members are “numerous,” the legal and factual issues are “common,” the claims are representative of the class members, and the representatives can adequately protect the interests of the class. In addition, the class must satisfy one prong of Rule 23(b). Rule 23(b)(2) allows a court to certify a class seeking an injunction if the opposing party has treated class members similarly, so that the case could appropriately provide relief to the class as a whole. Alternatively, Rule 23(b)(3) allows certification where the shared legal and factual issues predominate over individual ones, and a class action is better than other methods of legal action. Plaintiffs in a class action must also show that they suffered a legally cognizable harm, in order to have standing under Article III of the United States Constitution.  

    Laboratory Corporation of America Holdings (“Labcorp”) operates patient diagnostic services centers.  Its centers allow patient check-ins through express touchscreen kiosks or with a front desk staff member. Because the kiosks lack auxillary aids, visually impaired patients must check in with staff members instead of through the kiosks.  In 2020, Luke Davis and Julian Vargas, legally blind plaintiffs in California brought a suit against Labcorp arguing violations of the Americans with Disabilities Act (ADA) and California’s Unruh Civil Rights Act (Unruh Act). The plaintiffs claimed the Labcorp discriminates against visually impaired patients because its express check-in kiosks are inaccessible to them, and Labcorp does not provide auxiliary aids. The plaintiffs sought declaratory and injunctive relief and recovery of damages.

    The United States District Court for the Central District of California first certified the class in May 2022, approving both an injunctive class under Rule 23(b)(2) and a class seeking damages under Rule 23(b)(3).  . The District Court later amended and refined the class definitions.  

    Labcorp then filed an interlocutory appeal in the United States Court of Appeals for the Ninth Circuit, challenging the plaintiff’s Article III standing and opposing the class certification. The Ninth Circuit held that the plaintiffs maintained standing because although visually impaired patients could check in at a front desk, the inability to utilize the kiosks denied them full and equal enjoyment of Labcorp’s services. The court also affirmed both class certifications. It held that class members need not suffer identical harm and that here, the members suffered from the same injuring behavior, so an injunction solving the complete accessibility for visually impaired patients would provide relief to class members.

    On September 13, 2024, Labcorp petitioned the Supreme Court for a writ of certiorari.  On January 24, 2025, the Supreme Court granted the petition, limiting the question to whether the class may be certified where some of the members lacked Article III standing.

    Analysis

    ARTICLE III LACK OF STANDING

    Labcorp argues that Article III requires standing to be established at the beginning of a case before a court has the power to decide on the merits of a claim. Standing, Labcorp continues, requires each individual plaintiff to show that he or she has suffered an injury that is concrete, particularized, and actual or imminent. Labcorp asserts that plaintiffs in a class action are not excused from this rule, comparing them to intervenors, who are required to establish standing individually when seeking individual relief.

    Labcorp concedes that the manner and degree of evidence required should depend on the stage of the litigation, so that at certification, a plaintiff must: define the class to exclude those lacking injury, plausibly establish that all class members have been harmed, and show that common evidence will prove the injury by the defendant’s conduct. Labcorp responds to Davis’s assertion—that the Court allows a case to proceed when at least one individual plaintiff can demonstrate standing—by stating that the Court has only done so when the case involved requests for injunctive or declaratory relief, not money damages. The right to damages, Labcorp maintains, is peculiar to the individual, and awarding relief to the single party who has established standing will not provide relief to the other unnamed plaintiffs as an injunction might.

    Davis first responds that the Court should practice constitutional avoidance and judicial restraint by addressing Labcorp’s rule-based arguments before deciding on the constitutional issues. Davis further counters that Article III is not a jurisdictional barrier to certifying a Rule 23(b)(3) class action if some members of the class have not established an injury yet.  . Davis contends that a court can certify a class so long as the named plaintiff, which can be a single individual, has standing. Davis cites Tyson Foods, Inc. v. Bouaphakeo as a case in which the Court upheld a class certification despite the presence of a significant number of uninjured class members. Davis argues that Article III did not present a jurisdictional barrier to certification in that case.

