Ehrheart v. Verizon Wireless

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________

No. 08-4323
___________

NICOLE EHRHEART; JOHN J. GARLAND,
Individually and on behalf of all others similarly situated

v.

VERIZON WIRELESS; DOES 1 THROUGH 10 inclusive;
VERIZON WIRELESS SERVICES, LLC; CELLCO
PARTNERSHIP d/b/a VERIZON WIRELESS

NICHOL EHRHEART and JOHN GARLAND,

Appellants
___________

On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 2-07-cv-01165)
District Judge: The Honorable Donetta W. Ambrose
___________

ARGUED OCTOBER 29, 2009
 BEFORE: SMITH, FISHER,
and NYGAARD, Circuit Judges.

(Filed: June 15, 2010)
___________

Gary F. Lynch, Esq. (Argued)
R. Bruce Carlson, Esq.
Carlson Lynch
36 North Jefferson Street
PO Box 7635
New Castle, PA 16107

Counsel for Appellant, Ehrheart

Justin S. Gilbert, Esq.
Gilbert Russell & McWherter
101 North Highland
Jackson, TN 38301

Counsel for Appellant, Garland

Michael A. Carvin, Esq. (Argued)
Noel J. Francisco, Esq.
John M. Gore, Esq.
Jones Day
51 Louisiana Avenue, NW
Washington, DC 20001

2
Amy E. Dias, Esq.
Jones Day
500 Grant Street, Suite 4500
Pittsburgh, PA 15219

Counsel for Appellees

___________

OPINION OF THE COURT
___________

NYGAARD, Circuit Judge.

I.

We focus in this appeal on the parameters of a district
court’s role in reviewing class action settlements. The factual
and procedural background is straightforward. The Fair and
Accurate Credit Transaction Act (FACTA), 15 U.S.C. § 1681 et
seq., prohibits a seller from printing a receipt that displays more
than the last five digits of a buyer’s credit or debit card and/or
the expiration date of the credit or debit card. 15 U.S.C. §
1681c(g)(1). The Appellants claimed that Verizon Wireless
violated these provisions and filed a class action lawsuit against
the company.

The parties participated in court-ordered mediation,
starting in January of 2008. During this time, legislation was
pending before Congress—the Credit and Debit Card Receipt
Clarification Act of 2007, 15 U.S.C. § 1681n(d)—which would

3
amend FACTA by eliminating the Appellants’ cause of action.
After completing mediation, the parties arrived at a settlement
which they submitted to the District Court for approval pursuant
to F ED.R.C IV.P. 23(e) on April 22, 2008. The District Court
entered a preliminary order approving the settlement two days
later.

The Clarification Act was signed into law by President
Bush on June 3, 2008. Six days later, Verizon filed a motion
asking the District Court to vacate its order granting preliminary
approval to the settlement. The District Court granted this
motion.1 Verizon then moved for a judgment on the pleadings,
which was granted on September 25, 2008. We will reverse.

II.

Federal Rule of Civil Procedure 23(e) requires a district
court to approve any settlement of a certified class before the
settlement becomes final. In evaluating a class action settlement
under Rule 23(e), a district court determines whether the
settlement is fundamentally fair, reasonable, and adequate. Id.
The purpose of Rule 23(e) is to protect the unnamed members

1.
We note that in other almost identical cases, district
judges within this Circuit have denied requests to set aside
FACTA settlements after passage of the Clarification Act. See
Colella v. Univ. of Pittsburgh, 569 F.Supp.2d 525 (W.D. Pa.
2008); Hughes v. InMotion Entertainment, 2008 WL 3889725
(W.D. Pa. Aug. 18, 2008); Curiale v. Lenox Group Inc., 2008
WL 4899474 (E.D. Pa. Nov. 14, 2008).

4
of the class from unjust or unfair settlements. See In re AT & T
Corp., 455 F.3d 160, 175 (3d Cir. 2006) (quoting In re Cendant
Corp. Litig., 264 F.3d 201, 231 (3d Cir. 2001)). Here, the
District Court never considered whether to approve the
settlement because, citing the Clarification Act, the court
vacated its preliminary approval.

In vacating its order granting preliminary approval to the
settlement, the District Court lost sight of three important points
that guide our decision today. First, there is a restricted, tightly
focused role that Rule 23 prescribes for district courts, requiring
them to act as fiduciaries for the absent class members, but that
does not vest them with broad powers to intrude upon the
parties’ bargain. Second, a strong public policy exists, which is
particularly muscular in class action suits, favoring settlement of
disputes, finality of judgments and the termination of litigation.
Third, our jurisprudence holds that changes in the law after a
settlement is reached do not provide ground for rescission of the
settlement.2

A. Appropriate Role of the District Court

Under F ED.R.C IV.P. 23(e), a district court’s primary role
is to determine whether the settlement is fundamentally fair,
reasonable and adequate. In re Ins. Brokerage Antitrust Litig.,
579 F.3d 241, 258 (3d Cir. 2009). The purpose of Rule 23(e) is
to protect the unnamed members of the class. In re Warfarin
Sodium Antitrust Litig., 391 F.3d 516, 534 (3d Cir. 2004).

2.
We exercise plenary review when reviewing a district
court’s grant of judgment on the pleadings. Jablonski v. Pan Am
World Airways, Inc., 863 F.2d 289, 290 (3d Cir. 1988). We also
exercise plenary review in construing and constructing a
settlement agreement. Coltec Indus. Inc. v. Hobgood, 280 F.3d
262, 269 (3d Cir. 2002).

5
Under Rule 23(e), a district court acts as a fiduciary, guarding
the claims and rights of the absent class members. In re AT&T,
455 F.3d at 175 (citing In re Cendant Corp. Litig., 264 F.3d at
231); see also, In re General Motors Corp. Pick-Up Truck Fuel
Tank Prods. Liability Litig., 55 F.3d 768, 782 (3d Cir. 1995).

The requirement that a district court review and approve
a class action settlement before it binds all class members does
not affect the binding nature of the parties’ underlying
agreement. In re Syncor ERISA Litig., 516 F.3d 1095, 1100 (9th
Cir. 2008). Put another way, judicial approval of a class action
settlement is a condition subsequent to the contract and does not
affect the legality of the proposed settlement agreement. Collins
v. Thompson, 679 F.2d 168, 172 (9th Cir. 1982). A district court
is not a party to the settlement, nor may it modify the terms of a
voluntary settlement agreement between parties. In Evans v.
Jeff D., 475 U.S. 717 (1986), the Supreme Court explained the
role of a district court in reviewing settlements in class actions:

Rule 23(e) wisely requires court approval of the
terms of any settlement of a class action, but the
power to approve or reject a settlement negotiated
by the parties before trial does not authorize the
court to require the parties to accept a settlement
to which they have not agreed.

Id. at 726-27 (footnotes omitted). Similarly, our role as an
appellate court is to ascertain whether or not the trial judge
clearly abused his or her discretion in approving or rejecting a
settlement agreement. See GM Truck, 55 F.3d at 782; Cotton v.
Hinton, 559 F.2d 1326, 1333 (5th Cir. 1977).

