Supreme Court to Decide Pivotal Class Action Case: LabCorp v. Davis

The U.S. Supreme Court has agreed to hear Laboratory Corporation of America Holdings v. Davis, a case that could reshape the future of class action litigation. The Court will decide whether a federal court can certify a Rule 23(b)(3) damages class when some proposed class members lack Article III standing. The ruling is expected to have major implications for businesses facing class action lawsuits, particularly in statutory damages cases.

The Background: A Circuit Split on Class Certification

The case stems from a growing divide among federal courts over whether uninjured class members can be included in certified damages classes. In TransUnion LLC v. Ramirez, the Supreme Court ruled that "every class member must have Article III standing in order to recover individual damages." However, since TransUnion was decided post-trial, courts have struggled with its impact at the certification stage.

LabCorp argues that a deep split exists among federal appellate courts. The Ninth Circuit permits certification even when more than a de minimis number of class members lack standing. By contrast, the Second and Eighth Circuits have taken a stricter approach, barring certification in such cases outright. The First and D.C. Circuits take a middle-ground stance, allowing certification if the number of uninjured class members is minimal. The Supreme Court’s decision in LabCorp is expected to clarify this issue and set a national standard.

Why This Matters for Businesses

The inclusion of uninjured members in certified classes significantly increases litigation exposure for businesses, especially in statutory damages cases. In LabCorp, the plaintiffs allege that the company’s self-service kiosks violated the Americans with Disabilities Act (ADA) and California’s Unruh Act, which impose statutory damages of $4,000 per violation. However, many class members never used or intended to use the kiosks, making them uninjured under Article III. LabCorp warns that certifying such a class could lead to nearly half a billion dollars in potential liability per year, demonstrating the high stakes for defendants.

False advertising class actions present similar risks. Many of these claims hinge on whether consumers would have made their purchases—or paid the same amount—had they known that an advertising statement was false or misleading. Defendants argue that resolving individualized injury inquiries at the certification stage is necessary to prevent inflated exposure. The Supreme Court’s ruling could determine whether standing arguments become a more viable defense in these cases.

What’s Next? A Decision That Could Reshape Class Actions

The Supreme Court’s ruling in LabCorp v. Davis is expected by the end of its term in June 2025. A decision adopting a strict interpretation of TransUnion could make it significantly harder for plaintiffs to certify damages classes, forcing them to prove standing for every member before certification. Alternatively, if the Court embraces the Ninth Circuit’s approach, businesses may face a surge in class actions with questionable injury claims.

Beyond resolving the circuit split, the decision could also shift evidentiary requirements at the certification stage. If the Court imposes stricter standing rules, plaintiffs may need to conduct extensive individualized injury analyses before certification, making such lawsuits more expensive and difficult to pursue.

How MZLS Can Help

With the Supreme Court poised to issue a landmark ruling on class certification, businesses must stay ahead of evolving litigation risks. At MZLS, we assist clients in navigating complex class action defense strategies and compliance with Article III standing requirements. Led by experienced litigators like Carlos A. Steffens, our team provides strategic counsel to mitigate risk and defend against high-stakes claims.

To understand how this decision may impact your business, contact us today.