G r a n t & E i s e n h o f e r P. A .

The Ascertainabilty

Fallacy and Its

Consequences

Adam J. Levitt 1 and Justin S. Brooks 2

©2015 Gr ant & Eisenhofer P.A.

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INTRODUCTION

In addition to the express requirements set forth in Federal Rule of Civil Procedure

23, most courts have imputed a judicially-created “ascertainability” requirement into class certification jurisprudence. Courts traditionally recognized that classes are “ascertainable” if the characteristics of the members of the class are adequately defined and can be identified by reference to objective criteria in the class definition. Recent Third Circuit jurisprudence – as well as additional jurisprudence in various other courts adopting the Third Circuit’s approach – diverges sharply from this traditional approach by requiring plaintiffs to prove the existence of an administratively feasible mechanism capable of objectively identifying all potential class members. Not only does interpreting ascertainability in this manner skew the original intent of this judge-made doctrine, but, applied according to the Carrera v. Bayer approach, can be viewed as a death knell for class action lawsuits regarding small-dollar consumable items – the very types of situations for which the class action mechanism is best-suited.

This article discusses the traditional interpretation of ascertainability, highlights the radical departure taken by the Third Circuit in Carrera, and identifies an emerging split in the wake of that and other similar decisions.

THE ORIGINS AND EVOLUTION OF THE

ASCERTAINABILITY PRINCIPLE

A prospective class has traditionally been recognized as “ascertainable”

if the characteristics of class members are adequately defined and can be identified by reference to objective criteria in the class definition.3 Indeed, until very recently, few courts invoked ascertainability to deny class certification. When courts did deny class certification on ascertainability grounds, they did so principally to prevent certification of classes defined by subjective criteria or in situations where a mini-trial would be required to identify a workable class definition.4 In such cases, the class

definition does not provide an objective basis for defendants to assess damages or understand the extent of their exposure.

Under the traditional view of ascertainability, class members must be identifiable pursuant to objective criteria in the class definition, but plaintiffs need not prove that there is an “administratively feasible” mechanism capable of identifying all individual class members.5 By contrast, the Third Circuit and several district courts, now demand that plaintiffs – at the time of certification – proffer an objective method by which to precisely identify each individual class member.6

MARCUS AND CARRERA: THE THIRD CIRCUIT REWRITES

THE ASCERTAINABILITY REQUIREMENTS

The Third Circuit first considered “administrative feasibility” in Marcus

v. BMW of North America. In Marcus, the plaintiff alleged that BMW violated statutory law by knowingly selling vehicles equipped with defective Bridgestone tires.7 The Third Circuit held that the class raised “serious ascertainability issues,” because BMW did not track which cars had been sold with Bridgestone tires, dealerships sometimes changed tires before selling the cars, BMW did not maintain records showing the current owners of its vehicles, and BMW did not keep records that showed which vehicles had Bridgestone tires replaced because they had gone flat.8 It remanded so the district court could determine whether there was an “administratively feasible” means to determine class membership but expressly warned “against approving a method that would amount to no more than ascertaining by potential class members’ say so” (such as through the submission of affidavits). It further suggested that submission of affidavits without an opportunity for BMW to cross-examine affiants might violate BMW’s due process rights.9

The Third Circuit next considered ascertainability in Hayes v. Wal-Mart Stores, Inc.10 There, the district court

had certified a class of consumers who purchased a service plan on “as-is” goods sold in Sam’s Club stores in New Jersey. Plaintiff alleged that the policies were worthless because the plans were not available for as-is products.11 Citing and relying on its decision in Marcus, the Third Circuit reiterated that “there must be a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.”12 Rejecting the district court’s conclusion that a “plaintiff should not be hindered from bringing a class action because defendant lacked certain records,” the Third Circuit instead held that “the nature or thoroughness of defendants’ recordkeeping” cannot alter a plaintiff’s obligation to satisfy the requirements of Rule 23.13 Finally, the Third Circuit held that submission of affidavits is insufficient to satisfy plaintiffs’ burden of demonstrating an administratively feasible mechanism capable of identifying all individual class members.14

In Carrera v. Bayer, the Third Circuit provided its most fulsome explanation of the Third Circuit’s “administrative feasibility” construct. In Carrera, plaintiff had brought a class action alleging that Bayer falsely and deceptively advertised its product One-A-Day WeightSmart.15 Bayer argued that the class was unascertainable because class members were unlikely to have documentary proof of purchase and Bayer did not keep a list of purchasers because it did not sell WeightSmart directly to consumers.16 Plaintiff argued that the class could be ascertained by reference to retailer records of online sales made with store loyalty reward cards as well as affidavits from class members stating that they purchased WeightSmart.17