    Davis further argues that class actions transpire in two phases: the representative phase, when the named plaintiff litigates on behalf of an evolving class, and the individual phase, when the court determines whether to grant relief to each class member. During the representative phase, Davis reasons that unnamed class members are not invoking the court’s remedial powers, which means they do not have to show standing. Davis contends that unnamed class members do not act like parties and cannot be compared to intervenors. Davis asserts that, unlike an intervenor, an unnamed class member cannot participate in the case; they can only receive notifications and object to any settlement.

    RULE 23(b)(3) PREDOMINANCE REQUIREMENT

    Labcorp claims that before a court can certify a class action, Rule 23(b)(3) requires a plaintiff to prove that common questions of law or fact will predominate over individual issues. A question is common to the class, Labcorp asserts, if the class members can rely on the same evidence to resolve it. Labcorp contrasts common questions with individualized questions, which would require the class to present evidence specific to each member. The purpose of the predominance requirement, Labcorp contends, is to avoid overwhelming the court with individualized issues, should the court grant class certification. Labcorp argues that because Davis will be unable to show injuries of class members using evidence common to the class, Davis will overwhelm the court with member-by-member proof of harm. Labcorp points out that the result will be a multitude of “mini trials,” with Labcorp challenging the evidence and raising defenses as to each individual member.

    Labcorp considers unlikely Davis’s prediction that the court will be able to adopt a process to identify and exclude any uninjured members from a damages award. Labcorp asserts that any mechanism to exclude uninjured members must be narrow enough to ensure individual issues do not overwhelm, but not so narrow as to violate Labcorp’s Seventh Amendment and due process rights to present every defense and to contest every element of Davis’s claim. Labcorp contends that even though Rule 23(b)(3) certification does not require a class without any uninjured members, it does require an administratively feasible number of such members. Labcorp applies this appreciable-number test to Davis’s proposed class, arguing that the number of challenges to standing are too numerous and cannot be handled by a manageable process at or before trial. Therefore, Labcorp continues, the Court should not permit certification.

    Davis agrees with Labcorp’s statement that Rule 23(b)(3) requires an assessment of whether individualized inquiries into standing will predominate over common questions of fact or law. However, Davis counters that common questions can predominate even when an appreciable number of members are uninjured. Davis contends that Labcorp’s appreciable-number test finds no basis in the text of Rule 23(b)(3). Davis argues that the text of the rule does not treat one kind of individualized question, namely injury, as more important than any other questions. Further, Davis maintains that the rule’s language, which requires courts to undertake a case-specific inquiry, does not allow for judge-made, categorical rules like Labcorp’s suggested test.

    Davis asserts that Rule 23(b)(3) demands a qualitative assessment for identifying uninjured class members, rather than a quantitative one. Davis contends that this is the approach of the lower courts. Davis explains that if there is a credible reason to believe some unnamed class members are uninjured, there must be an “administratively feasible mechanism” for identifying and excluding those members before damages are distributed. Davis concedes that only injured people may recover damages and so there must be some way to distinguish an uninjured class member from an injured class member. However, Davis points to TransUnion LLC v. Ramirez as an example of when uninjured class members are easily identified and excluded despite composing the majority of the class. Davis further asserts that a quantitative rule like Labcorp’s appreciable-number test also lacks clarity and certainty in its application, despite purportedly being a bright-line rule.

    DEFINING THE CERTIFIED CLASS

    Labcorp contends that the class in this case includes those who may have been proximate to a kiosk that they were unable to use, regardless of whether they had knowledge or a desire to even some day use the kiosk. Labcorp maintains that this is not a concrete harm. Labcorp further argues that this definition allows uninjured members to permeate the class. Labcorp asserts that the relevant inquiry to determine harm is whether the class members wanted to use the kiosks. To that end, Labcorp contends that approximately a third of all Labcorp patients prefer other methods over using a kiosk, such as checking in at the front desk or online, and that that percentage is higher for legally blind patients.

    Davis counters that Labcorp is applying the wrong class definition. Davis points out that, after Labcorp appealed, the district court modified the class definition. Davis further alleges that Labcorp did not amend its appeal following this modification. Davis argues that Labcorp's appeal is therefore moot because the initial order was replaced by the modified class definition. Even if the appeal is not moot, Davis contends that Labcorp is arguing against the modified class definition on cert. But, Davis argues, the Ninth Circuit ruled on the initial class definition, not on whether class members under the modified class definition lacked injury. Davis asserts that the Supreme Court should, as a result, dismiss the writ as improvidently granted.  Davis also points out that, regardless of which class definition the court uses, all class members suffered an injury because Labcorp knowingly installed kiosks inaccessible to blind patients in all locations.

