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[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-10663
____________________
TROY SMITH,
individually and on behalf of all others similarly situated,
BRENDAN C. HANEY,
individually and on behalf of all others similarly situated,
GERALD E. REED, IV,
individually and on behalf of all others similarly situated,
Plaintiffs-Appellees,
COSTA DEL MAR, INC.,
a Florida corporation,
Defendant-Appellee,
versus
MITCHELL GEORGE MIORELLI,
AUSTIN VALLS,
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2 Opinion of the Court 22-10663
JOHN W. DAVIS,
Interested Parties-Appellants.
____________________
Appeal from the United States District Court
for the Middle District of Florida
D.C. Docket No. 3:18-cv-01011-TJC-LLL
____________________
Before BRANCH, LUCK, and TJOFLAT, Circuit Judges.
BRANCH, Circuit Judge:
This is an appeal from a district court order approving a
class-action settlement that resolved three different lawsuits
against Costa Del Mar, Inc. (“Costa”) for its allegedly deceptive
warranty and repair policies on its sunglasses. The district court
determined that the settlement provides over $32 million in
monetary relief—over $27 million in product vouchers and $5
million in injunctive relief—to four classes of consumers of Costa’s
sunglasses.
For obvious reasons, Costa and the named plaintiffs do not
argue that the district court erred in approving the settlement.
Instead, three unnamed class members—Mitchell Miorelli, John
Davis, and Austin Valls (hereinafter, “Objectors”)—appeal the
district court’s approval order. In essence, Objectors argue that the
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district court erred in approving the settlement because it
incorrectly determined that the settlement was not a coupon
settlement, thereby failing to apply the heightened standard of
scrutiny as required under the Class Action Fairness Act (“CAFA”),
28 U.S.C. § 1712(e).
We do not reach the merits of the CAFA argument,
however, because, as Objectors argue on appeal, the named
plaintiffs lacked Article III standing to pursue their claims for
injunctive relief. As a result, the district court necessarily abused
its discretion in approving the settlement because the court’s
holistic review of the settlement’s fairness included relief that it had
no jurisdiction to award. Accordingly, we VACATE the district
court’s order and REMAND for proceedings consistent with this
opinion.
I. Background
Costa is a sunglasses manufacturer that represented to
buyers that their sunglasses were backed by lifetime warranties.
According to the named plaintiffs, these lifetime warranties
required Costa to repair their sunglasses either free-of-charge or for
a nominal fee. Each of the named plaintiffs purchased Costa
sunglasses and, after the sunglasses became damaged, sent them to
Costa for repair. Instead of repairing the sunglasses free-of-charge
or for a nominal fee, however, Costa charged the named plaintiffs
up to $105.18 to repair their sunglasses. Accordingly, the named
plaintiffs initiated three separate class action lawsuits against Costa
asserting various claims.
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Troy Smith initiated a class-action lawsuit in the U.S. District
Court for the Middle District of Florida (hereinafter the “Smith
lawsuit”), bringing a one-count Magnuson-Moss Warranty Act
(“MMWA”) claim against Costa. 1 Smith’s complaint alleged that
he and unnamed class members suffered past injuries in the form
of an $11.95 payment to have their sunglasses repaired when
Costa’s warranty allegedly required repairs “without charge.”
Smith did not allege that he was likely to suffer any future injury.
Despite not alleging any threat of future injury, however, Smith
requested both monetary damages as well as injunctive relief in the
form of “[a]n [o]rder enjoining Costa from violating the MMWA.”
Gerald Reed also initiated a class-action lawsuit in the
Middle District of Florida (hereinafter the “Reed lawsuit”), bringing
a Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”)
claim. Reed alleged that when he sent his sunglasses to Costa for
repair, Costa charged him “$100.95 in repair and shipping costs,
which was far more than the ‘nominal fee’ promised by Costa.”
