CHICAGO — A federal appeals panel has given a fresh chance at life for a class action against Groupon over its use of people's images posted on Instagram.
On Oct. 9, the U.S. Seventh Circuit Court of Appeals ordered a “limited remand” of a federal judge’s decision rejecting the class action attempt.
U.S. District Judge Ronald Guzman in March refused to grant class action status to lead plaintiff Christine Dancel, who filed a 2016 suit in Cook County court alleging Groupon wrongly used Instagram photos to promote deals for restaurants and other businesses. In his decision, the judge said there are too many individualized claims for a class action to be practical. Groupon had removed the case to federal court and asked the judge to deny the class certification.
Dancel appealed the decision.
Seventh Circuit Judge William Bauer wrote the opinion on Dancel’s appeal. Circuit judges Michael Brennan and Amy St. Eve concurred.
Dancel said she took a photograph of herself and her boyfriend in August 2015 at a Vernon Hills restaurant, then posted it on Instagram and tagged it with the restaurant’s name. Groupon posted the photo, along with others, on the restaurant’s deal page in January 2016. Dancel said she neither has a Groupon account nor mentioned Groupon in her post. She alleged tens of thousands of possible class members should each get $1,000 in statutory damages.
Bauer wrote: “[Dancel] proceeded as though we gave her a free ticket to redo her opposition to the removal of her suit from state court. Although we refuse to entertain the bulk of her arguments, she has drawn our attention to a critical hole in the notice of removal — it does not allege the citizenship of even one diverse member of the putative class.”
In its motion to remove Dancel’s complaint to federal court, Groupon, which is incorporated in Delaware but is based in Chicago, said the class “undoubtedly would include at least some undetermined number of non-Illinois and non-Delaware citizens as class plaintiffs,” yet did not identify any one of these class members or their citizenship.
However, Dancel’s motion for a remand argued the “removal was improper not because jurisdiction was lacking but because it had always existed, and therefore Groupon had waived its right to remove,” Bauer wrote.
But in a later filing, Dancel argued that Groupon needed to identify an absent class member who lives in neither state to show minimal diversity. Groupon maintained it could cure that deficiency, but found it unnecessary.
Although the panel said Groupon’s allegations are deficient, Bauer explained an immediate remand to state court would be inappropriate so long as subject-matter jurisdiction of the federal court is apparent in the record or if the notice of removal could be amended to cure the shortcoming.
“The record does not currently reveal the existence of jurisdiction, so Groupon must amend its allegations, as it may do even on appeal,” Bauer wrote. “We asked Groupon to correct the jurisdictional statement in its appellate brief but it added only that its system did not screen photos for their owners’ citizenship — still providing nothing but a guess of diversity, educated and sensible though it may be.”
The panel further acknowledged the bar to clear is low — Groupon only needed to allege “on information and belief” the class included at least one person who lived outside Delaware or Illinois — and noted Groupon said during appellate arguments it could identify a specific, diverse class member through discovery after a remand to the federal court.
Bauer said the panel considered such a procedure earlier this year in Miller v. Southwest Airlines Co., and elected to follow that approach for Groupon, retaining its jurisdiction over Dancel’s appeal pending resolution.
“If the district court," Bauer wrote, "after a reasonable time, is not convinced that Groupon can carry its burden, then it may enter an indicative ruling that it is inclined to remand for lack of subject-matter jurisdiction, and we will take appropriate steps.”
Dancel has been represented by Ari Scharg, Benjamin Richman, Benjamin Thomassen and Jay Edelson of the Chicago firm of Edelson PC, as well as by Rafey Balabanian, of the firm's San Francisco office.
Groupon has been defended by Brian Cohen, Christopher Moore and Eric Macey of the Chicago firm of Novack & Macey.