We have no doubt that the settlement agreement reached
in this case is a binding and enforceable contract under general
principles of contract interpretation. The settlement agreement
was negotiated through and executed by experienced counsel on

6
both sides, following mediation with a well-respected and
experienced mediator. The parties acknowledged to the District
Court that the agreement was negotiated in good faith and at
arm’s length. Verizon admits no wrongdoing in the settlement
agreement and denies all liability, but agreed to the settlement
after taking into account the uncertainty and risks inherent in
any litigation, especially in multi-party cases like this litigation.

Post-settlement, Verizon made the argument, which was
endorsed by the District Court, that a settlement agreement is
not a binding contract until final judicial approval. This is
incorrect. There are two steps in reaching a settlement in a class
action. First, the parties reach an agreed-to settlement. Second,
the District Court evaluates the agreement as a fiduciary for
absent class members. In re Ins. Brokerage Antitrust Litig., 579
F.3d at 257. The reason for judicial approval is to ensure that
other unrepresented parties (absent class members) and the
public interest are fairly treated by the settlement reached
between the class representatives and the defendants. Collins,
679 F.2d at 172. Here, the District Court’s own local rules
specifically establish this fiduciary relationship by requiring
parties to class action settlements to give the court “sufficient
information for the Court to make findings with respect to the
fairness and reasonableness of the settlement to the class.”
Local Rule of the United States District Court for the Western
District of Pennsylvania 23(i) (emphasis added). We make
clear that this fiduciary protection does not extend to defendants
in a class action, who are in a position to protect their own
interests during negotiations. See Ibarra v. Texas Employment
Comm’n, 823 F.2d 873, 878 (5 th Cir. 1987).

If Verizon’s argument was accepted, and the District
Court’s action in vacating its preliminary approval affirmed, the
settlement process would become meaningless since either party
to a class action settlement (or any other type of settlement that
requires court approval) could back out of an agreement at any

7
time before court approval and avoid any legal repercussions for
breaching the earlier offer and acceptance. Here, the
Clarification Act was pending before Congress when the parties
negotiated their agreement. In negotiating this agreement,
Verizon bet on the certainty of settlement instead of gambling
on the uncertainties of future legislative action. Verizon lost,
and the District Court erred by letting it replay its hand.

B. Presumption in Favor of Settlements

The District Court’s decision also ran afoul of the strong
presumption in favor of voluntary settlement agreements, which
we have explicitly recognized with approval. See, e.g., Penwalt
Corp. v. Plough, 676 F.2d 77, 79-80 (3d Cir. 1982). This policy
is also evident in the Federal Rules of Civil Procedure and the
District Court’s Local Rules, which encourage facilitating the
settlement of cases. See, e.g., F ED.R.C IV.P. 16(a)(5) (one of the
five purposes of a pretrial conference is to facilitate settlement);
L.Cv.R. 16.2(B) (recognizing the burden litigation places on
parties and mandating that they utilize a broad range of court-
sponsored ADR processes); L.Cv.R. 23(C)(5) (including among
matters to be discussed at pretrial conference the timing and
plan for methods of alternative dispute resolution). This
presumption is especially strong in “class actions and other
complex cases where substantial judicial resources can be
conserved by avoiding formal litigation.” GM Truck, 55 F.3d at
784. The strong judicial policy in favor of class action
settlement contemplates a circumscribed role for the district
courts in settlement review and approval proceedings. This
policy also ties into the strong policy favoring the finality of
judgments and the termination of litigation. Settlement
agreements are to be encouraged because they promote the
amicable resolution of disputes and lighten the increasing load
of litigation faced by the federal courts. See D.R. by M.R. v.
East Brunswick Bd. of Educ., 109 F.3d 896, 901 (3d Cir. 1997).
In addition to the conservation of judicial resources, the parties

8
may also gain significantly from avoiding the costs and risks of
a lengthy and complex trial. Id. By vacating its preliminary
approval of the settlement and by granting Verizon a judgment
on the pleadings, the District Court permitted Verizon to void its
settlement agreement when it became unpalatable and digressed
from the federal policy of encouraging class action settlement
agreements.

C. Changes in the Law after Settlement

The parties do not dispute on appeal (nor did they before
the District Court) that the Clarification Act eliminated the
Appellants’ cause of action or that the Act retroactively
encompasses the Appellants’ claims. The question on appeal,
therefore, is not whether the Clarification Act, enacted earlier,
would have eliminated Appellants’ underlying claims, but rather
whether the Act moots the settlement agreement the parties
executed while that legislation was pending in Congress. We
conclude that it does not.

We first note that changes in the law after settlement do
not affect the validity of the agreement and do not provide a
legitimate basis for rescinding the settlement. Albeit in the
context of a F ED.R.C IV.P. 60(b) motion, we have held that a
favorable change in the law post-settlement does not give a
settling party a basis to repudiate an otherwise valid settlement
agreement. Coltec Industries, Inc. v. Hobgood, 280 F.3d 262,
273 (3d Cir. 2002); see also Agostini v. Felton, 521 U.S. 203,
239 (1997) (observing that “intervening developments in the law
by themselves rarely constitute the extraordinary circumstances
required for relief under Rule 60(b)(6)”); Kramer v. Gates, 481
F.3d 788, 792 (D.C. Cir. 2007). Of particular concern in Coltec
was the belief that the company was attempting to escape the
consequences of a bargain it regretted in hindsight. Id. We
noted that “even if Coltec’s decision to settle was improvident
in hindsight, the decision has been made and cannot be

9
revisited,” and held that the company must bear “the
consequences of its informed, counseled and voluntary
decision” to settle. Id. at 275.

In Coltec, we analogized a litigant’s decision to settle to
a determination not to appeal an unfavorable determination. Id.
at 274. We found such decisions, when voluntarily made, to be
calculated and deliberate choices by a litigant, choices which
provide no relief when the legal landscape subsequently
changes. Id. (citing Ackerman v. United States, 340 U.S. 193,
198 (1950)). Like a decision to forgo an appeal, the decision to
settle a case is a considered one. The choice to settle implicitly
acknowledges calculated risks and, in the end, reflects the
deliberate decision of both parties to opt for certainty in
terminating their litigation. See Ackerman, 340 U.S. at 198. We
will not relieve a party of that decision because hindsight reveals
that its decision was, given later changes in the law, probably
wrong. Id. The District Court erred by permitting Verizon to
escape the consequences of its informed, counseled and
voluntary decision to settle. Later changes in the law gave it no
foundation to do so. See Coltec, 280 F.3d at 275.

It is essential that the parties to class action settlements
have complete assurance that a settlement agreement is binding
once it is reached. See In re Syncor, 516 F.3d at 1100 (citing
Collins, 679 F.2d at 172). The fact that a settlement agreement
is governed by Rule 23 does not diminish its enforceability as a
contract. Where, as here, the parties have executed an
agreement, a party cannot avoid its independent contractual
obligations simply because a change in the law confers upon it
a benefit that could have altered the settlement calculus.