Accordingly, Reed alleged that he and other class members were
1 The MMWA vests federal district courts with subject matter jurisdiction to
hear claims brought under the Act. 15 U.S.C. § 2310(d)(1)(B). However,
Congress imposed limits on this jurisdictional grant, including limitations on
the maintenance of class actions. Id. § 2310(d)(3). Specifically, a class action
brought under the MMWA is not cognizable in federal court if “the number
of named plaintiffs is less than one hundred.” Id. § 2310(d)(3)(C). Smith,
however, was the lone named plaintiff in his class action lawsuit and could not
rely on the federal question jurisdiction provided by the MMWA. His initial
complaint invoked the federal court’s diversity jurisdiction under
28 U.S.C. § 1332(d)(2).
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injured by Costa because they “[d]id not receive the benefit of the
repair warranty made by Costa” and “[p]aid more than a ‘nominal’
fee for repairs.” Like Smith, Reed did not allege that he was likely
to suffer any future injury. However, Reed also requested not only
monetary damages but injunctive relief.
Nicholas Howland initiated a class-action lawsuit in the
Circuit Court, Fourth Judicial Circuit in and for Duval County,
Florida, bringing both a FDUTPA and a MMWA claim against
Costa. Brendan Haney later replaced Howland as the named
plaintiff in that lawsuit (hereinafter the “Haney lawsuit”). Haney
alleged that Costa charged him “a total of $105.18 in repair and
shipping costs” despite its warranty that it would repair glasses for
a “nominal fee.” Like the named plaintiffs in the other two
lawsuits, Haney did not allege that he faced any threat of future
injury by Costa’s warranty practices, only past harm. However, in
addition to requesting actual damages, Haney requested—just like
the plaintiffs in the other two lawsuits—injunctive relief.
On February 25, 2020, after extensive litigation in all three
lawsuits, Smith moved to file an Amended Complaint to facilitate
a settlement agreement that would resolve the claims in all three
cases by providing payment in the form of product vouchers as
well as injunctive relief requiring Costa to change its label and
warranty practices. The district court granted the motion, and
Smith filed an Amended Complaint, consolidating all of the claims
from the Smith, Haney, and Reed lawsuits. The Amended
Complaint in Smith continued to reference only past, not future,
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injuries. 2 It made no allegations that any of the named plaintiffs
faced the prospect of future injury by needing to have their
sunglasses repaired again. Despite the lack of allegations regarding
the threat of future harm, the named plaintiffs again requested the
court to grant injunctive relief in the form of an order “enjoining
[Costa] from falsely promising to repair or replace its
sunglasses . . . for a nominal fee” as well as “enjoining [Costa] from
violating the MMWA.”
On May 1, 2020, the named plaintiffs filed an unopposed
motion for preliminary approval of the class settlement pursuant
to Rule 23(e) of the Federal Rules of Civil Procedure. They argued
that the proposed settlement would result in “over $60 million of
value to the [c]lass” in the form of product vouchers and attorneys’
fees, as well as non-monetary injunctive relief requiring Costa to
change “certain consumer-facing marketing materials and product
packaging” to remove language regarding the strength of Costa’s
warranties. Additionally, the plaintiffs emphasized that product
vouchers that were not redeemed would result in a cy pres payment
of up to $1,000,000 to an unnamed charity.
2 With respect to Smith, the Amended Complaint alleged that “Smith and the
members of the class have paid $11.95 plus tax per warranty claim to Costa,
when the MMWA required that Costa honor its warranty ‘without charge’”
and “Costa failed to comply with its obligations under the MMWA, and each
of the members of the class were harmed by Costa’s failures.” As to Reed and
Haney, the Amended Complaint alleged “[a]s an immediate, direct, and
proximate result of Costa’s false warranty, Costa injured Plaintiffs Reed and
Haney, and the class members.”
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The district court granted preliminary approval of the
settlement, noting “it [was] satisfied that the settlement [was] not
a coupon settlement.” It instructed the parties to disseminate the
class notice and set a final fairness hearing. After the class notice
was disseminated, Objectors filed individual objections arguing
that the settlement was a coupon settlement and subject to
heightened scrutiny as required by CAFA, 28 U.S.C. § 1712. 3 They
argued that pursuant to 28 U.S.C. § 1712(a) any award of attorneys’
fees to class counsel must be based on the value of product
vouchers that are actually redeemed, not the value of vouchers that
would be distributed. Thus, they asserted that the district court
should have determined the value of the vouchers likely to actually
be redeemed and awarded class counsel attorneys’ fees based on
that figure.
