The Supreme Court’s Upcoming Ruling on Class Certification: A Watershed Moment for Insurance and Business Litigation

Imagine a world where insurers could fend off class action lawsuits early on simply because a handful of claimants lack tangible harm.

That world may soon become reality. In a case poised to reshape the class action landscape, the U.S. Supreme Court has agreed to decide whether courts can certify class actions that include uninjured members. This ruling, expected in mid-2025, has the potential to dramatically alter litigation strategies for insurance companies—along with financial institutions and other businesses across industries—facing high-stakes lawsuits.

On Jan. 24, 2025, the high court granted certiorari in Lab. Corp. of Am. Holdings v. Davis to resolve a fundamental issue in class action litigation: whether a federal court may certify a class action under Federal Rule of Civil Procedure 23(b)(3) if some proposed class members lack Article III standing. The Supreme Court’s ruling will have far-reaching implications, particularly for carriers frequently targeted by class actions.

A Fragmented Landscape

This issue is a direct consequence of the 2021 decision in TransUnion LLC v. Ramirez, where the Supreme Court held that “[e]very class member must have Article III standing in order to recover individual damages.” However, TransUnion left open a critical question: whether a class can be certified if it contains uninjured members.

In the years since TransUnion, the federal courts of appeals have diverged. Some circuits, such as the Second and Eighth Circuits, have concluded that Article III bars class certification if any class members lack standing. Others, like the First and D.C. Circuits, have allowed certification so long as the class does not contain more than a “de minimis” number of putative class members who lack standing. Still others, like the Ninth Circuit, have taken a more flexible approach, even going so far as to reject the position that Rule 23 does not permit certification of a class that potentially includes more than a de minimis number of uninjured class members. The high court’s decision in LabCorp will resolve this split and clarify when and how class member standing must be established.

The Impact on the Insurance Industry

For insurers, the Supreme Court’s ruling will be particularly significant. The industry frequently faces class action litigation, whether from policyholders alleging improper claims handling, premium overcharges, or other widespread harms. A decision barring certification of classes with uninjured members could provide insurers with a powerful tool to defeat class actions at an early stage, reducing litigation costs and exposure to massive damages.

That being said, if the high court adopts a more permissive approach, carriers will continue to face large-scale class actions, often with groups containing members who suffered no actual harm. In such cases, courts may increasingly rely on statistical modeling or claims processes to distinguish injured from uninjured class members at later stages of litigation.

Beyond direct litigation exposure, the ruling could also influence how insurers structure policies and handle claims. If class actions remain viable despite uninjured members, insurers may be incentivized to alter risk assessments, adjust coverage exclusions, or modify premium structures to mitigate potential litigation risks.

Implications for Other Industries

While the insurance industry faces significant exposure, the Supreme Court’s decision will have broader implications across multiple sectors, including finance, pharmaceuticals, and technology. Companies in these spaces frequently face consumer class actions where only some plaintiffs experience concrete harm. If the Supreme Court rules against certifying such classes, a wide swath of businesses may be able to more effectively resist large-scale litigation.

Additionally, businesses that provide services to class action defendants—such as litigation funders, data analytics firms, and expert witnesses—may need to rethink strategies. A more restrictive ruling could diminish the volume of class action work, whereas a broader interpretation of class certification could maintain or even expand opportunities in this space.

Potential Legislative Response

Regardless of how the Supreme Court rules, legislative bodies may seek to intervene. If the ruling significantly curtails class actions, consumer advocacy groups and some legislators may push for reforms that allow broader class certification. Conversely, if the high court allows more lenient certification standards, business-friendly lawmakers might pursue statutory changes to limit class actions in high-risk industries.

A ruling favoring stricter standing requirements could also spur state-level action, particularly in jurisdictions known for plaintiff-friendly class action laws. In states like California, where courts have historically been more receptive to consumer class actions, plaintiffs may attempt to bring claims under state laws with lower standing thresholds.

What’s Next?

The Supreme Court has set an accelerated briefing schedule, with the petitioner’s merits brief due March 5, 2025, the respondents’ brief due March 31, and the reply brief due April 21. Given the docket, a ruling is expected by June or July 2025.

A decision barring certification of classes with even a de minimis number of uninjured members would be a game-changer for defendants, raising the threshold for class actions and reducing aggregate liability risks. On the other hand, a ruling that allows some flexibility for uninjured members could solidify the Ninth Circuit’s approach, maintaining a more plaintiff-friendly landscape.

LabCorp is set to reshape class certification doctrine and define the future of aggregate litigation in the U.S. Insurance companies would be wise to closely monitor this case.