Our dissenting colleague believes that the passage of the
Clarification Act rendered the settlement agreement moot. We
do not agree. Mootness asks “whether changes in circumstances
that prevailed at the beginning of the litigation have forestalled

10
any occasion for meaningful relief.” Artway v. Att'y Gen. of
State of N.J., 81 F.3d 1235, 1246 (3d Cir. 1996) (quotations and
citations omitted). This reflects the current posture of the case.
See also Arizonans for Official English v. Arizona, 520 U.S. 43,
68 n.22 (1997) (“Mootness has been described as ‘the doctrine
of standing set in a time frame: The requisite personal interest
that must exist at the commencement of the litigation (standing)
must continue throughout its existence (mootness)’” (quoting
United States Parole Comm’n v. Geraghty, 445 U.S. 388, 397
(1980)) (additional citation omitted).).

Viewing this case for mootness, we conclude that the
doctrine does not apply. “[A] case is moot when the issues
presented are no longer ‘live’ or the parties lack a legally
cognizable interest in the outcome.” Donovan ex. rel. Donovan
v. Punxsutawney Area Sch. Bd., 336 F.3d 211, 216 (3d Cir.
2003) (quoting Powell v. McCormack, 395 U.S. 486, 496
(1969)). “The mootness doctrine is centrally concerned with the
court’s ability to grant effective relief: ‘If developments occur
during the course of adjudication that eliminate a plaintiff’s
personal stake in the outcome of a suit or prevent a court from
being able to grant the requested relief, the case must be
dismissed as moot.’” County of Morris v. Nationalist
Movement, 273 F.3d 527, 533 (3d Cir. 2001) (quoting Blanciak
v. Allegheny Ludlum Corp., 77 F.3d 690, 698-99 (3d Cir.1996)).
We find nothing in the Clarification Act that would moot the
parties’ settlement agreement. Further, the fact that the
settlement agreement is a class action settlement governed by
Rule 23 does not affect the enforceability of the agreement as
a binding contract. The parties executed the agreement with the
understanding that intervening events could affect their interests
in the litigation. See, e.g., Taylor v. Gordon Flesch Co., 793
F.2d 858, 863 (7th Cir. 1986) (citing Glass v. Rock Island
Refining Corp., 788 F.2d 450 (7th Cir. 1986)).

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 Further, the Clarification Act did not change the District
Court’s ability to grant effective relief. The Appellants still had
a “personal stake in the outcome”—the settlement
agreement—and the District Court continued to possess the
ability and the authority to approve the settlement. See Old
Bridge Owners Coop. Corp. v. Twp. of Old Bridge, 246 F.3d
310, 314 (3d Cir. 2001). Assuming on remand the District
Court finds the settlement fair, adequate and reasonable to
absent class members, the District Court can grant complete
relief by entering judgment on the settlement agreement. Thus,
the Clarification Act does not render the settlement moot.

III.

In sum, we will reverse the District Court’s judgment on
the pleadings and remand this matter with instructions for it to
reinstate its preliminary approval of the settlement agreement
and to proceed with the Rule 23 process.

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Ehrheart v. Verizon, No. 08-4323, dissenting.

SMITH, Circuit Judge.

Having read the same briefs and heard the same oral
argument, the majority and I seem almost to be deciding two
different appeals. In the majority’s view, this case presents a
simple, run-of-the-mill class action settlement agreement
binding two willing, sophisticated parties. As such, according
to the majority, the District Court was obligated, as a fiduciary
for the absent class members, to reject any motion that would
harm those class members.

In my view, this case is about mootness and standing, two
interrelated doctrines that are derived from Article III of the
Constitution’s “case or controversy” requirement. The District
Court unquestionably had a fiduciary duty to the absent class
members. But that duty is triggered only within the confines of
Rule 23(e),1 i.e., when dealing with settlements, voluntary

1
All references to “Rule 23(e)” refer to Rule 23(e) of the
Federal Rules of Civil Procedure. That provision states:

Settlement, Voluntary Dismissal, or Compromise.
The claims, issues, or defenses of a certified class
may be settled, voluntarily dismissed, or
compromised only with the court’s approval. The
following procedures apply to a proposed

1
dismissals, or compromises. It cannot expand the boundaries of
federal court jurisdiction under Article III. Here, the District

settlement, voluntary dismissal, or compromise:

(1) The court must direct notice in a reasonable
manner to all class members who would be bound
by the proposal.

(2) If the proposal would bind class members, the
court may approve it only after a hearing and on
finding that it is fair, reasonable, and adequate.

(3) The parties seeking approval must file a
statement identifying any agreement made in
connection with the proposal.

(4) If the class action was previously certified
under Rule 23(b)(3), the court may refuse to
approve a settlement unless it affords a new
opportunity to request exclusion to individual
class members who had an earlier opportunity to
request exclusion but did not do so.

(5) Any class member may object to the proposal
if it requires court approval under this subdivision
(e); the objection may be withdrawn only with the
court’s approval.

Fed. R. Civ. P. 23(e).

2
Court gave effect to a congressional mandate, the Credit and
Debit Card Receipt Clarification Act of 2007 (the “Clarification
Act” or the “Act”), Pub. L. No. 110-241, 122 Stat. 1565 (2008),
an enactment that effectively stripped standing for claims based
solely on the printing of a receipt containing the expiration date
of a credit or debit card, id., § 3(a). Congress instructed that the
Act should be “appl[ied] to any action, other than an action
which has become final,” id., § 3(b), meaning that the Act
applied to this case because at the time it was passed the District
Court had not yet held a fairness hearing, issued final approval
of the settlement, or entered final judgment. Although I
disagree with the District Court’s reliance on Rule 23(e) in
reaching its outcome, because I conclude that the Clarification
Act rendered the named plaintiffs’ cases moot, I would reach a
similar outcome. I would vacate the judgment on the pleadings
in favor of Verizon and remand this case to the District Court
with instructions to dismiss the named plaintiffs’ complaints as
moot.

Before turning to this issue, however, I must explain the
origins of the Clarification Act, and the procedural and factual
posture of this case—aspects of this case that the majority all but
overlooks.

3
 I.

The Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.,2
was amended in 2003 by the Fair and Accurate Credit
Transaction Act (“FACTA”), Pub. L. No. 108-159, 117 Stat.
1952 (2003), to, inter alia, prevent identity theft. To serve this
end, FACTA, subject to a few exceptions not relevant to this
appeal, prohibited the electronic printing of more than the last
five digits of a credit or debit card account number or the card’s
expiration date on a receipt:

[N]o person that accepts credit cards or debit
cards for the transaction of business shall print
more than the last 5 digits of the card number or
the expiration date upon any receipt provided to
the cardholder at the point of sale or transaction.

15 U.S.C. § 1681c(g)(1). This prohibition became effective on
December 4, 2006, three years after the date of FACTA’s
enactment, for “device[s] that electronically print[ed] receipts .
. . that [were] in use before January 1, 2005.” Id. §

2
The Fair Credit Reporting Act was “passed in 1970 to
insure that consumer reporting agencies exercise their ‘grave
responsibilities’ regarding the ‘assembling and evaluating [of]
consumer credit and other information on consumers’ with
‘fairness, impartiality, and a respect for the consumer’s right to
privacy.’ 15 U.S.C. § 1681(a)(3) and (4).” Houghton v. Ins.
Crime Prevention Inst., 795 F.2d 322, 323-24 (3d Cir. 1986).