The district court considered the objections but ultimately
overruled them. Relying on the Ninth Circuit’s decision in In re
Online DVD-Rental Antitrust Litigation, 779 F.3d 934 (9th Cir. 2015),
3 Pursuant to 28 U.S.C. § 1712, “[i]n a proposed settlement under which class
members would be awarded coupons, the court may approve the proposed
settlement only after a hearing to determine whether, and making a written
finding, that the settlement is fair, reasonable, and adequate for class
members.” 28 U.S.C. § 1712(e). Additionally, “the court may, in its discretion
upon the motion of a party, receive expert testimony from a witness qualified
to provide information on the actual value to the class members of the
coupons that are redeemed.” 28 U.S.C. § 1712(d). Objectors argue that this
statute required the district court to determine the actual value of product
vouchers that would be redeemed before approving the settlement as fair,
reasonable, and adequate.
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the district court concluded that the settlement was not a coupon
settlement and thus based the settlement’s value on the face value
of the product vouchers to be distributed along with the
settlement’s injunctive relief. Accordingly, it determined that the
face value of these vouchers totaled $27.2 million and that the value
of the settlement’s injunctive relief was worth $5 million, making
the settlement’s value approximately $32 million. The district
court then awarded class counsel 25% of the settlement’s value,
which amounted to $8 million.4
At bottom, the district court approved the settlement,
including the injunctive relief, determining that the settlement was
fair, reasonable, and adequate. Objectors timely appealed the
district court’s approval of the settlement, arguing that the district
court erred in (1) determining that the settlement agreement was
not a coupon settlement; (2) calculating the attorneys’ fees owed
to class counsel, including by awarding attorneys’ fees based on the
face value of the vouchers as opposed to the number of vouchers
redeemed; (3) approving the potential cy pres payment; (4) failing
to adequately consider what Objectors alleged was evidence of a
collusive settlement;5 (5) awarding Objectors a relatively low
4 Because this $8 million figure was $4 million less than class counsel
requested, and per the terms of the settlement this difference was to benefit
the class, the district court requested additional briefing on how the $4 million
should be distributed to the class. The district court ultimately decided that
this $4 million would be distributed to the class in the form of cash payments.
5 Objectors argued that a “clear-sailing” provision proves that the settlement
agreement was the result of collusion. This provision called for the settlement
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amount because it determined that Objectors provided little value
to the class; and (6) considering the value of the injunctive relief in
the Settlement because the named plaintiffs lacked Article III
standing to pursue injunctive relief. Because we agree that named
plaintiffs lacked Article III standing for injunctive relief, we need
not reach Objectors’ other arguments.
II. Standard of Review
“Questions of the litigants’ standing may be raised at any
time, and are reviewed de novo.” Williams v. Reckitt Benckiser LLC,
65 F.4th 1243, 1251 (11th Cir. 2023). We review a district court’s
decision to approve a class-action settlement for abuse of
discretion. Johnson v. NPAS Sols., LLC, 975 F.3d 1244, 1251 n.2 (11th
Cir. 2020). “A district court abuses its discretion if it applies an
incorrect legal standard, follows improper procedures in making
the determination, or makes findings of fact that are clearly
erroneous.” Williams, 65 F.4th at 1251 (quotation omitted). “An
error of law is an abuse of discretion per se.” Id. (quotation
omitted).
III. Discussion
Objectors argue that the district court erred in assigning a $5
million value to the injunctive relief in the settlement because none
agreement to become null and void in the event that the district court
determined that the settlement was a coupon settlement. Objectors argued
that the only reason that the parties included this provision was to benefit class
counsel who would otherwise receive less money if the settlement were
deemed a coupon settlement.
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of the named plaintiffs had Article III standing to pursue injunctive
relief. 6 Article III limits federal courts to deciding “Cases” and
“Controversies.” U.S. Const. art. III, § 2. “The doctrine of standing
is one of several doctrines that reflect this fundamental limitation.”
Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009). “The
requisite elements of Article III standing are well-established[.]”
Fed. Election Comm’n v. Cruz, 596 U.S. 289, 296 (2022). A plaintiff
“must show (1) that he suffered an injury in fact that is concrete,
particularized, and actual or imminent, (2) that the injury is
traceable to—that is, was likely caused by—the defendant’s legal
violation, and (3) that the injury would likely be redressed by
judicial relief.” Walters v. Fast AC, LLC, 60 F.4th 642, 647 (11th Cir.