The Third Circuit held that the retailer records would not identify a sufficient number of class members because many consumers likely did not have loyalty cards.18 It also – once again – held that class member affidavits are inherently reliable, rejecting plaintiff’s argument that statistical sampling techniques could later be used to identify and weed

The Ascertainabilty Fallacy and Its Consequences

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out fraudulent or inaccurate claims. The Third Circuit found that statistical sampling was inadequate even if it “screen[ed] out a significant number of claims” unless sampling could clearly identity the “true” number of fraudulent or inaccurate claims.19 In short, the Third Circuit expanded on its prior decisions by insisting that a class cannot be certified unless plaintiff proves – at the time of certification – that there is a virtually foolproof method capable of identifying each and every class member. Acknowledging that this approach is “rigorous,” the court claimed that such an approach was necessary in order to: (1) ensure administrative efficiency; (2) facilitate notice to absent class members; and (3) protect defendants by preventing certification with inadequate class representative who would be unable to bind absent class members and foreclose future suits.20

The Third Circuit’s approach to ascertainability has been heavily criticized, including by Third Circuit judges. In a dissent from the denial of the Carrera plaintiff’s petition for an en banc review, Judge Ambro – the author of Marcus – wrote that Carrera went far beyond Marcus and argued that courts should be flexible in its approach to the “judicially created” ascertainability requirement.21 As Judge Ambro explained, Carrera did not share any of the difficulties that made determining whether someone was a proper class member in Marcus a challenge. In Marcus, the court had to accept that a plaintiff – without the benefit of records – once knew and would be able to recall: (1) the purchase of a vehicle with the defective tires (which were not incorporated into all vehicles of a given model) and (2) the vehicle was equipped with defective tires when it left the dealership (under a system where dealers often changed the tires before selling the car).22 In Carrera, class members simply needed to remember buying a discrete product in Florida during the relevant time period.23 Judge Ambro concluded that where “defendant’s lack of records and business practices make it more difficult to ascertain the members of an otherwise objectively verifiable low-

value class, the consumers who make up that class should not be made to suffer,” and warned that the majority’s decision was likely to curtail many meritorious small claims class actions.24

CARRERA HAS NOT ENDED SMALL DOLLAR CONSUMER

CLASS ACTIONS

Despite the Third Circuit’s best efforts, Carrera, while highly problematic

in several respects, has not proven to be the death knell of consumer class actions. Indeed, while several courts have adopted Carrera’s rationale,25 a number of courts have categorically refused to apply Carrera26 or otherwise rejected or cabined the Carrera approach in favor of a narrower, more nuanced interpretation of administrative feasibility.27 Even the Third Circuit has limited the reach of the Carrera trilogy by finding it inapplicable to certification of injunctive or declaratory relief class actions arising under Rule 23(b)(2) and more generally holding that “it does not follow from [the] holding in Marcus that ascertainability is always a prerequisite to class certification,” leaving open the possibility that it will find an ascertainability analysis inappropriate in a variety of other situations.28

In a particularly well-reasoned decision, one court rejected the “paramount” reasons that “have motivated courts to require a plan to identify specific members at the class certification state.”29 That court rejected Carrera’s conclusion that self-identification by affidavit compromises defendants’ due process rights because defendants retain the ability to challenge liability and total damages.30 The court also dismissed as speculative Carrera’s concern that inclusion of inaccurate claims could destroy the res judicata effect of class judgments and settlements, and, in any event, found this possibility insufficient to adopt a standard that forecloses the ability to bring many small claims consumer class actions altogether.31 Finally, the court rejected Carrera’s determination that identification of every class member is needed in order to give adequate notice because notice

by publication and other methods is generally appropriate.32

CONCLUSION

Carrera radically altered traditional interpretations of ascertainability in a

manner many courts have been unwilling to accept. Given the growing conflict between district courts that follow and reject Carrera, the questionable validity of Carrera’s reasoning and the precepts on which the Third Circuit based its decision, the emergence of a Circuit split and an ultimate Supreme Court review appears increasingly likely.33

ENDNOTES

1. Adam J. Levitt is a Director of Grant & Eisenhofer P.A., resident in the Firm’s Chicago office, where he heads the Firm’s Consumer Protection practice.

2. Justin S. Brooks is an associate with Grant & Eisenhofer P.A., based in the Firm’s Wilmington, Delaware office.

3. See, e.g. Jamie S. v. Milwaukee Pub. Sch., 668 F.3d 481, 496 (7th Cir. 2012).

4. See, e.g., Debremaecker v. Short, 433 F.2d 733, 734 (5th Cir. 1970) (refusing to certify a class of “residents…active in the ‘peace movement’ who have been harassed and intimidated as well as those who fear harassment and intimidation in exercising their First Amendment right of free expression in the form of passing out leaflets in furtherance of their cause” because ‘fear of harassment’ was subjective and determining the meaning of ‘peace movement’ would require a mini-trial).