4
1681c(g)(3)(A). For devices first put into use “on or after
January 1, 2005,” the prohibition became effective one year
after FACTA’s enactment, on December 4, 2004. Id. §
1681c(g)(3)(B).

Individuals who willfully fail to comply with this
deadline risk civil liability under the Fair Credit Reporting Act:

Any person who willfully fails to comply with any
requirement imposed under [the Fair Credit
Reporting Act] with respect to any consumer is
liable to that consumer in an amount equal to the
sum of --

(1)(A) any actual damages
sustained by the consumer as a
result of the failure or damages of
not less than $100 and not more
than $1,000; or . . .

(2) such amount of punitive
damages as the court may allow;
and

(3) in the case of any successful
action to enforce any liability under
this section, the costs of the action
together with reasonable attorney’s
fees as determined by the court.

5
15 U.S.C. § 1681n(a).

In June of 2008, Congress passed the Clarification Act,
which modified the civil liability provision to exclude instances
between December 4, 2004, and June 3, 2008, where an
individual did not remove an expiration date of a credit or debit
card from a receipt, but otherwise complied with FACTA:

[A]ny person who printed an expiration date on
any receipt provided to a consumer cardholder at
a point of sale or transaction between December
4, 2004, and the date of the enactment of this
subsection [June 3, 2008] but otherwise complied
with the requirements of [15 U.S.C. § 1681c(g)]
for such receipt shall not be in willful
noncompliance with [that] section . . . by reason
of printing such expiration date on the receipt.

Pub. L. No. 110-241, § 3(a) (codified at 15 U.S.C. § 1681n(d)).
This exclusion of expiration date claims “appl[ied] to any
action, other than an action which ha[d] become final . . .
without regard to whether such action [wa]s brought before or
after the date of the enactment of th[e] [Clarification] Act.”
Pub. L. No. 110-241, § 3(b).

The purpose of the Act was “to ensure that consumers
suffering from any actual harm to their credit or identity [we]re
protected while simultaneously limiting abusive lawsuits that
d[id] not protect consumers but only result[ed] in increased cost

6
to business and potentially increased prices to consumers.” Id.,
§ 2(b). In Section 2 of the Act, Congress set forth its findings
explaining its decision to exclude liability for the printing of a
card’s expiration date. Congress acknowledged that it enacted
FACTA to reduce identity theft, and that, as written in 2003,
FACTA prohibited the printing of a credit or debit card’s
expiration date or more than the last five digits of that card’s
account number. Id., § 2(a)(1) and (2). Congress found that
these requirements were mistakenly understood by “[m]any
merchants” as requiring only a truncation of the “account
number down to the last 5 digits[.]” Id., § 2(a)(3). It also found
that FACTA resulted in “hundreds of lawsuits . . . alleging that
the failure to remove the expiration date was a willful violation
of the Fair Credit Reporting Act even where the account number
was properly truncated.” Id., § 2(a)(4). According to Congress,
“[n]one of these lawsuits contained an allegation of harm to any
consumer’s identity.” Id., § 2(a)(5). Congress further found
that “[d]espite repeatedly being denied class certification, the
continued appealing and filing of these lawsuits represent[ed] a
significant burden on the hundreds of companies that ha[d] been
sued and could raise prices to consumers without corresponding
consumer protection benefit.” Id., § 2(a)(7).

II.

Verizon was one of the many merchants that Congress
found had failed to remove credit or debit card expiration dates
from receipts. See id., § 2(a)(3). In August of 2007, Nicole

7
Ehrheart filed one of the “hundreds of lawsuits . . . alleging that
the failure to remove the expiration date was a willful violation
of the Fair Credit Reporting Act,” id., § 2(a)(4), in the United
States District Court for the Western District of Pennsylvania.
She filed her complaint as a class action, purporting to represent
a class of individuals harmed by Verizon’s printing of credit and
debit card account numbers and expiration dates, but her
personal injury was limited to the printing of an expiration date.
She alleged that on June 7, 2007, Verizon gave her an
electronically printed receipt on which the expiration date of her
credit or debit card had been printed. Although there were no
specific “allegation[s] of harm to any consumer’s identity,” id.,
§ 2(a)(5), Ehrheart believed that she deserved redress.
According to her complaint, Verizon violated 15 U.S.C. §
1681c(g), entitling her to statutory damages, punitive damages,
costs, and attorney fees. In December of 2007, the District
Court referred Ehrheart’s action to mediation, and by late
February of 2008 the parties had agreed to settle.

A similar putative class action had been filed by John J.
Garland in the United States District Court for the Western
District of Tennessee on July 27, 2007. Unlike Ehrheart,
Garland alleged his personal injury in an ambiguous fashion, not
stating whether he received a receipt with his credit or debit card
account number, expiration date, or both printed on it. On April
14, 2008, Garland’s action was transferred to the Western
District of Pennsylvania and consolidated with Ehrheart’s
action. On April 22, 2008, Ehrheart, Garland, and Verizon

8
executed a Class Action Settlement Agreement (the “Settlement
Agreement” or the “Agreement”).

The Settlement Agreement

The Settlement Agreement was limited to individuals
who received electronically printed receipts displaying a debit
card’s expiration date. The Agreement defined the “Class” as:

All persons who received electronically printed
receipts displaying an expiration date from
Verizon Wireless at the point of sale or
transaction in a Verizon W ireless
Communications store, in a transaction occurring
between December 4, 2006 and April 21, 2008,
where payment was made with a debit card and
authorized by a personal identification number.

The parties stipulated and agreed that the settlement was
conditioned on the District Court’s preliminary and final
approval. According to the Agreement, a preliminary approval
order was needed to: (1) certify the class for settlement
purposes; (2) appoint a class representative; (3) confirm that the
likelihood of final approval of the settlement was sufficient to
warrant sending out notice to the class; and (4) schedule a
fairness hearing to determine the fairness, adequacy, and
reasonableness of the Settlement Agreement, and (5) to enter
final judgment. Settlement Agreement 8 (¶ 1.19). Once the
District Court entered the preliminary approval order and notice

9
was disseminated to the class, it was to conduct a fairness
hearing, as required by Rule 23(e). If the Settlement Agreement
met the requirements of Rule 23(e), then the District Court was
to enter an order of final approval and enter final judgment.

The parties agreed that if they did not receive final
approval of the settlement or if the associated judgment did not
become final for any reason, the Agreement would be “null and
void ab initio”:

In the event that the Court does not execute and
file the Order Granting Final Approval of
Settlement, or in the event that the associated
Judgment does not become Final for any reason,
this Settlement Agreement shall be deemed null
and void ab initio, it shall be of no force or effect
whatsoever, [and] it shall not be referred to or
utilized for any purpose whatsoever[.]