2023) (quotations omitted). A plaintiff must demonstrate he has
standing to sue “throughout all stages of litigation.” United States
v. Amodeo, 916 F.3d 967, 971 (11th Cir. 2019) (quotation omitted).
Additionally, “a plaintiff must demonstrate standing separately for
each form of relief sought.” TransUnion LLC v. Ramirez, 594 U.S.
413, 436 (2021) (quotation omitted). “Thus, even if a plaintiff can
establish standing to pursue separate claims for monetary relief
based on allegations of past harm, before a court may grant that
6 The main argument that Objectors raised was that the district court abused
its discretion in approving the settlement because it incorrectly determined
that the settlement was not a coupon settlement. Because the named plaintiffs
lacked Article III standing to pursue injunctive relief, and because of the
MMWA jurisdiction issue we raise in footnote 8, we do not address the merits
of whether the damages portion of the settlement was a coupon settlement
subject to CAFA requirements.
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plaintiff injunctive relief, the plaintiff must separately establish a
threat of ‘real and immediate,’ as opposed to ‘conjectural or
hypothetical,’ future injury.” Williams, 65 F.4th at 1253 (emphasis
in original) (quoting City of L.A. v. Lyons, 461 U.S. 95, 102 (1983)). 7
Here, none of named plaintiffs alleged any threat of future
injury, let alone a threat that was real and immediate. For example,
the Amended Complaint does not allege that any of the named
plaintiffs have sunglasses that are broken and need to be repaired
such that that the named plaintiffs are at an imminent risk of being
harmed by Costa’s alleged misrepresentations. Rather, the
Amended Complaint alleged past harm only. Accordingly, neither
Smith, Haney, nor Reed had Article III standing to pursue
injunctive relief when the district court approved the settlement.
As our recent decision in Williams makes clear, a district
court abuses its discretion in approving a class action settlement
when the named plaintiffs lack Article III standing to pursue
injunctive relief, yet the district court considers the injunctive relief
when determining whether the settlement is fair, reasonable, and
adequate. Williams, 65 F.4th at 1253–57. “This is because . . . the
decision whether to approve a class-action settlement is a holistic
one; the various parts of a settlement must be considered in concert
7 In Williams, we noted that “[t]he movant’s burden of proof” to establish
standing “at the class-certification stage is unclear” and assumed, for purposes
of that appeal, “that the applicable standard [was] a pleading standard.”
Williams, 65 F.4th at 1254. We do the same here, because “[t]he [n]amed
[p]laintiffs fail to satisfy even that low burden.” Id.
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to determine whether the Settlement as a whole provides relief to
the [c]lass that is ‘fair, reasonable, and adequate.’” Id. at 1256–57
(italics in original) (quoting Fed. R. Civ. P. 23(e)(2)). Thus, when a
district court “lack[s] 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.” Id. at 1257.
Because the district court lacked the power to grant the
injunctive relief in the parties’ settlement agreement, it abused its
discretion by considering the injunctive relief’s value in its
determination that the settlement was fair, reasonable, and
adequate. We thus VACATE the district court’s order and
REMAND for proceedings consistent with this opinion.
VACATED AND REMANDED.8
8 The parties have raised other jurisdictional issues that the district court
should consider in the first instance. For example, on remand, the district
court should consider whether it had subject matter jurisdiction over the Smith
lawsuit—the lawsuit into which the others were consolidated. The Smith
lawsuit brought a MMWA claim only. Some of our sister circuits have held
that when the jurisdictional requirements of the MMWA are not met, CAFA
does not provide an alternative basis for a federal court to exercise subject
matter jurisdiction over a case brought under the MMWA. See Rowland v.
Bissell Homecare, Inc., 73 F.4th 177 (3d Cir. 2023); Floyd v. Am. Honda Motor Co.,
966 F.3d 1027 (9th Cir. 2020). If after consideration of the jurisdictional issues,
the district court determines it has subject matter jurisdiction, it “should
account only for relief that the Named Plaintiffs have standing to pursue and
that it has jurisdiction to grant when assessing the overall fairness of any
settlement (assuming, of course, that the parties reach a new settlement
agreement and submit it for the district court’s approval).” Williams, 65 F.4th
at 1258.