    Discussion

    CONCERNS ABOUT THE PRESSURE TO SETTLE AND ITS COSTS 

    In support of Labcorp, the National Federation of Independent Business Small Business Legal Center (“NFIB”) argues that including uninjured members in a class may increase both the pressure to settle and the costs of settlement by removing the ability for defendants to assert individualized defenses to claims. NFIB emphasizes the impact of increased settlement pressure and costs on small businesses, which typically lack the funds to pay large damages awards and may even be forced to shut their doors due to costly class actions. The City of Beverly Hills and the City of Los Angeles agree, in support of Labcorp, arguing that towns and municipalities also suffer when large class-action settlements occur because they typically are self-insured and pay out of funds intended for community budgets and city residents. The Mortgage Bankers Association, in support of Labcorp, adds that when class actions seek statutory damages, businesses will pay more than the statutes they are brought under intended because the statutes are often designed with individual claimants in mind, not classes, nor classes of uninjured members. 

    AARP, in support of Davis, counters that class certification and costs of damages are not the driving factor for settlements, and instead all up-front litigation costs promote settlements. AARP therefore argues that early class certification can decrease costs for both plaintiffs and defendants, by removing the costs of discovery and experts required during the certification process. AARP adds that courts maintain the ability to contain settlement costs and pressure, including allowing burdened defendants to stay litigation pending settlement talks to assess the extent of the injuries. Lionel Harper and others (“Lionel Harper”), in support of Davis, argue that defendants often reach settlements lower than the potential damages, so claims often do not reach the maximum potential recovery and increasing the possibility of certification for certain classes will therefore not inflate settlement costs. Claims Administrators, in support of neither party, note that settlements typically occur after negotiations with full knowledge of expert calculations of defendant’s liability, ensuring the accuracy of settlement costs. 

    CONCERNS ABOUT CLASS ACCURACY AND FRAUDULENT CLAIMS

    TechNet, in support of Labcorp, contends that the size of classes and claims can easily be manipulated through vague allegations and indeterminiate impacted members when class members need not prove injury, creating potential ruinous liability.  For instance, TechNet argues that in the tech industry, plaintiff classes could be incentivized to include any user that uses an online service or platform regardless of whether they suffered any injury from using it. Beyond just increasing settlement amounts, TechNet cautions that overinflating class sizes could also harm innovation because tech companies, who have tended to increase access and ease of use on their platforms, could, fearing liability, begin to restrict platform usage. Products Liability Advisory Council, in support of Labcorp, agrees, noting that loosening standing requirements not only increases class size, but also increases the chances for fraudulent claims, which has only become more frequent as artificial-intelligence tools emerge. Products Liability Advisory Council adds that allowing certification without proof of injury will also result in little chance for defendants to dispute class accuracy because class actions often settle before trial, where the inaccuracies would be litigated, leading to settlements based on inaccurate class members.

    Civil Procedure and Complex Litigation Professors, in support of Davis, counter that Labcorp’s view on certification requirements will create vague, subjective criteria for classes, which not only harms accuracy of classes but also the finality and efficiency of judgment. Nobel Laureateeconomists Joseph Stiglitz and Daniel McFadden, in support of Davis, argue that in many cases, injuries cannot necessarily be measured in quantifiable methods, so requiring proof of injury would leave out members with more abstract harms and thus create inaccurate class definitions. AARP adds that even where inaccuracies in classes arise, courts have various tools to address inaccuracies after certification, such as holding separate trials to determine damages, creating subclasses, or altering or amending the class. Lionel Harper adds that requiring proof of injury at certification will create inaccuracies because defendants may conceal, manipulate, or destroy records that prove injuries. For example, if withholding records during discovery results in sanctions but also prevents class certification, defendants might be willing to take on the sanctions, which will likely cost far less than a settlement payout.

    Conclusion

       Sara Fischer and Sierra Berry

    :      Gijs de Bra

    Additional Resources