Settlement Agreement 2;3 id. at 15-16 (¶ 2.4.8) (The parties

3
“Final” was defined as:

(i) the date of final affirmance on an appeal of the
Judgment; (ii) the date of final dismissal with
prejudice of the last pending appeal from the
Judgment; or (iii) if no appeal is filed, the
expiration date of the time for the filing or
noticing of any form of valid appeal from the

10
agreed that “[i]f the Court reject[ed] the Stipulation, fail[ed] to
enter the Order of Final Approval, or fail[ed] to enter the
Judgment, th[e] Agreement shall be void ab initio, and Verizon
. . . shall have no obligations to make any payments under the
Settlement Agreement.”). In the event that the Settlement
Agreement was “terminated pursuant to its terms . . . or . . .
[wa]s not effectuated for any reason,” the litigation was to
proceed “as if no party had ever agreed to [the] proposed
settlement, without prejudice to the right of any party to
continue to seek or to oppose class certification.” Id. at 5.

Preliminary Approval of the Settlement Agreement

On April 22, 2008, the parties filed a joint motion for
preliminary approval of the Settlement Agreement, requesting
that the District Court approve the terms of the settlement,
certify the class for settlement, approve the proposed class
notice to be sent to the class, and schedule a fairness hearing.
On April 24, 2008, the District Court granted preliminary
approval of the Settlement Agreement, and scheduled a fairness
hearing for August 27, 2008.

Judgment.

Settlement Agreement 6 (¶ 1.10).

11
 Vacatur of the Order Granting Preliminary Approval

On June 9, 2008, six days after the passage of the
Clarification Act, Verizon moved to vacate the District Court’s
preliminary approval order. In its motion, Verizon pointed out
that “Congress enacted a law that unequivocally extinguished
[the] [p]laintiffs’ claims underlying the proposed settlement.”
Because “no valid claims exist[ed] to settle,” Verizon argued,
“the proposed settlement [wa]s not ‘fair, adequate and
reasonable’” and the District Court could not provide final
approval for the settlement.

On June 13, 2008, the District Court granted Verizon’s
motion to vacate the preliminary approval order. In its order,
the District Court reasoned that “Congress made clear that the
[Clarification] Act ‘. . . appl[ied] to any action, other than an
action which ha[d] become final . . . ’” and that “[t]his litigation
[wa]s not final,” as it had yet to give final approval to the
Settlement Agreement. Because Congress eliminated the
plaintiffs’ cause of action, the District Court reasoned, it had to
vacate its preliminary approval of the Settlement Agreement.
The plaintiffs moved for reconsideration and the District Court
denied the motion, rejecting the argument that it should ignore
the Act and simply enforce the Settlement Agreement negotiated
by the parties because its only remaining role under Rule 23(e)
was to ensure that the settlement was fair, reasonable and
adequate to the absentee class members. Aside from reiterating
its view that the Clarification Act extinguished the plaintiffs’

12
claim, the District Court added that under Rule 23(e), “[n]o class
action settlement can be fair, adequate or reasonable when
Congress has determined that such relief is unfair and
unreasonable.”

Verizon then moved for judgment on the pleadings,
asserting that judgment was warranted because the plaintiffs’
claims had been eliminated by the Clarification Act. The
plaintiffs opposed the motion, relying on the same arguments
offered in their opposition to Verizon’s motion to vacate the
preliminary approval order. Notably, they never asserted that
they had claims other than those based on the failure to remove
credit or debit card expiration dates. The District Court granted
Verizon’s motion for judgment on the pleadings on September
25, 2008.

The plaintiffs filed this timely appeal, challenging four
orders by the District Court, all of which turn on whether it
properly vacated its preliminary approval of the Settlement
Agreement: (1) the June 13, 2008 order granting Verizon’s
motion to vacate preliminary approval; (2) the September 25,
2008 order denying the motion for reconsideration; (3) the
September 25, 2008 order granting Verizon’s motion for
judgment on the pleadings; and (4) the judgment entered on
September 25, 2008.

13
 III.

The Clarification Act, without question, extinguished
Ehrheart’s injury-in-fact as alleged in her complaint. Without
an injury-in-fact, a requirement for Article III standing, the
District Court was obligated to dismiss Ehrheart’s action as
moot immediately. It lacked the authority to hold the required
fairness hearing, enter an order of final approval for the
settlement, or enter final judgment in the action. To do so
would have violated Article III’s “case or controversy”
limitation on its jurisdiction. Garland’s complaint, on the other
hand, left open the possibility that Verizon printed more than the
last five digits of his credit or debit card account number—a
viable claim notwithstanding the Clarification Act—but his
arguments throughout this litigation show that he, like Ehrheart,
suffered an injury based solely on the printing of the expiration
date of his credit or debit card. Thus, I likewise conclude that,
after the passage of the Clarification Act, Garland lost standing
and his claim was rendered moot.

I reach these conclusions based on two observations.
First, the Clarification Act applied to both plaintiffs’ complaints,
despite the District Court’s issuance of preliminary approval for
the Settlement Agreement. Second, Article III requires that a
plaintiff have an injury-in-fact, and the Act eliminated the
printing of a credit or debit card’s expiration date as a
cognizable injury for which an individual may seek relief under
FACTA.

14
 A.

The Clarification Act plainly extinguished causes of
action based solely on the printing of a credit or debit card’s
expiration date prior to the District Court’s final approval of the
settlement and entry of final judgment. In relevant part, the Act
stated:

[A]ny person who printed an expiration date on
any receipt provided to a consumer cardholder at
a point of sale or transaction between December
4, 2004, and the date of the enactment of this
subsection [June 3, 2008] but otherwise complied
with the requirements of [15 U.S.C. § 1681c(g)]
for such receipt shall not be in willful
noncompliance with [that] section . . . by reason
of printing such expiration date on the receipt.

Pub. L. No. 110-241, § 3(a) (codified at 15 U.S.C. § 1681n(d)).
This provision applies to “any action, other than an action which
has become final . . . without regard to whether such action
[wa]s brought before or after the date of the enactment of this
Act.” Pub. L. No. 110-241, § 3(b).

Although Congress did not define the term “final” in the
Clarification Act, it is obvious that it was referring to finality in
the judicial sense, as it enacted the legislation to rein in “abusive
lawsuits,” id., § 2(b). Congress’s findings explained that “the
continued appealing and filing of these lawsuits represent[ed] a

15
significant burden on the hundreds of companies that have been
sued and could well raise prices to consumers without
corresponding consumer protection benefit.” Id., § 2(a)(7).
Taking into account the Act’s goal of eliminating wasteful
lawsuits, I conclude that Congress intended the federal courts to
apply the Clarification Act to any action that was not, in the
judicial sense, “final.”

