Capitalizing on Concerns over Ascertainability Regardless of the Forum

Circuit Split on Ascertainability

At the outset, when discussing the circuit split on ascertainability, it is critical to define the subject of the dispute. Virtually all circuits agree that ascertainability is an implicit element of Rule 23 and, at the very least, requires “objective criteria” to determine class membership. In other words, the court must be able to determine the identity of the class based on a clearly defined set of characteristics. Thus, in its most traditional sense, ascertainability compels denial of class certification where class membership is based on subjective criteria (such as a class member’s state of mind, feelings, or beliefs) or where the class lacks sufficient definiteness (such as a particular time period). However, circuit courts are divided on whether ascertainability also requires an administratively feasible method for identifying class members as an absolute prerequisite to class certification.

The Third, Fourth, and Eleventh Circuits have adopted the most stringent view of ascertainability. In these circuits, there must be an “administratively feasible” method for identifying the members of a class. Administrative feasibility is a manageable process that does not require much, if any, individual factual inquiry. If an administratively feasible method does not exist, certification must be denied at the outset. Thus, when administrative feasibility is lacking, district courts in these circuits often do not even go on to consider the express elements of Rule 23(a) and (b). Notably, these circuits have been highly critical of methods of self-identification, and many district courts have outright rejected consumer affidavits. For that reason, administrative feasibility is often very difficult to satisfy where the defendant lacks records clearly identifying who is part of the class, and it often leads to the rejection of class certification in small-value consumer product class actions.

In contrast, the Seventh, Eighth, and Ninth Circuits have expressly rejected “administrative feasibility” as an absolute requirement of Rule 23. In the view of these circuits, a freestanding administrative feasibility requirement as an aspect of ascertainability is not consistent with nor compelled by Rule 23. Rather, the policy concerns underlying administrative feasibility and class member identification are better addressed through the requirements of Rule 23(b)(3)—particularly, predominance and superiority. The key distinction here, however, is that these elements are comparative in nature. As such, while difficulties in identifying class members can be relevant to the Rule 23 analysis, they are not dispositive on their own. And, unlike circuits that take a more stringent approach, the district courts in these circuits must certainly conduct a full Rule 23 inquiry when considering such difficulties.

The Second and Sixth Circuits seem to have taken yet another approach toward the issue. In Sandusky Wellness Center v. ASD Specialty Healthcare, 863 F.3d 460 (6th Cir. 2017), the Sixth Circuit did not take an express position on whether difficulties in identifying class members should be framed as a question of ascertainability or superiority. Yet, it made clear that concerns over self-identification can be sufficient on their own to defeat certification. Indeed, the Sixth Circuit felt that considerable difficulties in identifying class members, even when considered solely as an aspect of superiority, can be enough to preclude class certification. The Second Circuit took a somewhat similar approach in In re Petrobras Securities Litigation, 862 F.3d 250 (2d Cir. 2017). While the court technically rejected administrative feasibility as an aspect of ascertainability, it made clear that difficulties in identifying class members are already accounted for in the requirements of predominance and superiority and that such difficulties may themselves lead to fatal challenges to class certification. Thus, although difficulties in identifying class members may not always be enough to defeat class certification in these circuits, it seems that they can be enough in at least some cases.

Notably, the U.S. Supreme Court has repeatedly declined to review cases that could resolve the circuit split. Thus, at least for now, the divide will continue to plague class action litigation.

Strategies for Navigating the Divide

Given the divergent approaches and the considerable hurdle that ascertainability could potentially pose to class certification, plaintiffs’ attorneys are increasingly filing potentially problematic consumer class actions in circuits with a more lenient view of the issue. But defendants need not simply accept defeat and assume that there is little to be done on the ascertainability and identification front when facing suit in these circuits. There are strategies that defendants can potentially employ to use the issue of class member identification to advantage regardless of where they are sued.

Transferring the action. When facing suit in a forum with a less than favorable view of ascertainability and identification, defendants have several options for transferring the action to another forum. Before making such a determination, the defendant and its counsel should do a close consideration of the facts to determine whether there appear to be considerable obstacles to identifying class members in an administratively feasible manner. If that is the case—such as when the defendant does not maintain its own records identifying putative class members and third parties also lack such records—the defendant may want to give consideration to this option. As noted above, in those circuits that have expressly adopted administrative feasibility as an absolute standard, district courts routinely deny certification solely on the basis of ascertainability without even addressing the express requirements of Rule 23. Thus, transfer may present a desirable course of action. Of course, defendants must also give close consideration to the specific facts at issue to determine whether there is a viable and meritorious basis for transferring the action under one of the available mechanisms. Without facts and circumstances that justify transfer in the first place, doing so likely will not be an option.