5. See, e.g., Xavier v. Philip Morris USA, Inc., 787 F. Supp. 2d 1075, 1089-90 N.D. Cal. 2011) (denying a motion for class certification for a class of individuals who had smoked 20 “pack-years” of Marlboro cigarettes because the definition did “not describe a group of people whose membership can be ascertained in a reliable manner.”) The court refused to accept that self-reported smoking habits could be reliable. Id.

6. See, e.g., Carrera v. Bayer, 727 F.3d 300, 304, 311 (3d Cir. 2013) (on remand, plaintiff would have to prove the

By Adam J. Levitt1 and Justin S. Brooks2

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existence of an administratively feasible method capable of identifying all class members and eliminating fraudulent or inaccurate claims).

7. 687 F.3d 583 (3d. Cir. 2012).

8. Id. at 593-94.

9. Id.

10. 725 F.2d 349 (3d Cir. 2013).

11. Id. at 352-53.

12. Id. at 355 (internal citations omitted).

13. Id. at 356.

14. Id.

15. Carrera v. Bayer, 727 F.3d 300, 304 (3d Cir. 2013)

16. Id.

17. Id.

18. Id. at 308-09.

19. Id. at 311.

20. Id. at 307-08.

21. Carrera v. Bayer Corp., No., 12-2621, 2014 WL 3887938, at *1–3 (3d Cir. May 2, 2014) (Ambro, J. dissenting). The dissent was joined by three other judges.

22. Id. at *3.

23. Id.

24. Id. at *4.

25. See, e.g., Sethvanish v. ZonePerfect Nutrition Co., No. 12-2907, 2014 WL 580696, at *4-6 (N.D. Cal. Feb. 13, 2014) (adopting and applying Carrera to conclude that the class was unascertainable despite noting that Carrera was not the law in the Ninth

Circuit and that many other district courts in the Ninth Circuit had rejected it and found small claims consumer class actions ascertainable based on class member affidavits); Stewart v. Beam Global Spirits & Wine, Inc., No. 11-5149 (NLH/KMW), 2014 WL 2920806, at *6–14 (D.N.J. June 26, 2014) (refusing to certify a proposed class of all New Jersey residents who purchased Skinnygirl Margarita because no corporate records of these purchasers existed).

26. See, e.g., McCrary v. The Elations Co., LLC., No. 13-00242, 2014 WL 1779243, at *7-8 (C.D. Cal. Jan. 13, 2014).(stressing that Carrera is not the law in the Ninth Circuit and certifying a class of purchasers of a dietary supplement for joint pain even though consumer affidavits were the only basis to ascertain class membership); Brazil v. Dole Packaged Foods, LLC, No. 12-01831, 2014 WL 2466559, at *4-6 (N.D. Cal. Mary 30, 2014) (stating that Carrera is not the law and finding consumer affidavits a reliable means to ascertain class membership where all products contained the same misleading claims and the class period was short because individuals were likely to be able to accurately identify themselves as a purchaser).

27. Moreno v. Napolitano, No. 11-5542, 2014 WL 4911938, at *6-7 (N.D. Ill. Sept. 30, 2014) (argument that “manual review of tens of thousands of active [Form I–247 immigration] detainers” was administratively feasible and finding holding that “the fact that Defendants

may to conduct a manual review to determine the composition of the class is not sufficient grounds for denying class certification” even if it is slow and burdensome); In re Electronic Books Antitrust Litig., No. 11 MD 2293, 2014 WL 1282293, at *23 (S.D.N.Y. Mar. 28, 2014) (rejecting Defendants argument that the Carrera framework mandates that records need to be available at the time of class certification and definitively identify every class member prior to approval of class certification (see In re Electronic Books Antitrust Litig., No. 1:11-md-02293, Opposition to Class Certification, Dkt. No. 443, at 10 (S.D.N.Y. Nov. 15, 2013) and finding the class ascertainable because third party transaction records existed that would allow identification of individual purchasers of the qualifying products); In re Paulsboro Derailment Cases, No. 13-784, 2014 WL 1371712, at *4-5 (D.N.J. Apr. 8, 2014) (Carrera and related cases should not be used to strike allegations on the pleadings where discrete discovery would likely identify class members).

28. Shelton v. Bledsoe, No. 12-4226, 2015 WL 74192, at *3-4 (3d Cir. Jan. 7, 2015).

29. Lilly et al., v. Jamba Juice Co., No. 13-02998, 2014 WL 4652283, at *4 (N.D. Cal. Sept. 18, 2014).

30. Id.

31. Id. at *5-6.

32. Id. at *5.

33. Whether that would be a good thing, however, remains to be seen.