In the judicial context, a “‘final decision’ generally is one
which ends the litigation on the merits and leaves nothing for the
court to do but execute the judgment.” Catlin v. United States,
324 U.S. 229, 233 (1945). In class action litigation where the
parties have negotiated a settlement, voluntary dismissal, or
compromise, Rule 23(e) lays out procedures for achieving
finality in the dispute. Fed. R. Civ. P. 23(e). That rule
establishes that, regardless of the parties’ compromise, the court
must hold a fairness hearing, Fed. R. Civ. P. 23(e)(2), and
determine whether to approve the settlement before the matter
is final, Fed. R. Civ. P. 23(e). This long-standing procedural
requirement first appeared in the 1966 amendments to the rule.
See Fed. R. Civ. P. 23 (1966) (stating that “[a] class action shall
not be . . . compromised without the approval of the court”).
Since at least 2003, Rule 23(e) has explicitly stated that court
approval of a class action settlement may be given “only after a
hearing and on finding that [the settlement] is fair, reasonable,
and adequate.” Fed. R. Civ. P. 23(e)(2); see id., Advisory
Committee Notes on 2003 Amendments. Congress was well
aware of the 2003 amendments to Rule 23 because they were

16
passed onto it for review pursuant to the Rules Enabling Act.
See 28 U.S.C. §§ 2072, 2074.4 Thus, when Congress enacted
the Clarification Act and specified that it applied to “any action,
other than an action which has become final,” Pub. L. No. 110-
241, § 3(b), it knew that a class action settlement pending
district court approval under Rule 23(e) was not an action which
had become final.

Accordingly, because the District Court had yet to
conduct a fairness hearing, issue final approval of the
settlement, or enter final judgment in this case—all activities
contemplated under Rule 23(e) and required under the
Settlement Agreement5 —the litigation could not have been final

4
“The Federal Rules of Civil Procedure are not enacted
by Congress, but Congress participates in the rulemaking
process.” Bus. Guides, Inc. v. Chromatic Commc’ns Enters.,
498 U.S. 533, 552 (1991) (internal quotation marks and citations
omitted). “Congress has undoubted power to regulate the
practice and procedure of federal courts,” Sibbach v. Wilson &
Co., Inc., 312 U.S. 1, 9 (1941), so if it disagreed with a proposed
rule promulgated by the Supreme Court, it could “vote to
abrogate [that] rule,” In re Richards, 213 F.3d 773, 786 (3d Cir.
2000).
5
The Agreement was expressly made conditional by the
parties, and if the District Court “fail[ed] to enter the Order of
Final Approval, or fail[ed] to enter the Judgment, th[e]
Agreement [would be rendered] void ab initio[.]” Settlement

17
as of the date the Clarification Act was passed, June 3, 2008. As
such, the Clarification Act applied to the Ehrheart and Garland
actions.

The District Court’s preliminary approval of the
Settlement Agreement cannot rationally be construed as a final
disposition of this case in any sense. While it is true that an
order of preliminary approval may establish “an initial
presumption of fairness” in some circumstances, In re General
Motors Corp. Pick-Up Truck Fuel Tank Products Liability
Litigation, 55 F.3d 768, 785 (3d Cir. 1995) [hereinafter In re
GM Truck],6 that presumption does not inexorably result in final
approval of a settlement. “[I]t is clear that the court should not
give rubber-stamp approval.” 4 William B. Rubenstein, Alba

Agreement 16 (¶ 2.4.8). Furthermore, the Agreement
contemplated the possibility that the settlement would not occur.
In that event, the litigation would “proceed as if no party had
ever agreed to such proposed settlement, without prejudice to
the right of any party to continue to seek or to oppose class
certification.” Id. at 5.
6
We have held that a preliminary approval order
“establishes an initial presumption of fairness when the court
finds that: (1) the negotiations occurred at arm’s length; (2)
there was sufficient discovery; (3) the proponents of the
settlement are experienced in similar litigation; and (4) only a
small fraction of the class objected.” In re GM Truck, 55 F.3d
at 785.

18
Conte, & Herbert B. Newberg, Newberg on Class Actions §
11.41 (4th ed. 2009) [hereinafter Newberg on Class Actions].
Prior to final approval of a settlement, the district court must
hold a fairness hearing and examine at least nine factors to
determine whether the settlement is fair, reasonable, and
adequate. In re GM Truck, 55 F.3d at 785.7 This examination
must be “exacting and thorough” because the “adversariness of
litigation is often lost” once parties agree to settle:

The settling parties frequently make a joint
presentation of the benefits of the settlement
without significant information about any
drawbacks. If objectors do not emerge, there may
be no lawyers or litigants criticizing the
settlement or seeking to expose flaws or abuses.
Even if objectors are present, they might simply
seek to be treated differently than the class as a
whole, rather than advocating for class-wide
interests. The lack of significant opposition may
mean that the settlement meets the requirements
of fairness, reasonableness, and adequacy. On the
other hand, it might signify no more than inertia
by class members or it may indicate success on

7
Those nine factors are: “(1) the complexity and
duration of the litigation; (2) the reaction of the class to the
settlement; (3) the stage of the proceedings; (4) the risks of
establishing liability; (5) the risks of establishing damages; (6)
the risks of maintaining a class action; (7) the ability of the
defendants to withstand a greater judgment; (8) the range of
reasonableness of the settlement in light of the best recovery;
and (9) the range of reasonableness of the settlement in light of
all the attendant risks of litigation.” In re GM Truck, 55 F.3d at
785.

19
 counsel’s part in obtaining, from likely opponents
and critics, agreements not to object.

Manual for Complex Litigation, Fourth, § 21.61. “Even if there
are no or few objections or adverse appearances before or at the
fairness hearing, the judge must ensure that there is a sufficient
record as to the basis and justification for the settlement.” Id.,
§ 21.635; Fed. R. Civ. P. 23(e)(2) (stating that the court may
only approve the settlement on “finding that it is fair, reasonable,
and adequate”) (emphasis added). “The record and findings
must demonstrate to a reviewing court that the judge has made
the requisite inquiry and has considered the diverse interests and
the requisite factors in determining the settlement’s fairness,
reasonableness, and adequacy.” Manual for Complex Litigation,
Fourth, § 21.635; Fed. R. Civ. P. 23(e), Advisory Committee
Notes on 2003 Amendments (“The findings must be set out in
sufficient detail to explain to class members and the appellate
court the factors that bear on applying the standard.”).8

A district court may deny final approval for a settlement
in a variety of situations, including where absent class members’
interests are not served, In re GM Truck, 55 F.3d at 785, the
defendant “selects among [plaintiff] attorneys for competing
classes and negotiates an agreement with the attorneys who are

8
Notably, while we require an exacting and thorough
review by a district court, we also grant substantial deference to
that court’s fact-finding. A district court’s approval of a class
action settlement is subject to abuse of discretion review by an
appellate court. In re Cendant Corp. Litig., 264 F.3d 286, 293
(3d Cir. 2001) (citing In re GM Truck, 55 F.3d at 782-83).
Thus, the district court’s findings need only survive review for
clear error. In re GM Truck, 55 F.3d at 783.

