USA Trends and Developments Contributed by: Amir Nassihi, Michael Mallow, Rachel Straus and Christopher Wray, Shook, Hardy & Bacon LLP
evidence that is often unavailable at the certifi - cation stage. Circuit Responses to the Overpayment Theory Rejecting pure overpayment theories The Fourth, Eighth and Fifth Circuits require evidence of actual defects or harm. The Fourth Circuit rejected overpayment standing in Alig, 126 F.4th at 974, for lack of proof of inflated appraisals. The Eighth Circuit requires manifest defects per Johannessohn, 9 F.4th 981 (8th Cir. 2021) and the Fifth Circuit in Rivera v Wyeth- Ayerst Lab., 283 F.3d 315, 320 (5th Cir. 2003) emphasised that receiving the expected benefit negates economic injury claims. The ninth circuit’s permissive view Conversely, the Ninth Circuit in cases like Wolin v Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1173 (9th Cir. 2010), and Nguyen. Nissan N. Am., Inc., 932 F.3d 811, 822 (9th Cir. 2019), allows class certification based on alleged defects alone, without manifestation or actual harm hav - ing to be proved. Affirmative Misrepresentations v Non- Disclosure A crucial distinction arises between cases involving affirmative misrepresentations and those of mere non-disclosure. The courts are more receptive to overpayment theories when defendants have actively misled consumers, as this strengthens the causal link between conduct and injury. Non-disclosure cases require specu - lative inferences about consumer behaviour, making standing harder to establish. There is far greater confusion and disagreement among courts in non-disclosure cases. For example, Ninth Circuit precedent in pub - lished cases like Bowen v Energizer Holdings,
118 F.4th 1134, 1145 n.10 (9th Cir. 2024) make clear that it is “an open question in this Circuit whether an ‘overpayment theory of economic injury’ is viable in a case that does not involve misrepresentations”. However, other Ninth Cir - cuit cases, typically unpublished appellate dis - positions or district court decisions routinely assume that the Ninth Circuit permits such a theory. The Problem of Incomplete Damages Models Another complication is claimants seeking cer - tification based on incomplete damage models, arguing that damages only need to be“capable”of class wide proof and not actually be proved. This approach risks certifying classes without meaningful proof of injury or harm. The Ninth Circuit’s decision in Lytle v Nutramax, 114 F.4th 1011, 1033–34 (9th Cir. 2024), exemplifies this permissive stance, allowing certification despite unperformed damage analyses. While the case law supporting certification without evidence is often presented in the context of Rule 23, pub - lished cases have not grappled with whether this is permissible in situations where the dam - ages theory goes beyond simply addressing the amount of damages and questions the existence of damages in the first place. In other words, can a class be certified on the promise that Article III standing may be demonstrated in the future? Why This Matters The standing requirements for absent class members have significant practical conse - quences. Class certification dramatically shifts litigation dynamics, often increasing settlement pressure on defendants regardless of actual inju - ry. Including large numbers of uninjured mem - bers inflates exposure, encouraging settlement of meritless claims and undermining litigation’s deterrence function.
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