There are several potential ways to transfer venue of a putative class action. For instance, 28 U.S.C. § 1404 allows a district court to transfer a civil action to any other district in which it might have been brought “for the convenience of the parties and witnesses, in the interest of justice.” At the outset, the statute requires that the suit could have been brought in the transferee forum. Thus, with some narrow exceptions, defendants can generally move to transfer under section 1404 only if there is personal jurisdiction in the transferee forum with respect to all of the named plaintiffs’ claims (the defendant cannot invoke waiver in the context of the section 1404 analysis). Personal jurisdiction can either be general or specific. Pursuant to Supreme Court precedent in Daimler AG v. Bauman, 571 U.S. 117 (2014), general personal jurisdiction typically exists only in the place of incorporation or principal place of business (although “exceptional” circumstances may give rise to general jurisdiction elsewhere). Furthermore, pursuant to Supreme Court precedent in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), specific personal jurisdiction exists only in a forum with a sufficient connection to the plaintiffs.

In evaluating potential transfer options under section 1404, it is helpful to note that there is typically a strong argument for transfer to the state in which a defendant’s principal place of business is located. The reasons for that are twofold. First, there is likely to be relevant evidence and witnesses in the state where the principal place of business is located. If that is the case, a good argument can be made that transferring the action to that state will satisfy the convenience of the parties and witnesses requirement. Here as well, however, the strength of this argument will necessarily turn on the specific facts of the case. Second, as noted above, Bristol-Myers instructs that a court does not have specific jurisdiction over the claims of named plaintiffs if they do not have a sufficient connection to the forum. Thus, if the class action consists of plaintiffs from multiple states (as most do), a court that does not have general jurisdiction over the defendant typically will not be able to adjudicate all the plaintiffs’ claims. However, by transferring the action to the state in which the principal place of business is located—where general jurisdiction over the defendant necessarily exists—all the claims can be adjudicated at once. Indeed, in Bristol-Myers, the Supreme Court expressly contemplated that multistate plaintiffs can “join together in a consolidated action in the States that have general jurisdiction over the [defendant].” As judicial efficiency is of paramount importance in determining the interests of justice factor, transferring the action to such a forum is likely to satisfy the interests of justice factor.

Accordingly, if the place of incorporation is located in a forum with a more favorable view of ascertainability and there are meritorious arguments for transferring the case to that forum under section 1404, invoking this option is worth serious consideration. A defendant can also attempt to invoke section 1404 to transfer the case to the state in which it is incorporated—where general jurisdiction also exists. However, it may be much more difficult to satisfy the convenience of the parties and witnesses requirement when seeking transfer to such a forum.

Another potential option for transfer is through 28 U.S.C. § 1406 or 28 U.S.C. § 1631. These statutes allow a district court to transfer an action to a district in which the action could have been brought if either venue is inappropriate (section 1406) or jurisdiction is lacking (section 1631). As discussed above, a court typically does not have personal jurisdiction over a defendant with respect to the claims of nonresident plaintiffs if general jurisdiction is lacking. And if personal jurisdiction is lacking, venue would also be inappropriate under 28 U.S.C. § 1391(c)(2). Thus, these statutes can likely be invoked as to the claims of nonresident plaintiffs, and a relatively easy argument can be made for transfer of such claims. To the extent the court does have personal jurisdiction over a plaintiff who resides in the forum, a defendant can then consider invoking section 1404 (discussed above) to transfer the claims of that plaintiff. When suits involve some claims over which the court has jurisdiction and other claims over which the court does not, several courts have found that it is appropriate to invoke section 1406 or section 1631 to transfer those claims for which jurisdiction is lacking and to then invoke section 1404 to transfer those claims for which there is jurisdiction.

Note that, as with section 1404, the transferor court can transfer an action under sections 1406 and 1631 only to a district in which the case could have originally been brought—i.e., typically only one with personal jurisdiction over the defendant with respect to all the claims at issue. However, unlike transfers under section 1404, transfers under sections 1406 and 1631 do not require a showing on the convenience of the parties and witnesses. Thus, a defendant can more easily lodge an argument under section 1406 or 1631 for transfer to the state of incorporation (where witnesses and evidence are unlikely to be located). As most companies are incorporated in Delaware—which is located in the Third Circuit—defendants should consider this potential mechanism for bringing a class action to the Third Circuit if the circumstances and facts otherwise warrant such a transfer.

Yet another option is to move to transfer through the first-to-file rule. This rule can be invoked only if another similar action is already pending in another forum. In particular, when a similar action has been previously filed in another district and the action raises similar allegations on behalf of a similar putative class, a defendant can move to transfer the case to the first-filed district under this rule. Notably, transfer under this rule does not require that the elements of section 1404 be satisfied. Thus, a court can transfer the action even if the action could not have originally been filed in the transferee district. If a related case is already pending in a forum with a more favorable view of the ascertainability requirement, defendants should also consider this option.