20
willing to accept the lowest class recovery (typically in
exchange for general attorney fees),” Manual for Complex
Litigation, Fourth, § 21.61, “class members [receive] illusory
nonmonetary benefits . . . while granting substantial monetary
attorney fee awards,” id., defendants seek to “impos[e] . . . strict
eligibility conditions . . . [such] that many [class] members will
be unlikely to claim benefits,” id., the settlement treats
“similarly situated class members differently,” id., the settlement
releases “claims against parties who did not contribute to the
class settlement,” id., or the settlement releases “claims of
parties who received no compensation in the settlement,” id.9

The factors considered in determining whether a
settlement is fair, reasonable, and adequate, see supra n.7, “are
[just] a guide; an unfavorable conclusion regarding one or more
factors does not automatically render the settlement unfair.” 2
Joseph M. McLaughlin, McLaughlin on Class Actions: Law and
Practice § 6:7 (6th ed. 2010). Each settlement agreement must
be evaluated based on the particular circumstances of that case
and, as shown by the examples above, there are many reasons
why a district court may not issue final approval for a settlement
agreement.10

9
See Barbara J. Rothstein & Thomas E. Willging,
Managing Class Action Litigation: A Pocket Guide for Judges
12-16 (Federal Judicial Center 2005) (discussing other
settlement terms that are “hot button indicators” that “show their
potential unfairness on their face”).
10
Indeed, while recognizing the benefits of multi-factor
tests for Rule 23(e)—such as, signaling to district courts that the
inquiry is fact intensive and relies on discretion, and providing
parties a roadmap for settlement, Jonathan R. Macey & Geoffrey

21
 In sum, there was still much for the District Court to do

P. Miller, Judicial Review of Class Action Settlements, 1 J. of
Legal Analysis 167, 172 (2009)—some commentators have
suggested that such tests suffer from a variety of deficiencies
that result in “confusion and inconsistency in standards for
review of class action settlements[.]” Id. at 202. Among other
issues, the sheer number of factors to consider may encourage
perfunctory analysis by district courts. Id. at 172. “Courts
applying [a multifactor] test[] often recite the litany and engage
in pro forma analyses, but their hearts are not in it.” Id. Also,
the federal courts have yet to provide a uniform procedure for
weighing the various factors implicated in a class action
settlement:

Like all factor tests, the considerations do not
always point in the same direction with the same
force (if they did, the court could save time by
looking at only one). A weighting is required.
Should the courts assign equal weights to all the
factors? The items are too diverse to make this
plausible. But which factors should get more
weight and which less? The courts of appeals
don’t provide much enlightenment. Some
opinions indicate that the most important factor is
the value of the settlement compared with what
the class could expect from continued litigation.
This may be interpreted as weighting one
consideration over others, but it leaves open how
much weight is demanded and how other factors
should be assessed. This lack of clarity may be
typical of factor tests but it is not an outcome that
lends much predictability or certainty to the law.

Id. at 174.

22
to conclude this litigation by way of settlement. Thus, this
matter was not final and the Clarification Act applied to both
named plaintiffs’ complaints.

B.

The majority claims that the District Court could not have
vacated its order of preliminary approval without losing sight of
its tightly focused role as a fiduciary for the absentee class
members. Indeed, it is well established that “the district court
acts as a fiduciary who must serve as a guardian of the rights of
absent class members[.]” In re GM Truck, 55 F.3d at 785;
Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997)
(“Rule 23(e) . . . protects unnamed class members from unjust
or unfair settlements affecting their rights when the
representatives become fainthearted before the action is
adjudicated or are able to secure satisfaction of their individual
claims by a compromise.”) (internal quotation marks omitted);
In re AT&T Corp. Secs. Litig., 455 F.3d 160, 175 (3d Cir. 2006);
In re Cendant Corp. Litig., 264 F.3d at 296. But Rule 23(e) and
the District Court’s corresponding duties under that rule apply
to only proposed settlements, voluntary dismissals, or
compromises. Fed. R. Civ. P. 23(e). They do not apply to
involuntary dismissals, such as sua sponte dismissal for
mootness. In Amchem Products, Inc., the Supreme Court stated,
albeit in dicta, that “Rule 23’s requirements must be interpreted
in keeping with Article III constraints, and with the Rules
Enabling Act, which instructs that rules of procedure ‘shall not
abridge, enlarge or modify any substantive right[.]’” 521 U.S.
at 613 (quoting 28 U.S.C. § 2072(b)); see Fed. R. Civ. P. 82
(stating that the Federal Rules of Civil Procedure “do not extend
or limit the jurisdiction of the district courts”). “[A] class action

23
is a procedural device.” 1 Newburg on Class Actions § 1:2. It
“cannot confer standing to sue on a named plaintiff who seeks
to represent a class[.]” Id.11

11
The majority, in its attempts to sustain a live “case or
controversy,” argues that the District Court could still grant
effective relief to the plaintiffs by virtue of the existence of the
Settlement Agreement and the District Court’s ability to approve
that agreement after a fairness hearing. This argument
succinctly illustrates the errors of the majority’s approach. Rule
23, like all the Federal Rules of Civil Procedure, cannot
“abridge, enlarge or modify any substantive right.” 28 U.S.C.
§ 2072(b). Nor can it “extend or limit the jurisdiction of the
district courts[.]” Fed. R. Civ. P. 82. Yet the majority seeks to
use the procedures set forth in Rule 23 to accomplish both those
things.

The majority’s approach would grant class members who
do not opt out of the Settlement Agreement “substantive
right[s]” that would be denied to class members who do opt out,
in violation of the Rules Enabling Act. 28 U.S.C. § 2072(b).
Under the majority’s holding, the former group may receive
relief for a non-existent injury because the Settlement
Agreement and the procedures set forth under Rule 23
purportedly provide for such a result. Class members who opt
out, however, would have no right to relief. If an individual
who opted out of the Settlement Agreement sought to proceed
on her own claim, that claim would be dismissed because the
Clarification Act eliminated her cause of action.

In the same vein, the majority asserts that this case is not
moot because the District Court could hold a fairness hearing
and grant relief— the approval of the Settlement
Agreement—for the class members. Pointing to any Federal
Rule of Civil Procedure, including Rule 23, as the source of

24
 Here, the District Court, couching its decision in terms of
the “fair, adequate, and reasonable” language of Rule 23(e),
vacated its order granting preliminary approval of the settlement
because the statutory basis for the plaintiffs’ claims had been
eliminated. Instead, it should have dismissed both named
plaintiffs’ complaints as moot since their injuries were based on
the electronic printing of card expiration dates during the period
for which the Clarification Act eliminated the corresponding
statutory injury, 15 U.S.C. § 1681n(d). See Amchem Prods.,
Inc., 521 U.S. at 613.

Mootness is “the doctrine of standing set in a time frame:
The requisite personal interest that must exist at the
commencement of litigation (standing) must continue
throughout its existence (mootness).” Arizonans for Official
English v. Arizona, 520 U.S. 43, 68 n.22 (1997) (internal
quotation marks omitted); Artway v. Att’y Gen. of the State of
N.J., 81 F.3d 1235, 1246 (3d Cir. 1996) (“Mootness . . . asks
whether a party who has established standing has now lost it
because the facts of her case have changed over time.”).
Therefore, we look to the doctrine of standing to inform our
application of the mootness doctrine. “In its constitutional
dimension, standing imports justiciability: whether the plaintiff
has made out a ‘case or controversy’ between himself and the
defendant within the meaning of Art. III.” Warth v. Seldin, 422
U.S. 490, 498 (1975). “This is the threshold question in every
federal case, determining the power of the court to entertain the
suit.” Id. “Like any jurisdictional requirement, standing cannot
be waived.” Pub. Interest Research Group of N.J., Inc. v.

