By Gerald L. Maatman, Jr., Jennifer A. Riley, and Kathryn Brown
Duane Morris Takeaways: On June 3, 2024, in Albright et al v. Ascension Michigan et al, No. 23-1996 (6th Cir. June 3, 2024), a three-judge panel of the Sixth Circuit reversed and remanded a district court’s approval of a nationwide class action settlement because the plaintiffs lacked Article III standing. The case illustrates the fundamental requirement of federal court jurisdiction that all named plaintiffs have an alleged injury traceable to the settling defendants. The decision is required reading for litigants seeking court approval of a Rule 23 class action settlement.
Case Background
On July 12, 2022, over 100 current or former employees sued the Michigan-based Ascension healthcare organization for alleged violations of Title VII and Michigan state law occurring at its Michigan hospitals. The plaintiffs claimed that the defendant entities discriminated against them based on religion and unlawfully denied their request for a religious exemption from the organization’s mandatory COVID-19 vaccination policy. The plaintiffs sought to represent a Rule 23 class of solely-Michigan-based workers.
On April 24, 2023, the parties jointly moved the U.S. District Court for the Western District of Michigan for preliminary approval of a Rule 23 settlement. In the proposed settlement agreement, the settling parties expanded the scope of the lawsuit to the parent company of the Michigan defendant entities and 24 affiliate hospitals, clinics, and other entities in Alabama, Washington, D.C., Indiana, Kansas, Maryland, Michigan, Missouri, New York, Oklahoma, Texas, Tennessee and Wisconsin. Two days later, the district court preliminarily approved the settlement and issuance of notice to the class.
The settling parties filed an amended complaint to facilitate the proposed nationwide class action settlement of claims challenging the mandatory vaccination policy in place at Ascension’s various entities. The amended complaint reflected the same Michigan-based plaintiffs as the original complaint.
About 2,700 of the 4,000 workers who received notice opted-in to the settlement, with 281 workers opting out. Nine opt-ins who had worked for the newly-added entities objected to the settlement on August 23, 2023.
After a final fairness hearing held on October 5, 2023, the district court granted the settling parties’ motion for final approval of the settlement on November 2, 2023 over the objections of the nine objectors.
The objectors filed two notices of appeal to the Sixth Circuit, which were consolidated together. In addition to opposing the settlement on standing grounds, the objectors argued that, by expanding the scope of the settlement class to a nationwide group, the proposed settlement diluted the value of back pay payouts each class member would receive.
The Sixth Circuit’s Ruling
The panel judges of the Sixth Circuit, in a brief unpublished opinion, unanimously ruled that the settlement failed on standing grounds.
For Article III standing to exist, the defendant’s alleged actions must have caused the plaintiff to suffer a concrete “injury-in-fact.” In a class action, for any defendant, at least one named plaintiff must have an injury traceable to the defendant.
Writing for the panel, Circuit Judge Cole reasoned that the named plaintiffs had no injury traceable to the 25 entities added to the lawsuit for settlement purposes. In expanding the scope of the defending entities without “add[ing] any new named plaintiffs to match the additional affiliate defendants,” the settling parties failed to establish subject matter jurisdiction for the district court to approve the settlement. Id. at 3.
Absent standing, the Sixth Circuit concluded that the 95 Michigan-based named plaintiffs could not settle claims on behalf of thousands of other employees who had worked for Ascension entities outside of Michigan.
Accordingly, the Sixth Circuit vacated the district court’s orders approving the class-wide settlement, certifying the settlement class, and awarding attorneys’ fees and expenses to plaintiffs’ counsel. The Sixth Circuit remanded the case to the district court for further proceedings.
Implications For Employers
The ruling in Ascension illustrates that standing challenges to putative class actions are a powerful tool not only at the pleading stage, but at all phases of class action litigation.
Prior to resolving any Rule 23 claims — particularly for nationwide settlements — it is essential for counsel defending class actions to vet the standing of each named plaintiff. Otherwise, just as the litigants in Ascension experienced, even a settlement approved in final form by a district court is vulnerable to being unraveled on appeal.