Finally, defendants can move to transfer under 28 U.S.C. § 1407. This requires multiple similar lawsuits pending in other district courts around the country. If this is the case, the Judicial Panel on Multidistrict Litigation can transfer all the actions to any district for consolidated pretrial proceedings. Because the transferee court under section 1407 applies the procedural law of the transferee forum, the law of the transferee forum governs the application and interpretation of Rule 23. However, transfer under section 1407 is not frequently granted and comes with the risk that the Judicial Panel on Multidistrict Litigation will transfer all the actions to a forum in which the law is unfavorable.

Recharacterizing the problem. While there are several potential ways to transfer a putative class action, there are also considerable limits to this strategy. As discussed above, there are limited fora to which an action can be transferred. Unless those fora have a more favorable view of the ascertainability issue, transfer will not be a viable option. Moreover, the transfer statutes require a specific set of facts and circumstances justifying transfer to a particular forum—facts that may not be available in a particular case. But that does not mean that issues related to class identification need be marginalized. As discussed above, even as to those circuits that have outright rejected the ascertainability requirement, difficulties with class member identification still come into play in the Rule 23 analysis. Thus, even if not independently dispositive, these issues should certainly be explored and developed in furtherance of a defendant’s litigation strategy.

As the case law indicates, there are two potential ways that identification issues remain relevant—either through predominance or superiority. Where there are no records capable of identifying class members and plaintiffs must instead rely on affidavits, defense counsel should consider potential ways of attacking the credibility of such affidavits. Are there meaningful ways to discredit the validity of an affidavit? For instance, are there serious recollection issues involved in self-identification? Is there any evidence that consumers would either intentionally or inadvertently attest to their inclusion in the class? Have any named plaintiffs given testimony that would undermine their inclusion in the class? If thorough cross-examination undermines a particular plaintiff’s claim that he or she is a member of the class, this may provide a very powerful argument against the credibility of an affidavit.

The above credibility concerns are important because they help to demonstrate that the court will have to conduct a time-consuming, individualized inquiry of each affidavit. And the more complex and difficult the inquiry, the stronger the argument. Indeed, a defendant may be able to argue that the inquiry is so complex that the court will have to essentially conduct mini-trials as to the validity of each affidavit. This type of individualized inquiry is precisely the kind that bears on predominance. It also presents inherent difficulties in managing the proposed class, which undermines the element of superiority. These issues may help convince the court to deny class certification.

Notably, in discussing the need for individualized scrutiny, the defendant should emphasize its due process rights to defend itself against individual claims. A defendant has an absolute due process right to defend itself even in the class action context. Thus, while the analysis regarding class identification may be “comparative,” the need to scrutinize each affidavit is absolute. If the defendant’s counsel emphasizes that the court not only should—but must—conduct this inquiry, a district court may be more likely to pause and consider just how complex and time-consuming the inquiry is before deciding that it can certify the class. The due process concerns at play may be particularly apparent to the court where the defendant can show that thorough cross-examination of a named plaintiff has cast doubt on his or her alleged membership in the class.

Affidavits are not the only potential form of identification when the defendant lacks its own records. In developing their defense, defendants should consider any potential forms of identification that plaintiffs may raise, such as retailer records, receipts, or recall notices. To the extent possible, the defendant should also develop evidence that discredits these forms of identification. For instance, it may be possible to discredit the utility of receipts or sales records if they do not actually identify the relevant product or service. Or it may be possible to demonstrate that obtaining third-party records involves a time-consuming and entirely unmanageable process—such as when there are thousands of retailers across the country. And it may be possible to undermine the utility of recall records if the recall notices were sent to a much wider population. The point here is that even where defendants lacks thorough records, they should consider any and all potential forms of identification in developing their discovery strategy. It would be less than ideal if the plaintiff presents a form of identification that the defendant had overlooked during discovery and to which it therefore lacks any meaningful response during class certification briefing.

Conclusion

In sum, there is obvious disagreement between the circuits with regard to the issue of ascertainability and class member identification. However, defendants have potential tools to capitalize on these issues even when facing suit in a less than favorable forum. At the outset, defendants can consider whether there is an available transferee forum with a more favorable view of these issues. If administrative feasibility appears to be a considerable obstacle to class certification, serious consideration should be given to whether the action can be transferred. Moreover, even in circuits that reject administrative feasibility as an absolute standard, difficulties in identifying class members still play a role in the Rule 23 analysis. Thus, defendants should certainly still give attention to this issue in developing their litigation and discovery strategies. And, when appropriate, defendants should emphasize these difficulties in opposing class certification. Even as part of a comparative analysis, they may be enough to tip the scales against certification. 

Erica Rutner is a partner at Lash & Goldberg LLP in their Fort Lauderdale, Florida, office.

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