Article III jurisdiction is categorically barred. Fed. R. Civ. P.
82. Rule 23’s procedures cannot resuscitate a moot case. Id.

25
Magnesium Elektron, Inc., 123 F.3d 111, 117 n.5 (3d Cir. 1997).
In general, a plaintiff “must have standing at all stages of the
litigation[.]” Id. at 117. “[F]ederal appellate courts have a
bedrock obligation to examine both their own subject matter
jurisdiction and that of the district courts.” Id.12 The Supreme
Court has explained that “the irreducible constitutional
minimum of standing contains three elements”:

First, the plaintiff must have suffered an “injury in
fact” -- an invasion of a legally protected interest
which is (a) concrete and particularized, and (b)
“actual or imminent, not ‘conjectural’ or
‘hypothetical[.]’” Second, there must be a causal
connection between the injury and the conduct
complained of -- the injury has to be “fairly . . .
trace[able] to the challenged action of the
defendant, and not . . . the result [of] the
independent action of some third party not before
the court.” Third, it must be “likely,” as opposed
to merely “speculative,” that the injury will be
“redressed by a favorable decision.”

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)
(internal footnote and citations omitted). These elements are an

12
The Supreme Court frowns upon a federal court
“resolv[ing] contested questions of law when its jurisdiction is
in doubt.” Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83,
101 (1998); see Storino v. Borough of Point Pleasant Beach,
322 F.3d 293, 300 (3d Cir. 2003) (explaining the importance of
the standing doctrine).

26
“an indispensable part of [a] plaintiff’s case[.]” Id. at 561. In
a class action, “named plaintiffs who represent a class ‘must
allege and show that they personally have been injured, not that
injury has been suffered by other, unidentified members of the
class to which they belong and which they purport to
represent.’” Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26,
40 n.20 (1976) (quoting Warth, 422 U.S. at 502). “Absent
Article III standing, a federal court does not have subject matter
jurisdiction to address a plaintiff’s claims, and they must be
dismissed.” Berg v. Obama, 586 F.3d 234, 242 (3d Cir. 2009)
(internal quotation marks omitted). “[W]e are required to raise
issues of standing sua sponte if such issues exist.” Addiction
Specialists, Inc v. Twp. of Hampton, 411 F.3d 399, 405 (3d Cir.
2005) (internal quotation marks omitted).

Here, an issue of mootness is presented. Prior to the final
approval of the settlement, Congress eliminated the named
plaintiffs’ injury-in-fact, see Pub. L. No. 110-241, the printing
of the expiration date of their debit cards. By doing so, it
eliminated the District Court’s jurisdiction over Ehrheart’s and
Garland’s cases. Ehrheart’s complaint does not allege any
personal injury besides the printing of the expiration date of her
credit or debit card on a receipt on June 7, 2007. Her injury
stemmed solely from 15 U.S.C. § 1681c(g), a statute “creating
legal rights, the invasion of which create[d] standing[.]” Warth,
422 U.S. at 500 (internal quotation marks omitted). Once her
injury—the invasion of her right not to have the expiration date
of her credit or debit card printed on a receipt—was deemed a
non-injury by Congress, her standing to seek relief in federal
court was eliminated and her case was rendered moot. See id.
As such, the District Court could not have held a fairness
hearing, issued final approval of the settlement, or entered final

27
judgment in Ehrheart’s case without violating Article III.
Ironically, it is the District Court’s supervisory role as a
fiduciary for the absent class members—a role the majority and
Ehrheart trumpet in their reasoning—that dooms her claim.
Without the District Court’s final approval after a fairness
hearing, and the entry of final judgment, the settlement was not
complete. The District Court lost jurisdiction to issue final
approval or enter final judgment when Ehrheart’s case was
rendered moot.

Garland’s action should likewise be dismissed as moot.
Although his complaint’s ambiguous allegation that Verizon
injured him by “print[ing] more than the five digits of [his]
credit . . . or debit card number and/or print[ing] the expiration
date of [his] credit or debit card,” leaves open the possibility that
he has a cognizable injury-in-fact based on the printing of his
account number, everything in this litigation points to his injury
as being based solely on the printing of the expiration date of his
credit or debit card. Indeed, the District Court, in its opinion
and order granting Verizon’s motion for judgment on the
pleadings, concluded that “[a]lthough Garland allege[d] in the
alternative that [Verizon] printed more than the last five digits
of his credit / debit card on his receipt . . . the actual receipt
which Garland attached to his Complaint reveal[ed] only the
printing of his expiration date, and not the printing of more than
the last five digits of his credit / debit card.” It reached this
conclusion based on Verizon’s undisputed explanation of
Garland’s injury in its memorandum in support of its motion for
judgment on the pleadings. Moreover, Garland’s own
arguments throughout this litigation have assumed that he has no
claim due to the Clarification Act. For example, his
memorandum in opposition to Verizon’s motion to vacate the

28
District Court’s preliminary approval of the settlement
agreement began by assuming that his claim was eliminated by
the Clarification Act. It then argued that despite this
shortcoming Garland was entitled to the fruits of the Settlement
Agreement. His arguments in this appeal are a continuation of
that untenable argument. Despite challenging the order granting
Verizon’s motion for judgment on the pleadings in this appeal,
Garland does not challenge the District Court’s conclusion
regarding his injury.

Because the Article III standing requirements are “not
mere pleading requirements but rather an indispensable part of
the plaintiff’s case, each element must be supported in the same
way as any other matter on which the plaintiff bears the burden
of proof, i.e., with the manner and degree of evidence required
at the successive stages of the litigation.” Lujan, 504 U.S. at
561. “At the pleading stage, general factual allegations of injury
resulting from the defendant’s conduct may suffice,” id., but in
light of the receipt attached to Garland’s complaint, his failure
to refute the assertion that his only injury stemmed from the
printing of his credit or debit card’s expiration date, his
litigation strategy, and the District Court’s entry of judgment on
the pleadings in favor of Verizon, I view his injury-in-fact as
being limited to the printing of his credit or debit card’s
expiration date. Therefore, I conclude that Garland’s claim, like
Ehrheart’s claim, was rendered moot after the passage of the
Clarification Act.

IV.

Although the District Court erred by cabining its analysis
to the terms of Rule 23(e), its ultimate outcome and much of its

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underlying reasoning was correct. I would vacate the judgment
on the pleadings in favor of Verizon and remand this case with
instructions for the District Court to dismiss both named
plaintiffs’ complaints as moot. Because the majority permits
this matter to proceed, despite the lack of a live “case or
controversy” as required under Article III, I respectfully dissent.

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